China’s Zhejiang province takes ‘action plan’ to reduce unsold, unused properties

KUALA LUMPUR (July 13): The property glut monster in China has now reached Zhejiang province.

The South China Morning Post (SCMP) recently reported that the province has become the latest to fire off policies targeted at slashing a property glut.

The province’s “action plan” to meet this goal include “easing restrictions on residents buying properties in other cities, encouraging migrant workers to buy urban homes, and reducing land supply in cities that face mounting inventories”.  

On the commercial side, there are plans to allow the change of use for unused offices and shopping malls while the lease of empty buildings are being encouraged.

More than 20 provincial governments in China have implemented similar plans.

The authorities in Zhejiang are determined to slash the “number of empty properties by a fifth within 16-18 months, with branded developers taking over three quarters of the market by 2020”, the SCMP reported.

Overall, Beijing wants to reduce housing inventories and it is one of its “supply-side reforms” to handle the Middle Kingdom’s slowing economy.  

It could be a major task as people in the industry feel that many cities will still be having an oversupply situation in the months ahead.    

“In cities where the residential inventory is expected to take more than 20 months to clear, land supply should be halted, according to the provision,” the SCMP reported.

If a city takes less than eight months to clear its oversupply, then land supply can be increased, the action plan prescribed.

So far, only Hangzhou (pictured), the capital Zhejiang, has an inventory that will take less than eight months to clear, said private market monitor, China Real Estate Information System.

SCMP also reported that according to the National Bureau of Statistics, there were 722 million sq m of unsold property in China at the end of May, a 9.9% rise on May 2015.

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