Beijing Authorities May Buy into Troubled Housing Projects
Yvonne Liu 24 November 2008
Beijing’s municipal government plans to buy troubled private housing projects and convert them into cheaper housing.
Vice-mayor Chen Gang said the city would buy mass residential projects and remodel them into public housing or budget homes.
Private housing projects that offered lower-priced, smaller units would be the acquisition targets, he said.
The municipal government announced on Saturday it planned to have a total of 8 million square metres of budget homes by the end of this year as one of its measures to boost “reasonable” property consumption among the city’s residents, Xinhua reported.
The aggregate area that the city is currently constructing for affordable housing amounts to 5.3 million sqmetres, and the municipal government is aiming to have 8.5 million sq metres more of this cheap housing available next year.
Other measures, including cutting the transaction tax, extending preferential policies for private properties and encouraging banks to provide mortgages were announced on Saturday and are scheduled to take effect from today.
Sui Zhenjiang, the chairman of the municipal construction committee, the city’s housing authority, said the government had begun to visit some private housing projects but details of the policy had not been finalised.
Mr. Sui said that through acquisitions the government could help developers fund financially troubled projects. “The best way is for developers to finance their projects in the market by themselves,” he said. “But if they run into difficulties, the government will consider acquiring a portion of the units.”
However, some property consultants believe that developers will not benefit from the policy, because of the price gap between private and public housing.
Li Wenjie, the general manager at Centaline (China) in Beijing, said average prices for public housing or budget homes were at least 20 per cent lower than those for private housing in the city.
Meggie Qin, a director of research at property consultant CB Richard Ellis, said developers must reduce their prices by 30 to 40 per cent if they wanted to sell their projects to the government.
“The projects could attract many buyers in the private housing market if the developers cut prices by just 20 per cent,” Ms Qin said. “Developers would rather cut the price to lure buyers than sell to the government for a lower price.”
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Beijing Authorities May Buy into Troubled Housing Projects
Yvonne Liu
24 November 2008
Beijing’s municipal government plans to buy troubled private housing projects and convert them into cheaper housing.
Vice-mayor Chen Gang said the city would buy mass residential projects and remodel them into public housing or budget homes.
Private housing projects that offered lower-priced, smaller units would be the acquisition targets, he said.
The municipal government announced on Saturday it planned to have a total of 8 million square metres of budget homes by the end of this year as one of its measures to boost “reasonable” property consumption among the city’s residents, Xinhua reported.
The aggregate area that the city is currently constructing for affordable housing amounts to 5.3 million sqmetres, and the municipal government is aiming to have 8.5 million sq metres more of this cheap housing available next year.
Other measures, including cutting the transaction tax, extending preferential policies for private properties and encouraging banks to provide mortgages were announced on Saturday and are scheduled to take effect from today.
Sui Zhenjiang, the chairman of the municipal construction committee, the city’s housing authority, said the government had begun to visit some private housing projects but details of the policy had not been finalised.
Mr. Sui said that through acquisitions the government could help developers fund financially troubled projects. “The best way is for developers to finance their projects in the market by themselves,” he said. “But if they run into difficulties, the government will consider acquiring a portion of the units.”
However, some property consultants believe that developers will not benefit from the policy, because of the price gap between private and public housing.
Li Wenjie, the general manager at Centaline (China) in Beijing, said average prices for public housing or budget homes were at least 20 per cent lower than those for private housing in the city.
Meggie Qin, a director of research at property consultant CB Richard Ellis, said developers must reduce their prices by 30 to 40 per cent if they wanted to sell their projects to the government.
“The projects could attract many buyers in the private housing market if the developers cut prices by just 20 per cent,” Ms Qin said. “Developers would rather cut the price to lure buyers than sell to the government for a lower price.”
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