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  • Aug 27, 2014
  • Updated: 11:24pm
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PUBLISHED : Tuesday, 17 December, 2013, 1:04am
UPDATED : Tuesday, 17 December, 2013, 3:20am

Foreign buyers seen eyeing rural land

Mainland leadership now allows outsiders to bid for farm sites under the latest policy change

A key meeting of economic policymakers came and went last week, with the leadership's objectives for next year leaving little to trouble property players on the mainland.

Beijing emphasised that it would maintain "proactive fiscal policy and prudent monetary policy", leading analysts to believe the targets for M2 money supply growth and the fiscal deficit might remain broadly unchanged from this year.

This comes as a relief for the property market. Many analysts had expressed cautious optimism for the year ahead before the Central Economic Work Conference.

For foreign investors, the bright spot next year is Beijing's policy for a gradual liberalisation of the rural land market, as stated at the third plenum of the Communist Party last month.

Urban land designated for building can be sold or mortgaged but, until this policy change, could not be used by entities outside the village. The policy is aimed at achieving a unified market for rural and urban construction land and giving farmers more property rights.

Rico Chan, a partner at Baker & McKenzie, believes foreign investors stand to gain from the policy. And not just those in the property industry. Foreign investors, such as those with retail or restaurant operations, have long sought to move into rural areas to tap the huge population of farmers. But they have found it difficult to find suitable land.

Chan said the change of use in farm land would now provide them with a way to enter the rural market. Such investors are expected to participate in future public sales of farm sites.

A sale of rural land in Shenzhen on Friday could test market interest as foreign investors are likely to be among the bidders. The land, in Baoan district, covers 14,600 square metres with a gross floor area of 69,900 square metres. The government has set a reserve price of 116 million yuan (HK$147 million) for the site.

According to the tender document, 30 per cent of the proceeds will go to the farmers who own the land, with the rest to the city government.

The Anhui government has allowed farmers in the province to sell land designated for their own houses to expand their income. More such moves are expected.

peggy.sito@scmp.com

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