Soho China

Crackdown on illegal land use nets 18.6b yuan

PUBLISHED : Wednesday, 20 April, 2011, 12:00am
UPDATED : Wednesday, 20 April, 2011, 12:00am


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The Ministry of Land and Resources will step up efforts to clamp down on illegal land use after recovering 18.63 billion yuan (HK$22.15 billion) last year from 8,612 persons that it says was obtained through malpractice.

Gan Zangchun, deputy director-general of the ministry's land inspection authority, said those responsible for illegal practices had been punished or faced further investigation.

He said the authority had made routine inspections in 77 major mainland cities, resulting in the review and verification of 10,800 land-use approval cases at the provincial level, adding that there were field inspections for 3,801 land-use cases for construction projects last year.

The recovered money included 4.06 billion yuan in fines for land misuse, 13.23 billion yuan in land transfer revenues, 497 million yuan in royalties for new construction sites and 843 million yuan in land reclamation fees, Xinhua quoted Gan as saying.

The government also restored 62,400 mu of land for cultivation, increased 47,000 mu of available farmland and retrieved 55,300 mu of idle farmland which had remained unused after a project won approval.

Xu Tonghui, customer and corporate branding manager at mainland developer Longfor Group, said the move would help clean up the industry. 'It will create a sustainable and healthy real estate market,' he said.

He said the firm and the market overall would benefit from the central government's tight regulation of land use because eliminating illegal practices created a level playing field.

In the past two years, the central authority has increased land supply for government-subsidised and small homes to ease property prices to help first-time buyers. But some developers have built commercial properties on land earmarked for affordable housing, prompting an extensive campaign to punish culpable officials and executives.

In Inner Mongolia, Gan said 18 department units have built employee quarters on sites originally set aside for affordable housing.

'We are also deeply concerned that those development sites have been left vacant for years and at the illegal use of land for building golf courses and villas,' he said.

The government's scrutiny of land use is part of a broader effort to rein in runaway home prices.

Pan Shiyi, chairman of Soho China, said he believed Beijing's austerity measures to cool the market were having an effect. 'Home sales volumes in major cities like Beijing and Shanghai are down as much as 50 per cent, although there has not been a significant drop in prices,' Pan said after the company announced the acquisition of a prime commercial site in Shanghai for 2.47 billion yuan yesterday.

In Beijing, he said, the number of transactions had dropped to 100 per day since the government's austerity measures, compared with 304 previously. If the low transaction volume persisted for one or two more months, he predicted some developers would offer their projects at a discount to generate cash flow.

He believed the central government was unlikely to introduce further measures in coming months. 'No measures will be more effective than imposing limits on the number of purchased homes,' he said.

Soho China's newly acquired site, with a potential gross floor area of 152,032 square metres, is at the Huilun subway station. Inclusive of the land cost, the total investment for the office-commercial project would be three billion yuan. He expects the project would be completed in 2015 and office units would be offered for pre-sale in 2014.

Recovery efforts

Last year's campaign against illegal land use generated this amount, in yuan, in land transfer revenues: 13.2b yuan