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I do not remember what the actual projections are, but I think there was talk of moving at least 300,000,000 into cities from rural areas, in the next 10 years. At 3 persons per family, that works out to 100,000,000 units of housing required. And we are talking about very low cost housing, as these rural folks probably do not have a lot of money. |
How about a plan that works something like this: Assuming development cost of RMB 1,500 per sq. m. (development and construction), not counting land cost. Assume gross area of 50 sq. M. for these low units - which gives effective unit areas of 35 sq. M., the cost per unit would be RMB 75,000. Carrying cost, at 10% return, would be about RMB 700 per month (assuming amortization over 30 years). That should support rents of say RMB 1,000 per month.
Can city income support RMB 1,000 rent per family, especially in the secondary cities?
Take a page from the Hong Kong experience, build these as housing estates for the low income, and throw in 10-15% retail space as enticement for the developers. Sell bonds to support the program. The rents can also go up over the years. Design the units so they they can easily be remodelled and combined into larger units. After 20 or 30 years, convert and sell them to the tenants or other low income folks.
The local government only has to put up the land. The retail and the added population's consumption would bring in even more tax revenues, and it solve a big part of the low income housing problem.
100,000,000 units would translate to a RMB 7.5 Trillion project. Probably will need to get some foreign financing involved. But I know many Chinese would be happy to buy long term bonds that pay 8 or 10%, if secured by housing. Much safer than gambling the stock markets.
If qualification to rent or buy is limited to low income folks, this would not adversely affect the commercial developments.
[ Last edited by tongluren at 2007-2-3 06:38 AM ]