Shanghai Launches New Property Controls to Contain Speculation Using Shell Companies


Shanghai is one of numerous cities around China that have launched new policies to control speculative investment in real estate via shell companies.

On 3 July Shanghai officially launched the “Provisional Regulations Concerning Standardisation of Enterprise Purchases of Commercial Residential Housing” (关于规范企业购买商品住房的暂行规定), which seeks to contain the use of shell companies for speculative investment in real estate.

Shanghai’s new policy requires that enterprises purchasing commercial residential housing be established at least five years previously, have paid at least 1 million yuan in taxes within the municipality and possess at least ten staff.

The new policy also increases the restricted period for putting commercial residential housing back on the market to five years from three years previously.

The move from Shanghai municipality arrives just as municipal governments around China launch similar measures in response to the release of the “Notice Concerning Special Actions in Some Cities to Strike in Advance against Illegal, Non-compliant Conduct that Harms Public Interest and Deal with Property Market Malfeasance” ( 关于在部分城市先行开展打击侵害群众利益违法违规行为治理房地产市场乱象专项行动的通知) by the Ministry of Housing and Urban-Rural Development in conjunction with a slew of other central agencies.

These cities include Changsha, Chongqing, Hangzhou, Hefei, Kunming, Nanjing, Taiyuan, Tianjin and Xi’an.

Observers point out that the Notice on “special actions” marks the first time that the Ministry of Public Security has been involved in a directive concerning real estate market controls, signalling Beijing’s determination to contain speculative investment.

State media reports that the “focus of the current round of housing controls is striking against speculative investment in property, and supporting the purchase of homes by those subject to inelastic demand.”

Liao Jianhua (廖建华), vice-mayor of the Hunan province capital of Changsha, said that at present the greatest conflict on real estate markets was the battle between speculators and anti-speculative measures.

The municipality’s new policies will focus on property hoarding, speculative housing investment, sales in breach of regulations, and the driving up of home prices.

Zhang Dawei of Centaline Property said to state-owned media that the real estate controls will continue to intensify given a recent reheating of nationwide property markets.



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