China's first property taxes kick in

China's long-awaited first property taxes took effect on Friday in Shanghai and the mega-city of Chongqing in the southwest, as the country tries to reform its booming real estate market.

People buying higher-end second homes in Shanghai, China's wealthiest city, and Chongqing, home to 30 million people and the country's fastest-growing municipality, now have to pay a 0.4-1.2 percent annual tax, officials said.

But Chongqing Mayor Huang Qifan said the pilot tax programmes were not aimed at clipping the soaring real estate prices that are a top consumer concern across the country.

"People will ask if I think the real estate tax will definitely bring property prices down.... No one believes the property tax will hit the nail on the head and bring prices down," Huang told a news conference late Thursday.

He estimated the tax would generate 150 million yuan ($22.8 million) in revenue for the municipal government this year, according to an official transcript, although state media cited him as saying 200 million yuan.Michael Klibaner, head of China research for property company Jones Lang LaSalle, said the ultimate aim of the tax was not to rein in prices, but rather to prevent hoarding of properties, a pressing problem in recent months.

"Previously there was very little holding cost for residential property because many people paid 100 percent cash for these properties.

Now the holding cost is no longer zero," Klibaner told AFP.

"When the holding cost is zero, it's very easy to let these homes sit idle.

It doesn't cost you anything to let them sit there. It's like gold," he said. "Now there's a holding cost -- the hope is it will change the way people perceive real estate as an asset class.

"The two cities announced different tax pilot projects almost immediately after the State Council, China's cabinet, said it had approved the trials on Thursday.Shanghai announced a flat 0.6 percent tax on new second homes that are double the average market price.

New second homes costing less will be subject to a 0.4 percent tax.Chongqing introduced a progressive tax ranging from 0.5 percent for homes that are double the market average price and rising to a maximum of 1.2 percent depending on the value of the home.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

Property prices in China's major cities posted their fourth straight month-on-month rise in December and sales picked up pace, according to the latest government figures.Prices in 70 major cities were up 0.3 percent last month from November and were 6.4 percent higher than a year ago.

The annualised surge peaked in April, when prices soared 12.8 percent, but growth has since slowed.But prices have remained stubbornly high, despite a range of government measures such as hiking minimum down-payments on property transactions to at least 30 percent in a bid to avoid a damaging price bubble.

By AFP

China to launch property tax on trial basis

China said Thursday it would start imposing property taxes on homes in some cities on a trial basis, in the government's latest move to try to cool the red-hot real-estate market.The State Council, China's cabinet, approved the trial but said the tax levy method would be decided by the governments of the provinces where the cities are located, the official Xinhua news agency said. It gave no more details.

A statement posted on the finance ministry's website said the tax would help "adjust income distribution and promote social equality.""People's living standards have hugely improved, but the income gap is also widening.... Property tax is one important method to adjust income and wealth distribution, and levying property taxes helps reduce the wealth gap," it said.It added the tax would help "rational" home-buying.

The trial is the latest in a range of measures taken by the government to curb spiralling property prices, as polls have shown the difficulty in affording housing has become the top consumer fear.On Wednesday, the government raised the minimum down payment for second homes to 60 percent of the property's value and ordered authorities to rein in real estate prices.

The central bank has also raised interest rates twice since October, and has increased the amount of money banks must keep in reserve in a bid to curb lending.But despite these policies, property prices in China's major cities have continued to increase, posting their fourth straight month-on-month rise in December as sales picked up pace.

The statement did not mention which cities would trial the tax, but Xinhua said Shanghai was one of them and had already set the tax rate at 0.4 to 0.6%.

The southwestern municipality of Chongqing is also one of the trial locations.According to a report on popular web portal sina.com, authorities in Chongqing have set the tax rate at between 0.5 and 1.2%.Chongqing mayor Huang Qifan estimates revenue from the tax will reach 200 million yuan ($30.4 million) and will be used to build public housing, the report said.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

By AFP

China property prices climb in December

SHANGHAI: Property prices in China’s major cities posted a fourth straight month-on-month rise in December and sales picked up pace, data showed yesterday, despite efforts to cool the market.

