Excess Land Speculation and Urban Development

1
Excess Land Speculation and Urban Development

• Haila A (1999) Shanghai building a Giant
  Speculative Property Bubble, IJURR
• Wu, F. (1999) Game of landed-property
  production and capital circulation, EPA
• Wong and Zhao (1999) Land Apportionment. EPA

2
Office development in Shanghai (Haila, 1999)

• Shanghai a huge construction site
• Floor space under construction increased from 17
  million m2 in 1991 to 50.7 million m2 in 1995. 
• Vacancy of Office Towers in Shanghai Estimated
  to be 34-40 in 1997. In Pudong, this was
  estimated to be around 70.
•  But such a high vacancy apparently has not
  slowed down the pace of new construction starts.

3
Capital Switching (Wu, 1999)

• Channelling of funds to land (and housing)
  development (Wu, 1999)
•  Annual housing production in Shanghai 1978,
  3.75 million m2 1985, 170.73 million m2 1995,
  356.66 million m2

4
Urban expansion and phenomenal loss of
agricultural land (Wong and Zhao, 1999)

• Proliferation of Development zones
• Nation
• 2800 development zones set up between 1991 and
  1993, mostly by local governments.
• In 1994 alone, 714,000 hectares of cultivated
  land were taken away for new development zones.
• Annual loss of agriculture land doubled between
  1980 and 1990. In that year this amounted to
  400,000 hectares.

5
Development zones

• In Guangdong
• 210,000 hectares of agricultural land
  appropriated by local governments between 1991
  and 1993.
• In mid 1990s, 23,000 hectares of former farmlands
  were laid idle in the province

6
Urban expansion plans

• Many cities have plans to double, triple or even
  quadruple their built up areas.
• Large tracts of land are being apportioned and
  held in anticipation of future price increase.
• These lands are then levelled and subsequently
  laid idle for many years.

7
Examples

• Zhuhai
• Currently has a built up area of 100 km2.
• New master plan calls for expanding its built up
  area to 700km2.
• Shanghai
• Leased out a total of 1193 plots with a total
  area of 115 km2 in 8/88 11/96.
• Over 90 of the land transactions were made
  between 1992-95.

8
Hainan

• Leased out an area of 32 km2 in Yanpu to several
  overseas consortium at a price of 3000 yuan per
  mu in the late 1980s.
• RMB 4.5 billion has since been invested for the
  improvement of 18 km2 (27000 mu) of land.
• Only 700 mu was sold and 0.7 billion yuan
  recovered.
• Today there are two empty buildings, one being a
  45-storey office tower and the other a 28-storey
  residential building, standing in the middle of
  nowhere.

9
Wong and Zhaos (1999) conclusion

• Under the gradualist land reform . China seems
  to have gotten the worst of both worlds it lacks
  the dynamics of the market and the discipline of
  the plan