The days of developers sitting on large parcels of real estate
and selling small lots while awaiting a property upturn may be
numbered.
The Shanghai housing watchdog has initiated tough new rules
designed to stamp out the practice.
Developers of new residential properties with an aggregate
built-up space of under 30,000 square meters ready for pre-sale are
now required to launch their sales activities in one batch,
according to housing authorities.
And under the latest regulations announced by the Shanghai
Housing and Land Resources Administration Bureau, new residential
properties which have an aggregate built-up space of more than
30,000 square meters ready for pre-sale should introduce at least
30,000 square meters of new houses to the market at one time.
"The rule, probably the toughest of its kind introduced so far
by the local government, is supposed to help ease the current tight
market supply to some extent because many developers deliberately
prolong their sales period as housing prices continue to go north
in the city," said Xue Jianxiong, head of research at the Shanghai
Youwin Real Estate Information Service Co Ltd.
It is no secret among industry insiders that developers - big
and small - prefer to sell properties in small amounts at one time,
even though much more is available for pre-sale.
In many cases, only dozens of units are introduced to the market
at one time, and it is not uncommon for sales periods for some new
residential projects to last as long as several years.
"It is ubiquitous that developers hold onto their properties or
postpone their pre-sale launch," said Christine Zhao, a 31-year-old
finance manager who has been seeking a three-bedroom apartment for
months within the city's Outer Ring Road.
Her search has thus far been in vain.
In a bid to stabilize the local real estate market, which has
been plagued by continuously rising prices, the city's regulators
have been increasing efforts to crack down on illegal practices in
property development and sales.
The bureau has set up a project-monitoring center to track all
real- estate development in the city's 18 districts and one
county.
Heavy penalties apply for illicit activities and false
advertising.
(Shanghai Daily September 4, 2007)