MEASURES introduced by the Shenzhen government last year to revitalise its struggling property market are working, mayor Li Zibin says. He said sales in the market, suffering from falling demand and a glut of office space and high-rise flats, had picked up slightly. Between 4,000 and 5,000 flats have been sold since October last year. 'The situation will improve this year and become even better next year,' Mr Li said. He said the property slump in the special economic zone had dragged on for three years. 'Property sales were limited and prices did not drop much,' he said. 'Developers kept building because they believed there was a demand for residential and office space.' Mr Li was confident government measures would assist a recovery. A significant move was the strict control on leasing new lots of land for development, apart from Futian district, a prime district in the city. Other measures included granting tax holidays to developers and buyers, granting driving licences and residency permits to foreign property buyers, simplifying the customs services system and improving transport between Shenzhen and Hong Kong. Under the measures, the land cost differential between properties designated for overseas investors and domestic buyers must not be more than 30 per cent. Shenzhen has 5.4 million square feet of completed residential floor space and 17.2 million sq ft of unfinished floor space in surplus as a result of over-building. Shenzhen is estimated to have more than 200 real estate companies. Companies, work units and rural enterprises flocked there to invest in and develop properties. The secondary and resale markets have been under strict control by the authorities. Different types of fees imposed on investors had put some of them off completely. These included various management fees, transaction and education fees, and, even before Beijing's real property gains tax, Shenzhen had its own property gains tax. Real estate in the special economic zone has undergone several stages of change. It has developed from a market with lax supervision to a regulated one, and from a market where demand exceeded supply to one where supply now outstrips demand, and where the end-users are dominant.