China cuts minimum price for industrial land use
China's Ministry of Land and Resources has announced a 30 percent cut in the minimum purchase price of land for industrial use in order to boost investment.
The amount of rural land that can be converted into either industrial and building land is fixed, and contained in a detailed plan for each administrative area.
In order to stop local goverments giving away land for virtually nothing in pursuit of higher GDP figures, Beijing set minimum prices for industrial land use in January 2007.
The prices ranged from 60 yuan (US$8.77) per square meter in some counties in northwest China's Xinjiang Uygur Autonomous Region to 840 yuan per square meter in the suburbs of Shanghai.
These are now being reduced by 30 percent, as the government seeks to reach it 8 percent GDP growth target for 2009.
There is no such minimum price for building land.
Local governments tend to subsidise their discounted industrial land prices with revenues the aquired from selling building land. As a result, the price of building land extremely high, sending property prices rocketing in some regions.
This will now happen again, and may push up property prices. However it will be not be good news for property developers planning to purchase more cheaper land this year to dilute their land inventory cost.
China Overseas Land & Investment (HK:0688), for example, had said it plans to purchase 4 million square meters of land this year. The company’s land reserve was 24.8 million square metres till the end of last year.
Property shares were mixed. China Overseas Land & Investment declined 0.41 percent. China Vanke Co. (SZ:000002), the largest developer listed in mainland marekets with a land reserve of 22.8million square meters, remain unchanged. Poly Real Estate GroupCo. (SH:600048) dropped 0.92 percent.
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