Prices in 70 major cities were up 0.3 per cent last month from November and were 6.4 per cent higher than a year ago.

The month-on- month gain in November was 0.3 per cent.

The annualised surge peaked in April, when prices soared 12.8 per cent, but growth has slowed since then.

By AFP

Sino-Saudi plan for 7-star hotel

BEIJING: Beijing authorities plan to build a "seven-star hotel" modelled after Dubai's Burj Khalifa - the world's tallest building - in a US$1.3 billion (US$1 = RM3.07) joint project with Saudi Arabia.

The hotel will be erected in western Beijing's Mentougou district some 30 kilometres from the Chinese capital's centre, the state-run Beijing Morning Post said in a Thursday report, quoting a local parliamentary meeting.

A district official, who declined to give his name, confirmed the project and its price tag in comments on Friday.

He said that the Saudi side was expected to foot the entire bill but he refused to provide other details, such as why such an expensive project would be located in the underdeveloped rural area.

The Beijing Morning Post said the building's design would be patterned after the 828-metre Burj Khalifa's distinctive slender, tapering design, but did not say how tall the planned structure would be.

The "seven-star" classification is not officially recognised internationally, as no formal body awards ratings above five stars, but there are a handful of luxury hotels around the world that still use the distinction.

Dubai's Burj Al Arab is one such establishment, and in Beijing, the Pangu 7 Star Hotel built near the 2008 Olympic stadium also claims the rating.

By AFP

China may launch first-ever property tax in 1Q

SHANGHAI/BEIJING: China is set to further clamp down on the country's buoyant housing market by imposing a long-debated property tax for the first time in the southwestern city of Chongqing, domestic media reported on Monday, Jan 10.

Chongqing has "in principle" won approval from the Ministry of Finance and may introduce the property tax as early as this quarter, the China Securities Journal cited the city's government as saying.

Analysts expect the tax to be about 1 percent, the Journal said.

China has debated for many years about having a property tax but held back out of fears it may seriously harm the market.

Domestic media reports in recent months suggest, however, that China's government is finally warming to the idea and may impose a property tax on a trial basis in several cities including Chongqing, Shanghai, Beijing and Shenzhen.

The China Business News said on Monday that Chongqing is likely to only tax high-end properties, in contrast to Shanghai, which reportedly will only tax selected second homes.

Chiþna has taken a slew of measures to cool its red-hot property market since late 2009 as part of efforts to fight speculative "hot money" flowing into the country.

Despite the measures, house prices in China's major cities soared by more than a fifth last year.

Analysts welcomed the tax as a way to restrain the market.

By Reuters

China plans US$1.3b 'seven-star hotel'

BEIJING: Beijing authorities plan to build a "seven-star hotel" modelled after Dubai's Burj Khalifa -- the world's tallest building -- in a US$1.3 billion joint project with Saudi Arabia.

The hotel will be erected in western Beijing's Mentougou district some 30 kilometres (18 miles) from the Chinese capital's centre, the state-run Beijing Morning Post said in a Thursday report, quoting a local parliamentary meeting.

A district official, who declined to give his name, confirmed the project and its price tag in comments to AFP on Friday.

He said that the Saudi side was expected to foot the entire bill but he refused to provide other details, such as why such an expensive project would be located in the underdeveloped rural area.

The Beijing Morning Post said the building's design would be patterned after the 828-metre (2,717-foot) Burj Khalifa's distinctive slender, tapering design, but did not say how tall the planned structure would be.

The "seven-star" classification is not officially recognised internationally, as no formal body awards ratings above five stars, but there are a handful of luxury hotels around the world that still use the distinction.

Dubai's Burj Al Arab is one such establishment, and in Beijing, the Pangu 7 Star Hotel built near the 2008 Olympic stadium also claims the rating.

The announcement of the Mentougou project comes at a time when China is attempting to crack down on high-end developments and use more land for affordable housing, amid general discontent over soaring property prices.

By AFP

GuocoLand moves to integrated development

Malaysia’s Hong Leong Group property arm, GuocoLand (China) Ltd (GLC), is set to go bigger into integrated development in China from its early years of single building projects when it first set foot in that country.

