Former PCPD unit triggers Beijing land ban

Updated: 2010-03-13 07:50

By George Ng(HK Edition)

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Former PCPD unit triggers Beijing land ban

Pacific Century Premium Developments Ltd (PCPD), the property arm of billionaire Richard Li's PCCW Ltd, has been suspended from land transactions in Beijing, making the suspension the first such action, with as yet no stated period for which it will be in effect.

Beijing Municipal Bureau of Land and Resources took the action earlier this week after Beijing Qi Xia Real Estate Development Co, a former unit of PCPD, in 2008, when it still belonged to the company, missed a deadline for development of a project in the city, the agency said in a statement issued Friday.

The Bureau said it also slapped the developer of the project with a fine equivalent to one percent of the original acquisition cost of the site.

This was the first case of a penalty being imposed on a developer after mainland authorities stepped up their efforts to crack down on land hoarding.

"We are seeking more information on this matter from the authorities," a PCPD spokesman told media Friday, declining to make further comment.

But the spokesman noted that PCPD had sold its interest in the project to Shui On Construction and Materials Ltd last year.

Earlier reports said PCPD had sold the site for about 806 million yuan, reaping 230 million yuan in pre-tax profits after deducting the acquisition cost of 510 million yuan.

Vincent Lo, chairman of Shui On Construction and Materials, yesterday confirmed in Beijing that his firm acquired the site last September and had started construction work on the project.

Shui On will study the possibility of seeking compensation from PCPD for the fine levied by the municipal agency on the project, Lo said.

Authorities have ramped up efforts to crack down on speculative land hoarding after Premier Wen Jiabao recently vowed to curb soaring home prices .

"The government will resolutely curb the precipitous rise of housing prices in some cities and satisfy people's basic need for housing", Wen said in a speech delivered at the opening meeting of the annual full session of the National People's Congress (NPC), the country's top legislature on March 5.

On Thursday, the Ministry of Land and Resources unveiled stricter measures to crack down on land hoarding.

Developers must make a 50 percent down payment on all land auctioned off within one month of signing a contract, or face the prospect of losing the land, along with their deposit, which is equivalent to 20 percent of the suggested land price, the ministry said in a new directive.

The moves came after latest data from the National Bureau of Statistics indicated that residential prices in 70 major cities jumped 10.7 percent in February from a year ago, the fastest growth in home prices in two years.

(HK Edition 03/13/2010 page2)