Following the division of forces into ten routes to survey land conditions and the introduction of a catalog of restricted and prohibited land use projects, recently, Dong Zuojie, director of the Department of Planning at the Ministry of Land and Resources, stated at the second joint information conference of ten ministries to curb excess capacity that the Ministry of Land and Resources will introduce subsequent policies to crack down on developers hoarding land and expose major illegal cases. Dong Zuojie believed that there is currently no issue with insufficient land supply. However, due to behaviors such as developers hoarding land, the actual land supply may be insufficient. He pointed out that in the past two years, some land has not been used, part of which may be stockpiled by developers and not promptly used for development and construction. "We should find ways to bring this portion of the land into use."
Information from multiple sources provides ample context for the frequent actions of the Ministry of Land and Resources. The Development Research Center of the State Council released the "Research Report on the Competitiveness of China's Real Estate Enterprises," which showed that in 2008, the top 100 real estate enterprises in China hoarded as much as 38.1 million square meters of land, an increase of 30.8% compared to 2007, with the largest developer having a land reserve of 45 square kilometers. The latest report issued by the Research Department of the Construction Bank of China also showed that from the beginning of 2001 to May 2009, real estate developers cumulatively purchased 2.162 billion square meters of land but only actually developed 1.296 billion square meters, meaning a significant amount of land was stockpiled and resold.
Industry insiders have revealed that the original interest motivation for developers to hoard land is not hidden and can be roughly summarized as follows: financing, developing land reserves, expanding scale, speculating on land prices, and preserving value. Regarding the tens of millions of square meters of land reserves claimed by many listed companies, experts believe that according to the requirement of the Ministry of Land and Resources that full payment must be made to obtain a land certificate, many of the so-called "land reserves" claimed by listed companies have not been officially recognized. Additionally, IPO real estate companies hoarding land for listing purposes do not comply with the regulations of the Ministry of Land and Resources regarding the disposal of idle land. A recent survey by Centaline Property of land data in 12 cities across the country, selecting 40 well-known development enterprises including Vanke, Gemdale, and Henderson Land, found that among the 270 plots of land obtained in the public land market from 2003 to the first half of 2009, 57% had not yet entered the market, with 27% remaining undeveloped. Among these plots, 28 plots acquired between 2003 and 2007 remain undeveloped to this day.
In addition to the type of land hoarding aimed at pleasing capital markets, what is more criticized is the pure land speculation behavior. Yingke Dayan became a negative example after making over 200 million yuan in three years through the Gongti No. 4 plot. An unnamed insider in the real estate industry complained to the reporter that the media excessively focuses on who obtains the land king and which land king remains idle, but what truly deserves attention are those who hoard land through gray methods, waiting for the right price to sell. "They don't develop it, and after a few years, they resell the land or even sell it back to the government, earning huge profits. Compared to obtaining land through formal public procedures, this is the bad behavior that should be condemned and exposed."
The management measures accompanying land hoarding were born early. As far back as 1999, the "Idle Land Disposal Measures" clearly stipulated that for real estate development land that remains undeveloped for two years, the government will legally reclaim the land use rights free of charge. Since then, every time there was a peak in land hoarding, the management measure of "a fine if not developed within one year, reclamation if not developed within two years" would be repeatedly emphasized. Embarrassingly, despite repeated orders, enforcement remained ineffective. According to incomplete statistics from relevant departments, since the introduction of the penalty policy, fewer than five parcels of idle land have been reclaimed free of charge.
Senior researcher Hui Jianqiang of the Shanghai E-House Real Estate Research Institute believes that the deeper reason why land hoarding continues unabated lies in the distribution of government and enterprise interests, and whether the current land auction process is truly transparent requires examination. Moreover, law enforcement needs to be strengthened. "The collection of idle land fees only serves as a deterrent to some small investors or developers, but it is completely ineffective for large developers. In the decision-making process of many developers when acquiring land, idle fees or bank interest are not even considered because, in the process of land appreciation, whether it's the time value or spatial value of the land, there exists a large profit margin."
Dong Zuojie stated that follow-up policies by the Ministry of Land and Resources targeting the curbing of land hoarding will soon be introduced. Once again, the heavy-handed measures have been raised high, and the market awaits how they will fall. (Zhang Xiaoli)