GLC managing director Violet Lee said that after GLC’s flagship project, Guoson Centre, won the Best International Mixed-Use Development award last week in London, she was positive that integrated development was the way to go for the company.

Taking the prize at the International Property Awards had given her more confidence to continue with even bigger integrated development projects, she said.

“Over the years, we have transformed from single building projects to mega integrated projects of 100,000 sq metres, 600,000 sq metres,” she said.

Now, the company “will do bigger,” she told Malaysian, Singaporean and Hong Kong journalists in London last weekend after the award ceremony

“The next project in Beijing is going to be 1.4 million sq metres and in Tianjin 1.2 million sq metres, even bigger, double the size I am doing now,” said Lee who initiated the Guoson Centre development.

She said that after winning the award, at least she knew that she was doing the right thing and that she had been recognised for producing quality products.

“So if I continue with this development, this way of doing things I should not be wrong,” she said, adding that GLC’s focus would be on integrated developments in the years to come.
GLC’s developments are in prime locations in Beijing, Shanghai, Nanjing and Tianjin.

Lee said that to-date GLC, which was established in 1994, has a land bank of some 2.5 million sq metres valued at over US$3.5 billion in Beijing, Shanghai, Nanjing and Tianjin.
“We are not intending to move out of these four cities. They will always be within these four cities,” she addded.

The award winner Guoson Centre is a sustainable and fully-integrated development brand in Beijing and Shanghai. Comprising a large-scale cosmopolitan Guoson Mall, five-star British-styled Guoman Hotels, Grade A Office Towers, high-end residences, and expansive Singapore-inspired “Garden City” landscaping, the Guoson Centre combines aspects of ‘Work, Live, Play’ in resembling a city within a city.

Built specifically on prime locations that integrate two of the largest transportation hubs in the world, Guoson Centre is set to provide local, national, and global interconnectivity while satisfying the market’s needs for eco-friendly environments and cosmopolitan lifestyles. The centre is strategically located to provide easy access to some of the largest transportation hubs in the world, connecting urban, national and global centres.

Lee said that the US$2 billion 600,000 sq metres Beijing Guoson Centre is 90 per cent completed while the slightly smaller US$600 million Shanghai centre is on its first phase.

The US$80 million Guoman Hotel Shanghai, which is located within the Shanghai Guoson Centre, is already opened for business while the Guoman Hotel Beijing will open in July next year.

Touching on the hospitality sector, especially the hotel sector, where GuocoLand has ventured into, Lee said that despite the stiff competition there was still a market for hotels if ”you differentiate yourselves from the rest of the people in the industry.”

She noted that two years ago when China hosted the Olympic Games a lot of money were thrown into the hospitality business, with hotels sprouting out everywhere coupled with entertainment complexes, restaurants and malls. Similar facilities also emerged during the recent Shanghai Expo which was held from May 1 to Oct 31.

“But can you sustain this, that is the big question. To me, I think a lot of it will depend on the products that you are giving to the market. That means the hotel itself.”

Another factor would be the services one is providing because “branding comes not only with the products, a lot of it with the software too – the services.”

“When we march into a hotel, no bell boy to take your luggage, you walk to the front desk and they are talking on the phone and do not even want to look at you, I don’t think you would want to go back to the same hotel.

“So is there a market for hotels? The answer is yes, Despite the competition, there is a market. But you have to differentiate yourselves from the rest of the people in the industry," she said. So how is this done apart from having products that are spectacular?

“To me, I always emphasise on the different kinds of services. People say in a hotel you are looking for comfort, you don’t want to feel inhibited. You want to be comfortable. You want to know that people are looking over you. Actually in Guoman (hotels) we emphasise a lot on these services."

For example, she said that the Guoman Hotel Shanghai opened a few months ago is a “true blue five-star standard hotel” where the design was done from scratch.

“From now on all new hotels will be like the hotels in China. Those are our own own hotels we build from scratch. The next one in Beijing, you will see the Guoman signature."

Apart from the hotels in Shanghai and Beijing, one is being planned in Nanjing, and there would also be a hotel in Tianjin, she said, adding that all these hotels had and would have the Guoman signature.

