MNI EXCLUSIVE: China Regions To Sell Land, Aid Developers

By Wanxia Lin

     BEIJING (MNI) - Local governments in some Chinese regions are set to ramp

up sales of land to support developers at a time when the economy is struggling

under the impact of coronavirus and to bolster their own finances as the

epidemic pushes up spending, government advisors told MNI.

     Regional authorities may also provide financial support for developers, to

ensure they do not run out of funds or fail to complete construction work, said

Qin Hong, director of the Urban Renewal Research Center at the National Academy

of Development and Strategy (NADS) and a former director of the Policy Research

Center at the Ministry of Housing and Urban-Rural Development.

     While local administrations have recently moved away from large-scale land

sales to fund short-term spending, increased fiscal transfers from central

government since last year have been insufficient to compensate for the loss of

revenue, leaving them keen to start disposing of property assets again,

according to a research fellow in a think tank who asked to remain anonymous.

     Large developers with moderate debt levels, and especially listed

companies, should be willing to buy if more land becomes available, despite the

impact on demand for homes from coronavirus, both advisors said. Medium-sized

developers, seeking growth, should also be in the market, Qin added.

     Land markets in first- and second-tier cities should return to activity

from the middle of the second quarter, when the epidemic is expected to ease,

but developers' appetite may be limited in some third- and fourth-tier cities

with high housing stocks, the anonymous source said.

     --RELAXING PRICE CEILINGS

     So far, at least 10 cities including Wuxi and Shanghai have rolled out

measures to support developers, such as allowing them to delay payment of

land-transferring fees. In the first week after the Chinese New Year Holiday

ending Feb. 14, Beijing municipal government sold six lots of land without

setting home price ceilings in advance, despite the fact that many real estate

companies were still closed due to the virus, said Yan Yuejin, research director

at the Shanghai E-House Real Estate Research Institute.

     Relaxing price ceilings will make purchases more attractive for developers,

said Yan, who expects a significant increase in the supply of property after the

epidemic eases.

     Neither advisor expected significant measures to stimulate demand for

housing, with authorities remaining wary of fueling property bubbles and

insisting on their policy stance that "houses are for living in not speculating

on".

     Kuang Weida, director of the Urban and Real Estate Research Center at the

NADS, agreed that national measures to boost property demand would be unwise.

But, with demand for housing sapped by economic disruption and loss of income,

authorities in the worst-hit areas may have to consider measures to help buyers,

such as lowering deposit requirements, reducing mortgage interest rates or

cutting taxes, he said, although he added that restrictions on home purchase

aimed at deterring speculation should not be lifted.

     Some local governments should be cautious about increasing land supply if

demand is depressed, particularly in areas hit hardest by the virus, Kuang said,

noting that the impact of the epidemic may last a year.

     On Feb. 14, Hengyang, a third-tier city close to Wuhan, the epicentre of

the coronavirus, became the first urban area to roll out stimulus to lure

homebuyers, announcing it would waive taxes on purchases.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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