China farmer

China’s 700 million farmers have mostly missed out on the country’s economic boom. In 2006 Vice Premier Wen Jiabao correctly noted that rural poverty and land grabs that strip farmers of their land were a ‘key source of instability’ in China. Two years later, the situation is just as dire.

A raft of reforms recently announced may help. But if history is any guide, the reforms will provide only a superficial fix.

The main, still unaddressed, problem is farmers’ lack of full property rights. Unlike in cities, where owning property is now permitted, almost all farmland in China is owned by village collectives.

China farmers

Under a reform passed a decade ago, farmers ostensibly have 30-year land-use rights that allow them to till the soil. But corrupt local officials have little trouble stripping these rights through arbitrary ‘reallocations.’ These land grabs result in tens of thousands of protests in rural China every year.

The new set of reforms is being hailed by state media as a ‘landmark,’ but they still don’t give farmers the ownership rights. They do, however, make it easier for farmers to sell or transfer their land rights, which could unlock around $500 billion in land assets. They are also intended to make it harder for local officials to seize farmers’ land without compensation.

Much more HERE.
Source: Wall Street Journal Online

Self-help groups getting together to buy property.

Thousands of would-be home buyers are banding together in China to negotiate discounted prices with real estate developers in a unique solution that some hope could help prevent a property market crash.

China has so far escaped the worst of the global credit crunch, but borrowing conditions have been tightened to fight inflation — keeping many consumers off the property ladder.

At the same time, overstretched developers are unable sell houses to generate revenue — or borrow more money from banks — so they can pay down their debts.

Since July, more than 30,000 people have signed up to the ‘Housing for 10,000′ a group buying web site created by Zou Tao, a 34-year-old activist in Shenzhen, a booming city across the border from Hong Kong.

He said of those who signed up, about 500 have already succeeded in buying homes from developers at discounts ranging from RMB50,000 to RMB100,000 ($7,350 to $14,700), he said.

Others have since copied the model in cities such as Xian, Wuhan and Jinan.
Source: The China Post

This is probably not the founder of Blackstone but the Internet was down and I had a plane to catch and he seems a pleasant cove.

Private equity firm Blackstone Group has canceled a property deal with VXL Capital, for the $160 million acquisition of a commercial building in Shanghai.

Blackstone was originally planning to buy four buildings in Shanghai, for up to $1 billion, but has ditched the acquisition of a 90% stake in Changshou Commercial Plaza.

The report said that the seller, Hong Kong-based VXL Capital, and the American equity firm could not agree on the price, reported to be around $160m. VXL apparently bought the entire property in March 2006 for $86 million.

It is also not clear whether Blackstone will agree to buy the Skymall Shopping Centre in Shanghai from Chinese developer Super Ocean Group.

The global financial crisis and national forecasts that Chinese property prices will slide may have added to Blackstone’s withdrawal.
Source: Biz Update

Changes in property rules suggested

Economic growth should not be overly dependent on the property sector, warns a report from the Chinese Academy of Social Science (CASS).

The report followed the CASS’s investigation into the US subprime mortgage crisis in June. It suggested  the government should rethink the development of the real estate sector, and clarify their role in the market.

Local governments used to bank on the real estate sector for economic growth and land transfer fees were regarded as the main source of local fiscal income.

Statistics from the National Bureau of Statistics show that investment in the real estate sector last year reached RMB2.53 trillion yuan ($370.13 billion), contributing 10.25% to the country’s GDP.

The report suggested that the government reform the housing fund management system and establish housing mortgage banks and companies dealing in securities to back housing mortgages.
Source: China Daily

Jones Lang LaSalle

Jones Lang LaSalle Head of Research (Asia Pacific) Dr. Jane Murray said in the report Asia Pacific Property Digest Second Quarter 2008, that ‘The Asia Pacific property markets are entering a correction phase that will continue over the next 12 months at least.’

Jane Murray, however, noted that in contrast to previous cycles, the extent of the downturn is expected to be moderate in most markets in Asia Pacific given the underlying sound fundamentals.

She  pointed out that potential oversupply is becoming an issue in some parts of the region, notably tier I cities in China.

The Jones Lang LaSalle report highlighted that the retail sector has continued to perform well over the first half of the year, with Hong Kong and Shanghai posting the highest rental growth in the region.

However, it said that emergence of more difficult trading conditions, coupled with new supply coming on line in number of markets is likely to result in more moderate rental growth going forward.
Source: Trading Markets