China property tycoon blames state for prices

MARKET RESTRICTIONS::Despite frustration over China’s high property costs, analysts say that official measures have curbed excessive rises


Fri, Jan 04, 2013 - Page 15

A Chinese property tycoon blamed a government “land famine” for high property prices — which China has long sought to rein in — after he paid 1 billion yuan (US$160 million) for a plot in Beijing.

Ren Zhiqiang (任志強), a prominent real-estate tycoon, paid the mammoth price for development land in a suburb of the capital before turning to a local microblogging site, where he has 13 million followers.

“For fear of sky-high prices, [the government] has stopped holding many land auctions and reduced the supply of land, creating a land famine that has led to sky-high prices,” he said.

“Does the government think it can control property price increases by reducing the land supply?” he said. “This is neither good for companies nor for society,” he added. “But to survive in a land monopoly and shortage means doing whatever you can.”

Ren’s purchase was 490 percent above the auction starting price, the highest such premium since 2010, the Beijing News said, marking an extreme case of spiraling prices.

Authorities are concerned that escalating prices could shut more ordinary homebuyers out of the market, fueling discontent and possible social unrest.

Measures announced in early 2010 have ranged from restrictions on second and third home purchases, higher down payments and taxes in some cities on multiple and non-locally-owned homes.

The restrictions have frustrated investors such as Ren and cooled the once red-hot market, with analysts estimating that prices nationwide have risen only 4 percent to 7 percent since then.

However, pent-up demand, easing government monetary policy and inflows of speculative funds from abroad anticipating a recovery have brought the property market out of the doldrums.

Some microbloggers shared Ren’s frustration, with one lamenting that high prices were “good for the government, of no choice for the developer and bad for homebuyers.”

However, others blamed Ren, with one saying: “How could you buy at such a high price? Doesn’t that make you an accomplice?”