Officials clear way for development

INSTEAD of waiting for investors to pump in the money to tear down old dangerous housing and build new homes, Shanghai officials are taking the initiative by shouldering the financial burden then leasing out cleared sites to developers.

He Yaozu, vice-bureau chief of the demolition and resettlement bureau of the Shanghai Housing and Land Bureau, said: 'This is a better method. Foreign developers can start construction work immediately as the land is ready for use.' He said authorities would clear a site, resettle residents and tear down old structures before leasing the site to developers.

But the downside for Shanghai, which is struggling to upgrade its infrastructure to match rapid economic development, is that it involves a lot of money.

'So the method is not used often. It is more expensive than leasing out the land to developers and leaving them to clear the site,' Mr He said.

However, recently, the Huangpu district government found itself forced to clear the neighbourhood of No 92 Yanan Road East, at the cross junction with Hubei Road.

The houses in the densely populated district had been declared dangerous, but the area also commanded one of the highest land prices in Shanghai, and finding investors for the task would be difficult.

The demolition task has been undertaken by Huangpu district government's construction company and involves an investment of 130 million yuan (about HK$121 million).

The neighbourhood is one of the 23 old districts marked by Shanghai Government for redevelopment.

Mr He said the government's undertaking of the clearance work gave potential investors a dose of confidence.

Investors interested in redevelopment projects are put off by demolition and resettlement for affected residents because mass-housing projects guarantee only between 10 and 15 per cent returns.

However, in the Shanghai real estate market, building housing for the masses has become the sector with the most potential after the fall in growth of China's property market because of the clamp down on speculation by Beijing.

In Shanghai, the municipal government plans to achieve per capita living space of 100 sq ft by 2000, an increase from the present level of less than 80 sq ft.

Each year, the city builds at least 65 million sq ft of gross floor area for the domestic market.