Money

Renovation projects help build market

By Wang Ru (China Daily)
Updated: 2009-12-15 15:31

Unfinished buildings, known as lanweilou in Chinese or rotten-tail buildings, are being revived amid the booming real estate market in Beijing.

Located in Chaoyangmen area near the East Second Ring Road, a new residential apartment block named "Chaoyang Shoufu", built from the deserted shell of a nine-year-old failure, is now taking preorders of apartments at an average 35,000 yuan per sq m.

Construction on the high-end apartment building project was formerly known as "Senhao Apartment", began in 1999. However, work was stopped in 2002 by its developer at the time who falsified contracts and obtained 750 million yuan from banks. It was the biggest bank loan fraud to date in the city.

In September 2008, a Beijing-based real estate developer snapped it up at an auction for 560 million yuan.

A salesperson of the renovation project surnamed Ma told METRO yesterday that more than 2,000 customers have already registered to get hold of only 287 apartments, despite the fact that the 70-year property ownership term has only 61 years left.

"We have renovated the interior structure and replaced old facilities such as water pipes," said Ma.

According to an investigation conducted by the Beijing municipal commission of housing and urban-rural development last year, there are about 50 unfinished buildings scattered across the wealthy central districts, most of which have undergone suspension periods of 5 to 10 years.

Beijing launched a project in 2006 to investigate unfinished buildings with a plan to renovate them before the Beijing Olympic Games. Through the use of auctions, qualified developers bought most of these buildings at low prices and received preferential government policies such as shorter licensing term.

Unfinished buildings are generally considered as a symbol of a financial bubble, but real estate agents in Beijing said they are still valuable in the booming housing market.

"Many buildings located in the central districts are skyrocketing in price this year, but there is still space for investment," Xu Chao, manager of the investment consultant department at Centaline Property Agency, said yesterday. He added that the growing trend of the real estate market would continue.

"Most of those unfinished buildings were suspended because of financial problems or fraud. In addition to the location, purchasers need to check out the qualifications of new developers and the ownership terms," said Xu.

Liu Weixin, a retired real estate expert from the Chinese Academy of Social Sciences who has researched the market in China for more than 30 years, agreed with the idea of renovating unfinished buildings.

"Most of the suspended buildings were constructed for business use and had a lot of land resources and money wasted on them. It is a good idea to reuse them," Liu said yesterday.