Is it feasible for Xiongan not to engage in real estate at all?

Recently, as soon as the news about the construction of Xiongan New Area came out, it immediately aroused huge response from all walks of life. All kinds of interpretation articles and imaginative articles are overwhelming. Xiongan concept stocks have reached their daily limit across the board, and all kinds of jokes are flying in the sky. Everyone’s reaction is understandable, but I think the construction of the new district must be pragmatic and implemented, and the basic laws of economic development must be respected. Historical experience shows that for a new district to be successfully constructed, it is necessary for the government to formulate plans, policies, and inject resources, but more importantly, it must guide society's development awareness and adhere to market-oriented development. Only in this way can we ensure that a region can generate endogenous development momentum and truly achieve the "Millennium Plan".

The endogenous driving force for regional development is, in the final analysis, the development of industry. Only good industrial development can provide profits for capital, tax revenue for the government, and jobs for the people. With sufficient tax sources, the government can provide better public services and social environment, allowing people to live and work in peace and contentment, promote better development of enterprises in the area, and ultimately form a virtuous cycle. The construction of new districts cannot be separated from the fundamentals of "promoting the rational layout of industries and providing a high-quality development environment for enterprises." The endogenous development power of the region ultimately relies on entrepreneurship.

China’s current real estate development model has been widely criticized. Crazy real estate speculation will divert productive funds and accumulate huge financial risks. Soaring housing prices will significantly increase industrial costs. The profit-seeking nature of capital will lead to its quickest action. The quickest response to news about Xiongan New Area is the funds in the stock market and the funds in the property market. Fortunately, judging from the current situation, whether it is "comprehensive freezing of real estate transactions in the area", "strictly controlling the rush to build new houses", or "dispatching police forces to maintain market order", it comprehensively shows that Xiongan New Area is moving away from traditional real estate development Pattern determination. This is a welcome change, so how should Xiongan New Area handle the relationship between real estate and the development of the new area? Is it reasonable to follow the opinions on the Internet about completely abandoning commercial housing? All are worthy of further careful discussion. I have some suggestions for real estate development in Xiongan New Area.

It is not that real estate within the Xiongan New Area cannot be developed at all, but that there must be clear restrictions and market expectations, and the choice must ultimately be left to the market.

First of all, we need to make it clear that "houses are for living in, not for speculation." When engaging in real estate development in Xiongan New Area, one must ensure that those who work and live in Xiongan New Area have houses to live in. Therefore, new commercial real estate planned in Xiongan District must be located on the same plot of land and must be equipped with more than twice the number of low-rent housing, public rental housing and other non-complete property rights housing. The land for construction of low-rent housing and public rental housing can be provided free of charge by the government. When real estate developers acquire the land, they are required to directly complete the construction and installation of supporting facilities. The property rights of these houses belong to the government, and people working in Xiongan District are uniformly arranged to rent them. This will at least ensure that workers who cannot afford commercial housing in the area can have their own housing to live in.

Second, Xiongan New Area provides an excellent pilot area for property tax collection. Currently, the stock of commercial housing in Xiongan New Area is not large and prices are not high. Property tax collection can be carried out clearly within the district, which can not only further enrich local tax sources, but also curb investment demand for real estate and stabilize market expectations.

Third, Xiongan New Area should carry out rural land reform and increase the supply of land with residential functions. Our country has been conducting research on rural land reform for a long time, and has some relatively mature reform plans, and pilot projects in many regions have achieved certain results. Against this background, a comprehensive plan can be put forward directly in Xiongan New Area to carry out rural land reform work, actively guide the orderly transfer of rural land, and gradually change the form of land use through marketization and respecting the wishes of farmers. And liberalize corresponding policies and introduce various financial capital instruments.

Fourth, Xiongan area can implement purchase restrictions and loan restrictions and normalize such policies. The key to the implementation of such measures is that they should have a relatively stable duration and clearly and reasonably guide market expectations. Do not change policies at will due to changes in market conditions, causing chaos in market operations.

Fifth, Xiongan New Area should have a government organization within the area and rely on corporate power to establish a unified real estate sales and leasing platform. Standardize the release of relevant information on real estate sales and rental prices in the area, and implement transaction supervision. Make the supply and demand sides of the market "completely transparent" and completely eliminate irrational price fluctuations caused by market information asymmetry.

(The above answer was published on 2017-04-12, please refer to the actual relevant current house purchase policies)

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