Study highlights recommendations for sustainable urban development in China

During a presentation at the Cityscape Conference in The Sheraton Hotel, Shanghai today (Friday 25 May) David Pitcher, Chairman of the Royal Institution of Chartered Surveyors (RICS) in China, outlined 16 different recommendations for the sustainable growth of the Chinese property market and the wider socio-economic issues.

'The property-led development model as currently practised by Chinese cities should be replaced by a plan-led development model to achieve sustainable urban development and social harmony. The status of the property industry should be changed from a pillar industry to one of the important industries to help scale down property-led development, 'commented Pitcher.

The research paper had mixed views about the new property laws however. Chinese citizens now have the rights to land ownership, but there is no inheritance law. The rights of owners and owners' associations also need to be addressed; associations cannot represent individual buildings if they are a part of a larger complex or estate, posing conflicts of interest for owners with differing individual property issues.

Granted Land Use Rights (GLUR) need to be reviewed, no law currently exists to address the issue of renewals, neither the length nor the cost. Property descriptions are also a cause for concern; no legislation exists to curb misleading information provided by developers or their agents. Too many institutional bodies are also involved in development and policies need to be streamlined to ease the process, the same applies to Land Use Plans (LUP) there is little coordination between government departments.

The government also needs to understand and implement policy to value land correctly. 'They particularly need to address the cost of land versus the potential value of that land once built-up,' said Pitcher.

Housing density is also an issue, actual building land is scarce and with no National Planning Inspectorate (NPI), no guideline is available for developers and governments need to manage the market in this respect. The minimum density for ordinary housing should be 400 dwellings per hectare in major cities, 300 in second tier cities and 200 in towns. Development also needs to cater for the rapidly changing demographics in the aftermath of not only the one child policy but also the urbanisation issues.

Housing tax does not exist in China and although reluctant, government should introduce this, especially with high-end luxury developments. Currently government sales and capital gains tax can add up to 30 per cent to a transaction; these levies should be reduced and applied in the form of a housing tax or community charge. This would generate funds to sustain further urban investment.

Finally leasehold issues also need to be addressed; at present twenty years is the maximum permissible, which is not long enough for developers to attain a respectable ROI or to encourage a budding REIT market.