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Two months have passed since the State Council released regulations that tightened the property market. They put a stop to skyrocketing prices, discouraging some developers from buying land. But despite this, many developers have been holding on to land they bought years ago without any specific plans for development.
This piece of land in the south of Beijing was acquired by China Resources Real Estate in 2007.
After a dozen rounds of bidding, the land was bought for 1.4 billion yuan, more than double the initial bidding price.
But 2 and a half years later, the land is still an idle patch of grassland.
According to relevant land regulations, if a piece of land remains idle for more than a year but less than two, developers must pay a fine equal to 20 percent of the purchase price.
After two years, the local government can take back the land at a 100 percent loss to the developer.
So why has this lot remained idle for over two years?
A nearby resident said, "The land has been like this since 2007. There was once some activity. "
A real estate agent said, "There were some workers around, but they haven't started with the foundation yet, just put up some flags. They are taking their time."
Prof. Yan Jiming from Peopel's University said, "Some developers simply dig a pit and say they have begun construction. This is one of the tricks they use to bypass the regulations. "
Even artificial progress such as this trick has benefited the developers.
In 2007, the property price was 7,000 yuan per square meter, now it is 18-thousand yuan per square meter.
Experts believe that soaring land and property prices in the past few years have encouraged developers to hold on to land for some time before developing them.
Dealing with idle lots
Hoarding is just one of the reasons for the idle land in Beijing, while others are caused by an inefficient approval process from the local government. While others still are not developed due to a lack of capital or resettlement issues. Full Story>>
For more on the effects of the idle land and possible solutions, we are joined on the line by Mr. Mo Tianquan, Chairman of Sofun.com. Full Story>>