Shanghai pilots land transfer reform

Unreasonably high land costs have long been blamed for skyrocketing property prices in China. The country is now trying to cool down the real estate market by reforming its land transfer scheme. As Qi Tianxing finds out, who obtains land in Shanghai will no longer be fully decided by how much money they offer.

The Shanghai Municipal Land and Resources Authority has announced that it will begin transferring property plots by bidding invitations, rather than auctions. Bid assessment results will decide who wins the land, and the price an interested party offers will make up just 30 percent of the total review. A company's performance and technical achievements will be very important.

Song Huiyong, consultant, Centaline Property, said, "We will take companies' capabilities into consideration, rather than just the prices they want to pay. This can help prevent unreasonably high land rates. An eligible bidder must be able to effectively operate capital, and clearly comprehend city planning."

The Ministry of Land and Resources has decided to reform the land transfer scheme in some cities now experiencing skyrocketing property prices. The overhaul aims to change the process from land being acquired by the highest bidders, a situation which can cause unhealthy competition. But some say replacing auctions with bids will not solve the core problem.

Ma Guangyuan, Economist, said, "The land acquisition process should be transparent. Bidding might cool down land price increases, but it may also lead to corruption and manipulation."

Many experts say Shanghai's reform attempt should be encouraged, but it can't change the reality that many local governments' incomes depend greatly on property transfers. Some suggest that authorities should set limits on land auction prices, and require property developers to build a certain amount of affordable housing, as well as enough public facilities.