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Real Estate Development the Chinese Way Qiuhong Tang, SWA Group ULI Fall Meeting, 2011
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Real Estate Development the Chinese Way (Qiuhong Tang) - ULI fall meeting - 102811

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Page 1: Real Estate Development the Chinese Way (Qiuhong Tang) - ULI fall meeting - 102811

Real Estate Development the Chinese Way

Qiuhong Tang, SWA Group

ULI Fall Meeting, 2011

Page 2: Real Estate Development the Chinese Way (Qiuhong Tang) - ULI fall meeting - 102811

“The urbanization in China and the high-tech development in the United States will be the two keys to influence the human development in the 21st century.”

Joseph Stiglitz, Nobel Prize Economics Winner

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Urban China

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The Rapid Metamorphosis

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The Rapid MetamorphosisPopulation from being rural to urban

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The Industrialization Drive

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The Industrialization DriveThe acceleration of urbanization is due above all to a reinforcement of industrialization in China.

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The Economic Effects of UrbanizationThe economic spillovers of this urbanization are seen through the explosion of real estate investment as well as the spectacular demand for raw materials.

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An Era of Rapid Change

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The Historical Changes in Real Estate RegimesPoor use of land, given the lack of a real estate market and any commercial value for land

• Imperial ChinaVery restricted, reserved for an elite group, concentrated in rural areas, very many peasants had no land

• The Republic of China (1911 -1949)Kept private landownership, political instability

• China under Mao (1949 -1976)Overturned private landownership, farming land collectively

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The Land Reforms Under Deng XiaopingUrbanization in China is primarily the result of a strong, deliberate public policy since the Deng Xiaoping era

• 1978 the Four Modernizations“Socialist market economy”

• 1982 the Fourth Consititution of the People’s Republic of ChinaA distinction between agriculture land held collectively by peasants and non-agriculture land in urban areas recognized as State property

• 1986 the Land Administration Law (or Land Law)Introduced into China’s legal system the concept of the “right of use” land,The foundation of the major developments of private real estate industry

• 1990 allowed land use rights to be ceded between private individuals and companiesExtended nationwide

• 2007 adopted a general law on propertyStrengthened and completed changes over the preceding 20 yearsImproved the security of real estate transactions

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The Emergence of a Real Estate MarketThe introduction of transferable usage rights has stimulated the creation of a real estate market.

• In the early1980s, no property market in China • By 1991, 3700 developers were authorized to operate• In 1998, the abolition of free social housing boosted home buying• The share of real estate in total investment jumped from 4% in the early

1990s to 25% in the first 5 months of 2009.

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The Project Development Approvals Process

• the need of protecting agriculture land

• encouraging the urbanization of the population

• the development of a real estate industry

• Provides significant revenues from the sale of usage rights, tax receipts and employment

• Complex procedure, lobby intensely at all levels

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Case StudyGubei Pedestrian Promenade, Shanghai,

China

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Project Team

Awards

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Site Statistics

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Special thanks to my colleagues, clients and the ULI Pacific Rim team for their

support and generosity:Fred Allen, Ronald A Altoon, Phyllis Alzamora, Gerdo Aquino, Richard Drobnick, Wei Er, Ying-Yu Hung, Meyer Jeff, Gregory J Karns, Hui-Li

Lee, Sean O’Malley, Tess Pan, Natalie Sandoval, Ronald I Silverman, Jack Wu, Amanda Walter,

Xiaodong Xu, Xiaobo Zhou

Reference: “Urbanization and Real Estate Investment in China”Guillaume Rougier-Brierre/Guillaume Jeannet, 2009“An Overview of Property Development in China”

Brad Herrold/Lovells Beijing, 2008