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House seekers search for dream
(China Daily)
Updated: 2005-04-30 06:39
The 32-year-old information technology engineer wasn't seeking celebrity when
he unified some Beijing house-seekers behind the idea of building an apartment
project on their own rather than buying flats from developers.
But his act of defiance instantly drew him into the
media spotlight.
Yu Linggang
[sina] |
Yu Linggang, the engineer, who works at Lenovo - a
leading computer company in China - confesses he is not a professional in the
real estate business. But now some famous real estate firms are doing all they
can to try to co-operate with this "nobody."
Yu initiated his housing project in mid-December of last year to "counteract
profiteering in the real estate trade," he says.
For his apartment tower project near the northern Fourth Ring Road, a golden
housing area in Beijing, he says participants can buy an apartment with the
maximum floor area of 120 square metres at just 40 per cent of the price charged
by most developers.
Beijing's real estate sector has been notorious for its rising redhot prices,
with commercial housing averaging 6,325 yuan (US$760) per square metre in the
first nine months of 2004, 8.23 per cent more than the previous year, according
to Beijing Real Estate Administration figures.
Some insiders estimate that at least 30 per cent of the prices paid go
straight to developers' wallets as profit.
In addition, homebuyers of ready-made apartment buildings usually have no say
on who is hired as estate manager, let alone sharing income from businesses like
community billboard advertising and leasing at ground-floor shops.
For those homebuyers frustrated at such a high profit rates and poor estate
managers at their complexes, Yu's promise of substantially lower costs and
future bonuses - including income sharing from estate management - are a big
lure. Within one day, his online billboard bulletin attracted more than 200
participants.
Pretty soon he received contacts from 300 people, each offering 150,000 yuan
(US$18,000) in trust money and a share of a bank loan of 225,000 yuan
(US$27,000), a minimum to set the project in motion.
Now the project, once dismissed by some as a Utopian dream, is "going well,"
says Yu.
And "the blueprint will be much more concrete" if, in the next step, all the
want-to-be participants really have the ability to pay the price needed for
their involvement.
Liu Jingjing, a candidate in her 20s who is now living
with her parents, says she took interest in the project because of its brand-new
operational mode and conception. "Everybody hopes for a house where he or she
will feel happy, but a ready-made product from a developer always seems
disappointing with its high price," she says.
A woman reads housing leaflets at a housing
exhibition in Beijing in this picture taken on April 7, 2005.
[newsphoto] |
Market shaker
Yu's move has shaken the foundation of the real estate sector in Beijing and
is regarded by some real estate analysts as open defiance to the current market
order of the profitable industry dominated by developers.
Yet Yu is not alone in challenging the system. Similar housing co-operative
ventures have emerged in other major Chinese cities like Shanghai, Chongqing and
Shenyang.
Kuang Weida, a real estate researcher with the Institute of Finance and Trade
Economics at the Chinese Academy of Social Sciences (CASS), says the emergence
of these housing programmes is by no means accidental or a sudden impulse by
their initiators.
"It's a reflection on and outcome of dysfunction in the housing market. It's
very natural that house seekers, frustrated by high housing prices, will unite
and take action when the government fails to intervene in the profiteering of
the real estate industry and regulate the market handicapped by a low elasticity
of supply," Kuang says. "Housing co-operatives are popular in Europe and are a
good way to balance the market."
Even without Yu, Kuang says, there might be others.
Surrender to developers?
Yu, who grew up in Beijing, is not houseless himself, but says he believes
this alternative can better protect estate owners' rights and save them money.
Though the do-it-yourself scheme was sneered at as a children's toy bricks
game by some when Yu first posted his online messages to promote his idea in
2003, Yu says he was confident at the very beginning that the apartment tower
will one day stand firm among forests of high-rises in the nation's capital.
Based on the project, a consultancy service company was set up in mid March.
The company has a 50-member board of directors and is composed of four
management teams, including administration, finance, project and legal teams. At
the end of March, the company reached an agreement with Vantone, a leading
developer claiming to provide personalized real estate service, for apartment
design and construction. About two months before that, the Minsheng Banking
Corporation, a large private bank in the country, expressed its willingness to
provide lending, with a dozen other banks promising support for the project.
Aside from problems in the process, such as land selection and bidding and
project supervision, misgivings over the prospect of the housing co-operation
mode have always followed Yu.
In some observers' eyes, the situation is aborting the true concept of the
housing co-operative model after Yu joined hands with Vantone, ascertaining that
Yu surrendered himself to estate developers at the cost of his partners'
interests.
"We cannot design and construct the project with our own hands," Yu contends.
"Vantone is actually employed by us."
Doubts still looming
Liu Hongyu with the Real Estate Research Institute of Tsinghua University
says that the future of the fledgling housing project remains ambiguous in spite
of its current impetus.
"The initiators' and participants' intent should be appreciated. But they
might meet many difficulties when operating. They cannot do this without
professional management from budget and design to construction, since their
co-operation is after all a loosely organized group and most participants are
not professionals," the professor says.
The involvement of professional agents, such as the design and construction
contractor Vantone, however, will inevitably add expenses to the
non-profit-seeking move, Liu says.
Some real estate analysts predict that the housing co-operative is doomed to
be a failure, since it flies in the face of economic rules of social labour
division and will restrain social labour efficiencies.
CASS researcher Kuang Weida, however, says that the emergence of such
co-operatives themselves is significant even if they cannot be sustained. "It is
a signal to remind us that the government isn't playing its role in the current
real estate market."
Kuang says he hopes the non-market housing mode, as a good supplement to the
current real estate market, can survive, but adds that depends on whether the
organization is well-organized with definite management rules. Otherwise, the
mechanism cannot run effectively and might serve as a tool for personal
interest.
What's more important is a favourable environment created by policy support
and legal guarantees, which are currently absent in the country.
A line city
Nothing, however, seems to be able to blur the ambitious Yu's vision of the
future. He says that two things are driving him forward: memories of a childhood
tragedy and an incentive to seek self-improvement.
Yu lost his mother in a road accident when he was at primary school age.
"Ever since then I dreamed of creating a city linked only by undergrounds, where
people may feel safe without cars running across streets and thus can see fewer
family tragedies like that of mine," Yu says.
The childhood tragedy, the engineer says, can partly explain why he takes
deep interest in urban planning.
He once spent time in the National Library perusing publications on city
planning and urban construction.
His ideal model is a line city - residential and functional clusters strung
by undergrounds and light rails, which is green, low-cost and energy-saving. The
current move to build an apartment tower under the framework of a co-operative
is only a pilot project of a bigger aim, where he will try most of the ideas of
his line city, Yu says.
(China Daily 04/30/2005 page3)
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