Monday, 24 December 2012
China’s anti-corruption drive triggers frantic property dump among officials
Real estate agents in provinces such as Guangdong and Jiangsu have been frantically trying to push deals for a torrent of second-hand flats suddenly released on the market – many of which belong to government officials, the Oriental Morning Post reported on Monday.
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China’s anti-corruption drive triggers frantic property dump among officials
Ernest Kao
24 December 2012
Real estate agents in provinces such as Guangdong and Jiangsu have been frantically trying to push deals for a torrent of second-hand flats suddenly released on the market – many of which belong to government officials, the Oriental Morning Post reported on Monday.
With an imminent state-led corruption crackdown looming, nervous Chinese officials - some of whom own multiple properties - are swiftly dumping assets or land holdings via private channels such as intermediaries.
Property agents have reported receiving mass produced text messages such as “Eight sets of hard-to-find flats, owner selling all at once, high-quality government resources”, the Oriental Morning Post reported.
“What’s strange is that these government people are anxious enough to call us requesting an urgent search for intermediaries to help sell their property holdings,” said a Jiangsu property manager from a financial advisory who was quoted by the pseudonym, Yang Zhi.
The report emphasised this was only the “tip of the iceberg”, suggesting the possibility of more asset sales by anxious government officials in the future.
The massive fire sale has sparked concerns that oversupply could lead to a decline in home prices in the secondary market. However, Chinese real estate mogul Huang Nubo, of the Zhongkun Investment Group, pointed out that the government’s anti-corruption policies could actually be more effective in stabilising the property bubble than the recent financial caps and monetary easing.
Huang reiterated that real estate markets would be brought back to normal because they would more accurately reflect trends in demand and supply since officials had no more property to secretly hoard.
Home prices on the mainland are forecasted to rise about 7.8 per cent [3] next year while property investments will be up roughly 17 per cent, according to a recent report by the China Index Academy.
All this comes amidst new anti-corruption measures by the Central Commission for Discipline Inspection to reform and bolster laws on assets disclosure and properties declaration amongst high-, middle- and low-ranking government officials.
A few members of the National People’s Congress have proposed the complete removal of “property privacy” for civil servants in an effort to tackle huge gains from “grey income”.
Grey income is often left unreported by wealthy individuals and government officials due to various loopholes such as supervisory weaknesses, rent-seeking and price distortions in the system. Government officials, for example, can transfer ownership of property titles to relatives and friends to avoid having to declare the property.
Many government officials are known to have secret financial investments on hand but those who own dozens of undeclared property have been dubbed by netizens on social media as “uncles and aunts of property”.
A junior official from Guangzhou’s Panyu district was sacked charged with corruption in October after authorities uncovered that he and his family owned 22 residential and commercial properties totalling to about 40 million yuan (HK$50 million). A number of other property “uncles and aunts” have since been implicated on similar charges.
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