300,000 yuan a square metre? That's too rich
The owner of Beijing's No 7 Diaoyutai, branded 'the most expensive home in China', has been ordered to suspend sales of its remaining apartments and submit to official investigation.
The 23 flats there cost between 180,000 yuan (HK$216,000) and 300,000 yuan per square metre. That's far above the average cost of property in the capital, 22,900 yuan, which most already see as high.
Late last month, when news of the prices at No 7 Diaoyutai surfaced, Xinhua said the developer, little-known Sinobo Group, might be guilty of excessive profit-making and extortion. Excessive profit-making is an offence under the mainland's price law. Xinhua said the project was a bad example at a time when the central government was under pressure to bring down prices for urban homes.
Chen Yunfeng, secretary general of the National Real Estate Managers' Association, described Sinobo Group as 'excessively bold'.
Mainland media reported that in mid-2010, No 7 Diaoyutai's asking price was only around 100,000 yuan per square metre. Raising its price by such a big margin in a short space of time could open the company to a charge of excessive profit-making, press reports say.
Charges have already been laid against a developer that raised the price for one of its housing projects in Beijing from 14,690 yuan per square metre in November 2009 to 36,000 yuan in April last year.
On Friday the Beijing Municipal Commission of Housing and Urban-Rural Development ordered Sinobo Group to halt sales and prepare for an official investigation. The municipal tax authorities were part of the investigation, Xinhua reported, because major price increases were also subject to extra taxes.
However, internet reports - none confirmed - suggest the case may be more complicated. There are reports Sinobo Group has ties to the military or hi-tech firms; that its executives could only be appointed by people in high places; or that it is linked to overseas mining interests or a housing development in Phoenix, in the US state of Arizona.
The name of the development itself has a ring of high connections. Diaoyutai is Beijing's well-known state guest house. For decades it has housed visiting state leaders and was the venue for six-party talks on North Korea's nuclear facilities. No 7 Diaoyutai is near the guest house, and on a site formally owned by the military, The Beijing News reported. Its future use was defined as being for scientific and technological research.
Sinobo Group, a company few people had heard of, has existed for only six years. Its headquarters are in the new office tower at the China International Trade Centre. Despite owning several development projects, it had never attended a public land auction, internet sources said. Sinobo also claims to own a molybdenum mine in Mongolia.
Little is known about the company's chief, Zhou Jinhui. Zhou is rumoured to be from Tangshan, Hebei province, and is only 35.
Zhao Yuji, a senior executive who left the company recently, had previously been in high positions in a large state-owned steel company and a military equipment supply company.
8,820 yuan
The average price, in yuan, per square metre for a house on the mainland. The average price per square metre for a home in Beijing is 22,900 yuan
