This general view taken on April 4, 2017, shows a residential area in Pudong district in Shanghai. Photo: Reuters.
This general view taken on April 4, 2017, shows a residential area in Pudong district in Shanghai. Photo: Reuters.

Shanghai land authorities released two parcels of land for residential leasing for at least 70 years on Tuesday, the first such projects ever allocated in the city to developers.

The larger area covers 65,007 square meters and is located in south Zhangjiang in Pudong New Area, while the other covers 28,513 square meters in Jiading district. Starting prices were set at 5,568 yuan and 5,590 yuan per square meter for the two parcels respectively.

Developers need to provide at least 1,897 units – apartments for rent – in a small dwelling size, but these cannot be used for offices or other services. They are required to hold the land for 70 years and properties cannot be traded. Leading players are expected to participate in the bidding in August.

The local government took action to provide optional accommodation for people who find home prices too high despite rigid housing demand.

The larger area is located near Zhangjiang Science City, the ‘Chinese Silicon Valley’, while the other is near automobile companies. Officials are keen to attract talented developers to get new rental units built in these areas in the future.

According to China Real Estate Information Circle (CRIC) data quoted in the Shanghai Observer, one third of the top 30 major real-estate companies have invested in long-term residential leasing apartments. News of this development may help calm the fanatical market to some extent.

This pic taken on July 15, 2016, shows residential buildings in Beijing. Photo: Reuters.

Developers of residential housing plots in Beijing, Tianjin and Guangzhou are usually limited on the prices that land can be purchased, as well as the sale of homes and the proportion of their properties allowed for sale on the open market.

These two parcels in Shanghai set aside for residential leasing use indicate, as policymakers said in December, that “houses are for living in, not for speculating with”, and officials will fight against rampant speculation in the property market.