Shenzhen's first sale of rural land fetches 116m yuan

The first tender by the Shenzhen government of a parcel of collective rural land, widely welcomed as a good start to the country's rural land reform policy, fetched a single bid at the reserve price of 116 million yuan (HK$147 million) yesterday.

The bid was accepted and the 14,600 square metre site was sold to the bidder, Shenzhen Forge Precision Components.

The site, in the Baoan district of Shenzhen, could be developed into a gross floor area of 69,900 square metres and is designated for industrial use, especially for technology services.

The land sale is seen as an experiment in changing rural land policy on the mainland and comes as the central government undertakes the gradual liberalisation of the rural land market.

"This is a [strategy] for the process of urbanisation in China," said Rico Chan, partner at international law firm Baker & McKenzie.

A spokesperson for the city's Bureau of Land Resources and Housing Management said: "The successful sale of the site is important. It is in line with the guideline mentioned in the third plenum of the Communist Party's 18th Central Committee."

In the third plenary session in November, the central government said a unified market for rural and urban construction land should be formed and farmers should be given more property rights.

The bureau's spokesperson said more rural land designated for industrial use could be offered for sale next year.

Land on the mainland is divided into rural and urban use. Rural land is owned by a collective on behalf of the state.

Urban land designated for construction can be sold or mortgaged, but similar rural land cannot be used by entities outside the village without approval.

Land use cannot ordinarily be changed and the land must be expropriated by city governments before it can be sold on the market.

The system leads to farmers generally losing their land and getting little compensation.

According to the Shenzhen land-sale document, 30 per cent of the proceeds will go to farmers who own the land and 70 per cent to the city government. Farmers are also entitled to 13,980 square metres of space in the development for free.