Alexander Pan, March 9, 2010
Beijing, China.
Beijing’s Exorbitant, and rapidly increasing housing prices have come under fire from many senior government officials at the national legislative meeting. The officials are demanding that housing prices be contained fearing that any further increases could lead to a bursting of the housing bubble, and consequently a massive economic downturn similar to America’s recent housing bust.
Du Deyin, a senior Beijing official and head of the Beijing’s local legislative body implicated in a bold speech that Beijing’s land resources and construction authorities were not doing their jobs.
Many experts on Beijing’s housing market claim that for year Beijing’s housing prices have been manipulated and pumped up through collaborations between real estate dealers and government officials. They claim that officials award lucrative land deals to major real estate developers in return for a hefty tax paid back to the government.
Du Deyin explicitly condemned this practice saying Instead of encouraging real estate dealers to snap up lucrative land deals, authorities should control land prices and offer special funds to house buyers.”
The central governments work report charged local authorities with curbing this excessive growth of home prices in major cities and satisfy the publics basic need for housing.
These demands to curb housing prices come as overwhelming signs of a housing bubble begin to emerge. In Beijing, the average housing prices in popular residential areas increased from approximately 15,000 yuan per sq m to 20,000 yuan per sq m in 2009. Preliminary reports said the capital’s property market saw a total increase of 23.5 percent last year, the major reason seemed to be government’s failure to provide enough land resources for low-cost housing.
Government Officials are not only worried about the possible collapse of this potential bubble, but also recognize that the rapidly increase price of housing has made it extremely difficult for low income families to secure housing in major cities. This could potentially balloon in a major point of civil unrest.
Some actions have already been taken by government officials including a new plan that will allocate fifty percent of new land for construction to low cost apartments for the mass middle income earners. Also more than 134,000 subsidized apartments will be built to meet the needs of low income residents.
Edward Lehman, Managing Director of Lehman, Lee and Xu said that “ The Central Government should be applauded for recognizing the signs of a housing bubble and taking the appropriate precautions to deflate this bubble before it bursts. The government’s actions to ensure housing for the lower and middle classes are also commendable. We at Lehman Lee and Xu have a great deal of experience in dealing with these types of market fluctuations and look forward to helping our clients deal with and take advantage of the current market condition.”
The LEHMAN, LEE & XU Real Estate team is comprised of both Chinese and foreign lawyers with many years of experience in all types of real estate transactions. This diversity of experience and foreign expertise enables LEHMAN, LEE & XU to provide creative, accurate and economical legal services to its clients.
With China’s rapidly expanding economy there is an increased need for residential housing, commercial space and industrial parks that are structured to meet the unique requirements of the Chinese population. With the experience and background of various lawyers in our Real Estate group, we can provide the expert advice needed by real estate developers to formulate and complete innovative real estate projects in all parts of the country.
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www.lehmanlaw.com
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