Riding the wind of rebirth

The development of Pudong involves a very important issue: real estate transactions.

For a transaction to take place, it must first be commodified; for it to be commodified, the issue of property rights must first be resolved.

The four major development zones in Shanghai—Lujiazui, Jinqiao, Waigaoqiao, and Zhangjiang—all need to solve this problem first; it can even be said to be a historical issue.

This proposition began in 1990 when the state announced the development and opening up of Pudong, defining it as a national strategy for the next century.

The earliest commercial housing was called "overseas remittance housing." Shanghai took the lead in developing a batch of overseas remittance housing, setting a precedent for the emergence of commercial housing.

The next step was to encourage individuals to purchase and build their own homes, and to actively explore the commercialization of housing.

Next comes land leasing, which is further divided into "developed land" and "raw land". Developed land refers to the demolition and reconstruction of old areas, while raw land refers to the requisition of original collective land from rural areas.

Both methods of leasing have their own problems. The former requires solving the property rights issue of developed land. At that time, the property rights structure of houses was complicated. Many were "system houses", which were real estate owned by state-owned industrial and commercial enterprises, housing allocated to employees, as well as the enterprises' own factories, land, shopping malls, and so on.

This requires injecting the land assets used by state-owned industrial and commercial enterprises into the enterprise group after valuation, reducing the enterprise's debt-to-asset ratio, revitalizing the "system housing" resources, and then pushing these land resources to the market to realize their potential value.

Regarding employee housing, management measures need to be introduced to allocate these properties to individual employees and then circulate them through commercial housing, allowing them to enter the market.

For undeveloped land, four functional development zone development companies were established to explore the "undeveloped land" leasing model in Pudong New Area. The original collective land was requisitioned from rural areas without the "seven connections and one leveling" infrastructure construction, and then the state transferred it to the transferee. The transferee first carried out infrastructure construction on the land, and then transferred the "developed land" or built houses on it, which is the so-called "land idling".

Through this process, development companies could immediately acquire land and then begin attracting investment, without the government having to advance huge sums of money to develop the land. This also provided a channel for undeveloped land to enter the real estate market. This played a crucial role in the rapid commencement of early development in Pudong.

Currently, Hudong has included six types of domestic investment projects, including commercial, tourism, entertainment, finance, service industry, and commercial housing, into the paid land use system. This signifies that the transfer of land use rights has gradually expanded from "overseas remittance housing" that could only be done by foreign-funded enterprises to domestic enterprises.

At the same time, Shanghai began to implement measures such as housing provident fund, rent increase and subsidy, housing allocation and bond purchase, and allowed the sale of self-contained housing units to employees, allowing housing to gradually enter the market. At the same time, it encouraged the development and construction of commercial housing and introduced a new law for buying houses - commercial housing mortgage loan business, namely "mortgage".

For three consecutive years, Shanghai has introduced and revised the "Interim Measures for the Post-Sale Management of Public Housing" each year, transforming the original housing management offices into property management companies.

To meet the real estate market's demand for centralized, fixed transaction venues, a real estate transaction center was established and equipped with a state-of-the-art computer transaction system. Utilizing dedicated system lines, the COSTS system, and smart terminals, it was connected to major real estate markets and information consulting companies in Shanghai.

Following this, regulations concerning real estate registration, transactions, brokerage, mortgages, and leasing were introduced. Immediately after these regulations were established, a "pilot program for key factors" was launched. The reason for implementing this "pilot program" was that last year, due to the impact of macroeconomic control policies, the investment attraction speed of several major development zones in Pudong lagged behind, leading some overseas media to fabricate rumors such as "the occupancy rate of office buildings in Lujiazui is only 20%" and "the lights in the buildings are not working."

Therefore, at the end of last year, an expert proposed to relocate the municipal real estate transaction market, which was originally located in Puxi, to Pudong, thereby promoting the formation of the Lujiazui Central Business District through the eastward shift of the factor market.

Taking this as an opportunity, we should further revitalize the secondary and tertiary real estate markets.

The transaction center is now basically completed and is expected to relocate from Puxi soon. Once completed, the center will house service windows for real estate transactions, registration, consultation, and information access, as well as agencies providing services such as real estate brokerage, surveying, valuation, notarization, taxation, finance, and law, offering a "one-stop service." It will also have 34 trading seats.

In addition to real estate, the next factor markets will include thirteen others such as securities, futures, diamonds, oil, and financial futures. These are the real strength of Lujiazui CBD.

Further east of Lujiazui lies Zhangjiang, an information technology industrial park that will flourish twenty years earlier than the previous Zhouzhi.

Unlike the previous Zhouzhi, this time the information technology industrial park is incredibly powerful, and the wealth generated by its industrial agglomeration effect is no less than that of Lujiazui.

Of course, this is only the first step in a long journey. Not everyone has the foresight and the courage to plan ahead. As a result, Zhou Zhi asked with some doubt: "If we actively promote the employee housing plan now, are we actually helping the government solve its problems?"

“You’ve hit the nail on the head.” Hu Changfeng looked like he was ready to teach a lesson. “If you buy real estate in Zhangjiang now, whether it’s buying a commercial apartment directly or buying land to build your own employee housing, the local government will welcome it. However, based on our experience, it’s best to buy land from the four development zone companies and build your own, so as not to involve any conflicts such as demolition and resettlement.”

“However, the supporting facilities may not be able to keep up for the time being. We need to understand the municipal planning for the next few years, such as hospitals, schools, stations, etc., and decide on the location for building based on these.” Hu Changfeng winked at Zhou Zhi: “As the first batch of builders in Pudong, we still have this kind of connection.”

Since it's a "two-way trip," things become much easier. Zhou Zhi breathed a sigh of relief and even felt he could make a request: "Then please help us report this matter to the city. Also, Shuzhong Jinli Group has a strategic plan to develop real estate in first-tier cities across the country. Could you hand over our group's Shanghai employee housing project to them?"

"You really never forget your hometown people," Hu Changfeng laughed. "I reckon the city's bigger wish is for you to take over a batch of completed residential properties and reduce the vacancy rate."

“No problem, we can definitely take over a batch.” Zhou Zhi took it all in: “However, our group has many senior experts and managers whose housing requirements may be different from the commercial housing under construction in the city. So, for the welfare housing of the group’s ordinary employees, we can consider purchasing directly from the city’s inventory of housing, but we also ask the city to consider the actual situation of our group and unify our decision to build a batch of high-end commercial housing to accommodate the group’s middle and senior management employees.”

"Then there's definitely no problem." Hu Changfeng laughed. "Secretary Huang will be overjoyed to hear this news. You've become addicted to being a money-giving boy."

Zhou Zhi chuckled inwardly. With such a large portfolio of properties in Zhangjiang, the group would have a significant advantage in controlling talent in the future. (End of Chapter)