Time runs out on old village

PUBLISHED : Wednesday, 09 September, 2009, 12:00am
UPDATED : Wednesday, 09 September, 2009, 12:00am

Zheng Yongmin has sold everything from biscuits to washing powder, cigarettes, watermelons and soya sauce in his rented 70 square metre store in Guangzhou's Lei De village.

But now urban renewal finds him at a crossroads.

For the past 17 years, customers could count on Zheng opening his little convenience store each morning at 7 to serve the inhabitants of the 900-year-old village near Guangzhou's new business and financial centre, Pearl River New Town.

But his landlord told him recently his lease would not be renewed because of the ongoing urban village redevelopment programme, and Zheng has marked his calendar for a countdown to the store's closure date.

Lei De village, which occupies an area of 323,255 square metres, has become the biggest piece of prime land near Pearl River New Town because of development and is part of the Guangzhou city government's five urban village redevelopment plans aimed at catching up with the march of Shenzhen and Shanghai.

'The landlord told me to move out in July next year, as all residential blocks here will be pulled down to make way for a big redevelopment,' said Zheng.

Since then, he has been searching each day for a new store site, as he frets over whether he can make a living after paying far higher rents when he moves out of the village.

Zheng is paying 3,500 yuan (HK$3,972) a month for the 70 sqmetre store on the ground floor and a similar-size unit on the first floor that provides accommodation for him and his family.

Outside the old village, shop rents rise to at least 3,500 yuan and, on top of this, Zheng will have to rent an apartment for at least 1,000 yuan a month.

'With higher rents, there will be no choice but to pass on the increased costs to the customers by marking up prices,' he said. 'Here where I am, the lower prices I can charge even attract shoppers not living in the village, and they do not mind taking a longer walk.'

And he can still make a living from his business, even though he is charging about 10 per cent less for his merchandise than shops in the main part of the city.

But times have changed, and Lei De village, which once had a population of more than 100,000, is now down to just 2,000 inhabitants as a result of the resettlement that got under way two years ago.

As a tenant rather than a landowner, Zheng will not get any compensation from the government for his move despite the fact that cash-rich developers will be taking over the sites on which he and the remaining shopowners operate.

To finance its 3 billion yuan Lei De village renewal project, the Guangzhou government put up a 114,176 sqmetre site - or one-third of the village area - for auction in September 2006.

Guangzhou R&F Properties and KWG Property Holding won the site for 4.6 billion yuan.

The two developers later invited Sun Hung Kai Properties to join the massive redevelopment project, comprising a five-star hotel, grade A offices, a shopping centre and luxury residences at a development cost of 10 billion yuan. The development will generate 568,000 square metres of gross floor area.

KWG executive director and chief financial officer Hoffman Tsui said the consortium held the ground-breaking ceremony two weeks ago.

The event has quashed speculation about the project's possible delay because of the problem of relocating existing residents.

'Our site is cleared except for the relocation of the Guangdong provincial school for the deaf,' said Tsui.

He expected the first phase of the residential project, comprising 150,000 square metres, to be offered for presale next year.