Britain’s Guoman, which runs the hotels, has a 30-year history in hospitality management.

Lee was reported to have said at the launching of the Guoman Hotel Shanghai that with Guoman''s 30-year history in hospitality management and its uniqueness in services, she was confident of the group''s future in the China market.

By Bernama

GuocoLand China wins property award

LONDON: Malaysia’s Hong Leong Group property arm, GuocoLand (China) Ltd (GLC), was voted the Best International Mixed-Use Development at the International Property Awards here over the weekend for its US$2 billion flagship project Guoson Centre.

The achievement sets an important milestone for China as it is the first time that one of its mixed-use projects has been honoured for "Best International" in 16 years since the awards’ inception, GLC said.

GLC group managing director Violet Lee said that winning the award showed that “China can actually construct quality projects that can top the world.”

“Winning the world’s best means we have reached a certain point namely world recognition of the efforts that we have put in,” she told reporters from Malaysia and Hong Kong here Sunday.

Lee said that one of the factors why GLC won the award against other nominees, which included those from the Midle East like Bahrain Bay with projects worth more than US$6 billion, was its “community angle.”

By Business Times

China cools hot property mart

BEIJING: Some of China's top trust companies have halted property-related lending and investment following a regulatory order, four sources told Reuters yesterday.

Seeing risks in rapid credit expansion to real estate projects, the China Banking Regulatory Commission (CBRC) last week instructed trust firms to assess the risks posed by their portfolios in a fresh move to rein in the red-hot property market.

The CBRC ordered a self-examination last Friday in a document, and our application to invest in a property project was turned down by our company on the same day.

I don't know whether it's a regulatory requirement or a decision by the company, a source at Ping An Trust told Reuters yesterday.


Pedestrians walking past a property advertisement billboard showcasing various building projects put in front of an old residential building in Beijing. — AP

Two sources close to Zhongrong International Trust cited a company document as saying that it had halted all new plans to invest in the property sector, except affordable housing a niche strongly supported by the government.

One of the sources added that China might order a complete halt to all property-related businesses by trust firms.

A source at China Credit Trust Co Ltd said his company had adopted a more prudent approach following the CBRC's order but had not yet halted property business.

Funds from trust companies have been an important alternative channel for Chinese developers to raise capital as the country has tightened controls on bank lending.

Trust companies are hybrid institutions combining features of commercial bank lending, private equity and asset management. Until recently they had been loosely regulated and had expanded rapidly.

By repackaging loans into equity- or fixed-income-linked products, trusts have been able to offer bank clients, typically rich individuals, much more attractive yields than are available on certificates of deposit.

The CBRC in July ordered trust companies to halt the launch of wealth-management products via banks.

Property-related trust investment totalled 150 billion yuan (US$22.6bil) in the first 10 months of this year, compared with 40 billion yuan in the whole of 2009, according to Use Trust Studio, a private data provider.

By Reuters

SunCity unit in JV for RM4.3bil project in China

PETALING JAYA: Sunway City (S’pore) Pte Ltd (SCS), a wholly owned subsidiary of Sunway City Bhd (SunCity), has entered into a joint venture to develop a project with an estimated gross development value of RM4.3bil in Sino-Singapore Tianjin Eco-City, China.

SunCity told Bursa Malaysia yesterday that SCS had signed an equity joint-venture (EJV) contract with Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd (SSTEC) to set up a joint-venture firm for developing 27.96ha in the township.

“The preliminary feasibility study of the proposed development features mixed residential and commercial development complemented by integrated and high quality amenities,” it added.

SunCity said the proposed development would span five years with the earliest start in March 2011 and an expected completion in mid-2015.

SCS will be the majority shareholder of the EJV company.

SSTEC, the master developer for the Tianjin Eco-City, is a 50:50 joint venture between a Chinese consortium led by Tianjin TEDA Investment Holding Co Ltd and a Singapore consortium led by the Keppel group.

By The Star

Hong Leong arm, GuocoLand, invests RM9.3bil in China

It is hungry for more land bank in China and GuocoLand China Ltd group managing director Violet Lee said the company had allocated about 6.6 billion yuan (RM3.1bil) to increase its land bank

SHANGHAI: GuocoLand Ltd, which is a Singapore-listed property investment arm of Malaysian conglomerate Hong Leong Group, will hunt for other land in China after its setback in acquiring a plot in Shanghai.

