Chinese government created ‘land famine,’ developer says

BEIJING- Agence France-Presse

This picture shows the under-construction Wang Jing SOHO complex by renowned architect Zaha Hadid in Beijing. AFP photo

Chinese property tycoon blamed a government “land famine” for high property prices -- which the authorities have long sought to rein in - after he paid 1 billion yuan ($160 million) for a plot in Beijing.
Ren Zhiqiang, a prominent real estate tycoon, paid the mammoth price for development land in a suburb of the capital before turning to Weibo, China’s version of Twitter, where he has 13 million followers.

“For fear of sky-high prices, (the government) has stopped holding many land auctions and reduced the supply of land, creating a land famine that has led to sky-high prices,” he said.

‘Not good for society’

“Does the government think it can control property price increases by reducing the land supply? “This is neither good for companies nor for society,” he added. “But to survive in a land monopoly and shortage means doing whatever you can.” Ren’s purchase was a soaring 490 percent above the auction starting price, the highest such premium since 2010, the Beijing News said, marking an extreme case of the spiralling prices that China has struggled for years to control.

Authorities are concerned that escalating prices could shut more ordinary homebuyers out of the market, fuelling discontent and possible social unrest.

Measures announced in early 2010 have ranged from restrictions on second and third home purchases, higher down payments and taxes in some cities on multiple and non-locally-owned homes. The restrictions have frustrated players such as Ren and cooled the once red-hot market, with analysts estimating that prices nationwide have risen only four to seven percent since then.

But pent-up demand, easing government monetary policy and inflows of speculative funds from abroad anticipating a recovery have brought the property market out of the doldrums.

Some Weibo users shared Ren’s frustration, with one lamenting that high prices were “good for the government, of no choice for the developer and bad for homebuyers.”

But others showed blamed the businessman instead, with one pointing out: “How could you buy at such a high price? Doesn’t that make you an accomplice?” “Crocodile tears!” wrote another.