A DRAMATIC fall of 54 per cent in domestic investment in real estate projects in China occurred in the first 10 months of this year, with a total of 103.9 billion yuan (about HK$94.65 billion) being invested, a top mainland government official says. At a recent real estate conference in Beijing, Song Chunhua, director-general of the Bureau of Real Estate under the Ministry of Construction, said more than 80 per cent of the investment went to build much-needed residential projects. He credited this turnaround to a number of central government policies which were aimed at cooling the economy and diverting a large share of investment towards mass housing and away from luxury villas, golf courses and garden estates. A system of preferential land grants and tax incentives had been introduced by the government to encourage developers to build mass residential housing, he said. The grants had also strengthened control over land use for construction of luxury villas and golf courses. Recently, the Chinese Government moved to clamp down further on luxury projects by banning the construction of all golf courses, racetracks, luxury hotels, office buildings and villas until the end of next year. Mr Song said policies aimed at regulating property development in China had been instrumental in saving the country's newly-borne real estate industry. The total area developed during the first 10 months of the year decreased 10.9 per cent from the figure recorded last year, he said. This figure compared with massive increases of 78 per cent in 1992 and 136 per cent last year. This year, the government had been more successful in collecting taxes from real estate projects which had been evaded in the past, Mr Song said. In the first seven months of last year, before the macroeconomic control policy was imposed, real estate investment in China hit a record 143.5 per cent increase over the corresponding period a year earlier. From 1992 to July last year, 120,000 hectares of land, including land for all types of economic and technological zones, had been granted to developers. Much was awarded free of charge. The government has recently moved to take back land if developers fail to start construction within two years.
