How To Dodge Chinese Property Laws: Buy Land And Pretend You're Building Low-Income Housing

china homes

Large investors and developers have many ways to dodge regulations meant to cool China’s real estate market.

First of all, they buy land. Chinese cities are pushing to release more land through auction by the end of the year, according to Business China:

On Oct. 28, the authorities in Shanghai, China’s wealthiest city, announced they would put 12 parcels of land up for auction. Officials in Wuhan, the most populous city in central China, said they would release 19 land parcels to the market the following day.

The southern metropolis of Guangzhou recently said it would supply seven land parcels, including four in the city’s Baiyun District.

In Shenzhen, where land transactions experienced a 10-month low after the government’s inauguration of strict curbs on the residential property sector in April, up to four parcels were expected to be sold over a four-week period to mid-November.

Second, they say they’re going to build low-income housing. State-owned-enterprise that were ordered to sell their real estate holdings ease government pressure by promising to build low-income housing. And then they go and build commercial housing, according to Business China:

According to the executive, a parcel of land would be acquired under the guise of building low-income housing, but would in fact be mostly used to developed commercial residential units.

“The low profitability of low-income housing has to be compensated for by ordinary commercial residential buildings. And in order to fulfil their tasks of constructing low-income apartments, local governments would normally accept this measure,” the executive said.

So that’s two ways corporations get around regulations. Individuals investors use other methods like faking a divorce to qualify for a second home.

Check out 14 charts that show China’s dangerous housing bubble is far from over >

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