The Situation of House and Land Prices Soars in Shanghai Free Trade Zone(FTZ)

Establishment of FTZ

Established on September 29, 2013, Shanghai Free Trade Zone is the first free-trade zone launched by the Chinese government. It covers an area of over 29 km2, including four existing bonded zones —Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan 00123f55b17b138f811c09Free Trade Port Area and Pudong Airport Comprehensive Free Trade zone. As a testing ground , there are many economic reforms ,video game consoles will be allowed in this zone.

The Free Trade Zone will permit yuan convertibility and unrestricted foreign currency exchange, and a tax-free period of 10 years for the businesses in the area. Although it was initially reported that the Free Trade Zone will also have unrestricted access to the internet (with bans on sites such as Facebook lifted), the official Xinhua News Agency has stated that Internet restrictions would not be lifted.The Free Trade Zone will also be the first area on mainland China to allow access to politically sensitive websites (such as Facebook, Twitter, and the New York Times)

Soaring price of House and Land

The establishment of FTZ motivated the real estate market, bringing it to prosperity again, the transaction volumes in those neighborhoods were up 280.5 percent month-on-month, the price of land and house rent have obviously increased in this area.

The FTZ is attracting investors into residential property in adjacent areas. Pudong Chuansha, Waigaoqiao, Zhuqiao and Lingang New City are four such areas, where housing prices have risen in recent months by some 20 percent.

 According to Chinanews, the Shanghai FTZ will drive up the city’s housing prices, in September, average home prices in Shanghai rose 20.4 percent from the same period of last year, the National Bureau of Statistics said.

“Neighboring land prices will definitely go up, just like what happened with the Lujiazui Finance and Trade Zone,” said Xie Chen, research director of CBRE Shanghai.

 Besides the soaring prices of housing rent and apartments, the land of this area are at their fastest pace too. “Neighboring land prices will definitely go up, just like what happened with the Lujiazui Finance and trade Zone,” said Xie Chen, research director of CBRE Shanghai.1372076613-2804859149

According to the report of China Economic Net, the first piece of land located in this zone was sold for 230 million yuan ($37.8million) on Wednesday, 91.67 percent above its starting price of 120 million yuan.

Factors of Soaring Price

First of all, with many major industries of logistics, trade and finance, the requirements for lands are increasing, improving the estate development, which needs vast lands for industry parks.

Secondly, the entrances of enterprises bring abundant population at the same time, and the demands for housing greatly increased. The desperately demands for land and apartments cause the sharp rise of prices. Thirdly, the welfare policy, including the marketization of RMB interest rate and the opening up of financial industry, attracts many investors in FTZ. And this perfected the environment of estate market, more and more investments prompted the impurity of the price.

Besides, the rise of huge land-transferring fees are still has its strong impetus. Soaring prices and growing demand have also driven a jump in the number of people putting their homes on the market. The speculation from the media also pushes the big jump of prices.

Influences of Soaring Price

The soaring price of land and housing rent bring many effects for both individuals and practitioners in estate market as well as the economy in FTZ.

For individuals, it has two sides. The good one is that as an estate speculator, it is a chance. The house property you owned will definitely rise. However, if you are trying to buy or even rent an apartment in this area , then the soaring price may block your way to buying your dream houses.

For practitioners in estate market, it is absolutely their dream days. The soaring of land and 12629653768997243500housing means the desire from the public, which will motivate the sales of apartments and housing rent, bringing them lots of benefits. But when the fervor disappears, the rapid growth of price will block the development of estate market in some points as the market has saturated.

For the economy in FTZ, the soaring price of land and housing is unquestionably a success. This is a proof that the establishment of FTZ really works, the increase of price can drive the development of other industries in this area, and then economy will be improved in some degrees.

Future Trend in Soaring Price

In the future, the price of land and housing in FTC will be on the uptrend channel. For instance, Lingang New City, which is included in the Yangshan Free Trade Port Area, saw its average home prices rise 22.3 percent year-on-year to 11,536 yuan per sq m, according to data collected by Sohu Focus, a real estate website.

In the secondary market, average prices rose 10 percent for apartments near the Waigaoqiao area one week after the State Council – China’s cabinet – approved the free trade zone project in late imagesAugust, according to Shanghai Centaline Property Consultants.

According to a report on People’s Daily online, the average housing price will grow 50 percent, but with time flies, the investment fever tends to be insipid, the price may increase 30 percent in the following three years, which is still higher than other areas in Shanghai.

 

Related posts:

Share

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>