Hainan reassigns 20.7 million square metres of residential land for industrial use to fit Xi’s vision for province
- Provincial government to lose US$9.2 billion in revenue as land is no longer available for residential property development
The island of Hainan in southern China will reassign for industrial use huge swathes of land previously earmarked for residential development, in a move designed to end its reliance on property development as it builds the country’s largest free-trade zone.
Ding Shijiang, head of the province’s natural resources and Planning Department, said on Monday about 20.7 million square metres will now be considered for industrial uses, including the development of sectors such as tourism and hi-tech industries.
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“Hainan is exploring a path that will help shake off an addiction to land sales. It wants to foster industries that steadily contribute towards taxes, which is a more sustainable path,” said Zhao Xiuchi, a professor at Capital University of Economics and Business in Beijing.
The land could have been developed into 62 million square metres of gross floor area, or 620,000 homes; and at an average price of 1,000 yuan (US$148) per square metre, it would have brought in 62 billion yuan in land sale revenue for the provincial government. This represents 92 per cent of its 2017 fiscal revenue.
But as industrial land prices are much lower in China – just 12 per cent of residential and commercial use land – the Hainan government stands to earn much less in revenue.
An executive at a local property consultancy, who declined to be named, however, said the loss of revenue was not a big concern for the local government, as it was getting support from Beijing. “The free-trade zone is not a ‘local government’ project, but a special administration region under the central government,” said the executive.