Shanghai cracks down on murky property deals

SHANGHAI: The Shanghai authorities vowed yesterday to crack down on bribery in land deals as a high-profile lawsuit alleging official corruption threatened to expose under-the-table transactions in China’s financial hub. 

Backroom property deals, which analysts cite as a factor that sparked an official probe into the dealings of scandal-tainted Shanghai real estate mogul Zhou Zhengyi, are endemic in the city and much of the country, officials and industry executives say. 

Effective immediately, all land leases and sales by district governments would fall under city supervision and two years of past deals would be checked, a city government spokeswoman said. 

“We’re going to look into deals all the way back to May 1, 2001,” she said. “Even if Zhou’s case had not come up, we would have done this. Property deals aren’t all done transparently at the moment and the city wants to correct this once and for all.” 

Zhou, now under house arrest, is at the centre of a widening probe into loans acquired from the Bank of China. 

In the lawsuit, a group of residents has accused Zhou of colluding with officials to evict them from prime land in the posh Jingan district without fair compensation and that he had secured a 43,000-sq-m plot for free. 

Industry executives say the suit filed against Zhou is throwing a spotlight on Byzantine property deals. 

Aware that officials and executives profit from under-the-table deals, the government has warned against graft. Analysts say it is trying to project a cleaner image but has its work cut out. 

“The land which was leased in improper ways will be collected and put into open bidding again,” the Shanghai Daily quoted Cai Yutian, director of the city’s land bureau, as saying. 

That policy of open bidding, in place for almost a year, has proven somewhat futile. Officials do not have to sell land to the highest bidder, nor state their reasons if they do not. 

That is a reason the city lacks big global players in property apart from Hong Kong developers such as Kerry Properties Ltd and Hang Lung Properties Ltd, analysts say. 

Still, others are getting in. For example, South-East Asia’s top property company, Singapore’s CapitaLand Ltd, plans to make China a core business. 

Investment in Shanghai's real estate grew 25.6% to 24.06 billion yuan (US$2.91bil) in the January–April period versus a year ago, official figures show. – Reuters 

  • Another perspective from The China Daily, a partner of Asia News Network. 

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