A plan to slow investment in fixed assets in China by doubling
the land-use fee for new construction projects next year may have
little impact on the country's booming property market, real estate
watchers said a day after the increase was announced.
The fee-increase is part of a series of measures aimed at
protecting arable land, discouraging land abuse and curbing
investment in the super hot fixed-assets market, according to a
statement issued?by the Ministry of Land and Natural
Resources, the People's Bank of China and the Ministry of Finance
on Monday.
Local governments will also lose their share of the revenue
generated by the fees under a new formula that will divert the
funds to the provincial and central governments.
However, analysts said local governments would simply find new
ways to benefit from land sales and that the increased fees were
still just a drop in the bucket compared with soaring land
prices.
The current land-use fee ranges from 5 yuan to 70 yuan per
square meter. It depends on the location. For example in a
desirable location like Shanghai's Changning District the land use
fee will grow to 140 yuan per square meter from 70 yuan per square
meter (US$17.5 to US$8.75).
Under the new rules land-use fees will also be levied on
illegally expropriated land in a bid to prevent local governments
from under-reporting land-development deals. Experts say some local
officials pocket the proceeds of illegal land sales.
Under the new fee-collection formula the provincial-level
finance departments will take 70 percent of the revenue from
land-use fees. The central government will take the rest. The new
formula will take away the main incentive for local governments to
expropriate arable land, said Yan Jinming, a professor at Renmin
University.
"The new measures mean local governments won't keep the land-use
fee which is a part of the net income of land sales," he said. "The
doubling of the fee means they have to hand in more." However, he
added that local governments could offset the higher fees by simply
raising sales prices effectively passing on the higher costs to
developers.
Meanwhile, an analyst said the change would have little impact
on the vibrant activity in high-end real estate markets like
Beijing and Shanghai. Zhang Kunyu, a Beijing-based analyst at
Centaline China, a Hong Kong property company, said doubling
Beijing's land-use fee to 120 yuan (US$15) per square meter would
have little impact on the already sky-high land prices in the
capital.?
"Even if the fee is passed on the amount is nothing compared
with the high housing prices in Beijing," she said. Statistics show
that the average housing price per square meter in Beijing was
nearly 10,000 yuan in October.
Zhang also said the increased fees may actually end up exerting
more influence on secondary markets where land prices are
comparatively low. "They (the local governments) will think twice
(about developing land) if they have to hand in more while earning
a smaller share," she said.
(China Daily November 22, 2006)