Cities may alleviate housing woes

By You Nuo
Updated: 2006-05-29 08:55
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Beijingers may be moving out of the city in their droves in the next couple of years. So will many businesses, particularly small ones.

The fact is that, at least for the time being, the hopelessly high prices in Beijing's property market are viewed by nearby cities as a golden opportunity for their economies.

According to a recent report in the Chinese-language press, around 100,000 Beijingers have already become homeowners in nearby towns in Hebei Province. Add to that the individuals owning industrial facilities, such as factories and warehouses, and that number must be even bigger.

There was also a report last week about the ambitions of Tianjin, a port city some 100 kilometres southeast of Beijing, to attract property purchasers from the capital to its newly mapped out developed areas.

Agriculture is already disappearing rapidly in the cities and towns along the Beijing-Tianjin expressway. Huge tracts of land are being reclaimed for industry, as seen in Langfang, a city in Hebei Province, which is only 60 kilometres from Beijing's Third Ring Road and about an equal distance from Tianjin.

As long as there are no traffic jams, a 60-kilometre trip on the expressway in the morning rush hour can be much less of a hassle than a 10-kilometre trip on Beijing's eastern Third Ring Road.

Beijing is not the only place to witness such developments. With housing prices remaining high in places like Beijing and Shanghai  and don't forget that property investors are also coming to the Chinese mainland from Hong Kong and some foreign countries  cross-city ownership will become a widespread phenomenon.

As it is unavoidable that part of the population in big cities such as Beijing and Shanghai, especially retired people, are going to move elsewhere, we are still to be told about what kind of public services they will get in their new neighbourhoods, such as how they can use their Beijing medical insurance in Tianjin hospitals, or how to access local mortgage policies.

Not much time is left for the planners of Beijing and their counterparts from nearby cities to sit down and compare notes on their real estate programmes and related projects. But they should  in order to avoid bad planning and a waste of land resources, and perhaps most importantly, social dislocations that may be caused by mindless reclamations.

Real estate has been such a sensitive industry in all big cities. It is, without doubt, an engine quite capable of driving growth in overall commerce. But it may also be a major factor in driving up living expenses in those cities and resulting in widespread complaints from many local residents, which is currently the case in Beijing and Shanghai.

Housing prices in these cities have become one of the important factors to affect the public's evaluation of the health of the whole economy. They have already led the central government to interfere with the real estate industry from time to time.

One main target of those points has been to stabilize real estate prices. But it is also obvious that "stabilize" does not mean "bring down."

Real estate development is important when domestic consumption is weak. Despite some pockets of luxury in large cities, housing conditions remain inadequate for workers and farmers. The potential for converting old homes into new ones, and for building new cities, remains great in China. Some moderate rises in property prices in those places will benefit the economy and local residents.

But as seen in Beijing and Shanghai's housing market, and in the business practices of individual developers, both within one city and on a cross-city level, things should not be left entirely at the mercy of market forces.

Municipal officials and their business advisors should start designing ways to manage their problems by sharing opportunities with their neighbours.