GuocoLand China Ltd group managing director Violet Lee said the company had allocated about 6.6 billion yuan (RM3.1bil) to increase its land bank but it only managed to secure one of the two plots it bidded in Shanghai.

The successful bid is for a 47,647 sq m site in the Changfeng Ecological Business District in the Putuo district which was sold at the price of 3.04 billion yuan (RM1.4bil).

“There will be leftover of funds and we will use them and continue to bid for other land,” she said after a signing ceremony in Beijing last week which saw the entry of the five-star Poly International Cinema into Beijing Guoson Mall.


Violet Lee and Liu Debin at the signing ceremony in Beijing on Oct 20.

To date, GuocoLand China has invested an estimated US$3bil (RM9.3bil) in China with an ever-growing land bank of two million square metres in Beijing, Shanghai, Nanjing and Tianjin.

Beijing Guoson Mall, spanning 160,000 sq m, is located in GuocoLand China’s flagship project Guoson Centre which has a total area of 600,000 sq m. The mixed development project is smacked within Dongzhimen, which is regarded as Asia’s largest transportation hub with three subway and light rail lines, dozens bus routes and a daily traffic flow of 800,000 commuters.

The similar development has been emulated in the Guoson Centre in Changfeng, Shanghai. The 500,000 sq m is located at the crossroads of the business zones of Zhongshan Park, Gubei and Hongqiao and only 10-minute drive from the Hongqiao transportation hub.

It will also include a Guoson Mall, a Guoman Hotel and office and residential buildings.

The newly-acquired land is situated in the same area as the Guoson Centre in Changfeng and will be used for residential development.

In 1998, GuocoLand China developed its first commercial building called Corporate Square in Beijing’s Financial Street. Only in the last few years, the company entered Shanghai, Tianjin and Nanjing in a big way by building upscale condominiums.

The company is considered a late bloomer in China’s real estate industry and is now up against heavyweights like CapitaLand, Keppel Land, Cheung Kong Holdings, Kerry Properties and Sun Hung Kai from Singapore and Hong Kong.

However, GuocoLand China builds its name as the transportation hub specialist.

“We had come to China many years ago but we were very low profile unlike others who used to boast about their presence,” Lee said.

“This is the right time to come here as China is flourishing into the world’s second biggest economy and we want to participate in its rapid development in this period.”

She said there were many successful approaches that the company could emulate from its projects in Singapore and Malaysia for China but it would prefer to build homes and commercial properties suited for the local market.

“We have built many green buildings in many places. We want to showcase this in China and are proud to say that we have done quite a lot to green the Guoson Centre,” she said.

“I believe it’s hard to find a 40,000 sq m rooftop garden on the complexes in Guoson Centre.”

With the signing of tenancy agreement between GuocoLand China and Poly Film Investment Ltd, Guoson Mall in Beijing will house one of the most advanced cineplexes in China. The cineplex will meet international standards of high-end and eco-friendly cineplex and occupy 7,000 sq m with nine screens and over 1,500 seats.

Poly Film general manager Liu Debin said the Guoson Mall’s brand positioning and vision was in line with Poly Group’s aim of providing the best service.

“Through its strategic location and well-built business atmosphere, we see enormous commercial value and potential. We are sure that our cooperation will lead to a win-win result,” he said.

Lee said GuocoLand and Poly would establish a long-term partnership and look into further cooperation in other projects in China, especially the Guoson Centre Shanghai.

She said being strategic partners would bring benefits to both companies as they could market themselves even better.

“It’s a rare opportunity to develop such a huge project in this strategic location. We will do our best to fulfil our promise to bring our best development to Dongcheng district (where Guoson Centre Beijing is located) and do our part to improve the people’s lifestyle,” she said.

Guoson Mall is scheduled to open early next year. The Guoson Centre project won the Asia Pacific International Property Awards (APIPA) 2010 for the Best Mixed Use Development in April.

This is the first time a Chinese development won the prestigious award.

By The Star