REAL estate experts have expressed mixed opinions on how to interpret some changes in Shanghai's most recent land tendering notice, but generally agree that such flexibility is important in developing a healthy property market.
The land tendering notice, the first this year by the Shanghai Housing and Land Resources Administration Bureau, has attracted media and industry attention by stating for the first time that deposits for land bidding can now not only be paid in yuan, but also US dollars, Hong Kong dollars, Japanese yen and euros.
"Such a change is definitely a good one as it encourages fair competition among domestic and overseas real estate developers," said Yin Kunhua, a former professor at Shanghai University of Finance and Economics, who has done extensive research on the industry for decades. "It doesn't make sense to impose such restrictions on overseas developers. And with transparent competition, domestic developers may be able to further improve their strength."
Qualified developers, as long as they are playing by the rules and commit long-term to the local market, should be welcome no matter if they are Chinese companies or overseas entities, Yin added.
If deposit payments are restricted to yuan, it could be difficult for overseas companies that do not have access to funds on the Chinese mainland, industry people said.
Chen Zeming, an associate researcher at the real estate research center of the Shanghai Academy of Social Sciences, shares a similar opinion. "It is a general trend to continue with the open-up policy and obligatory restrictions on some issues may not be good for the real estate market," Chen said.
However, not everyone has the same view on the government notice. Terrence Tang, international director of Jones Lang LaSalle China Investment, said the issue probably has nothing to do with loosening restrictions levied on overseas property companies. "From my point of view, it was purely a currency move because by accepting four other currencies, demand pressure on the yuan could ease a little," Tang said.
Successful overseas land bidders will still need approval from the State Administration of Foreign Exchange for payment, the recent notice said. Thus some industry people remain cautious.
"I think it is still a little bit early to say that such changes in the land bidding process indicates a relaxation on overseas investment in the city's real estate market," said an industry insider who asked not to be identified. "Many things haven't been made clear at the current stage and we'd better wait and see over a longer period of time."
In the second land tendering notice of 2006, released in October, foreign nationals, legal representatives and organizations were allowed to bid on land auctions. The previous policy said that only foreign investors registered in China for at least one year qualified as bidders.
The rule was imposed after a joint announcement by six ministries to impose limits on foreign investment in the real estate market in July 2006. The aim was to prevent overseas capital from pouring into the overheated sector and further pushing up housing prices. It made purchasing land difficult for most overseas investors. The rule required a firm to establish an enterprise first and inject at least half of its investment as registered capital one year before bidding.
Industry insiders said in order to obtain land, some overseas investors had to invest through subsidiaries or join forces with local partners.
Source:佚名