Planning needed to avoid damage to real estate sector from new urban access policy

By Hu Weijia Source:Global Times Published: 2016-2-25 0:18:05

China's authorities on Wednesday sought to clarify a controversial policy that instructs cities across China to open up gated communities and allow traffic to pass through. But the country still needs to balance interests from all sides.

The Communist Party of China Central Committee and the State Council issued new guidelines on urban development on Sunday. The document said no more enclosed residential compounds will be built in principle in China, and existing residential and corporate compounds will gradually open up in the future.

The guidelines aim to put interior roads in enclosed compounds into public use, a move that could optimize the structure of street networks and tackle the increasingly serious traffic congestion in big cities. However, the idea of opening up existing gated residential compounds has drawn criticism online since Sunday with concerns being expressed about various issues, such as possible security problems if walls around residential compounds are demolished.

To respond to the public concerns, the Ministry of Housing and Urban-Rural Development on Wednesday suggested that opening up existing gated residential compounds should be a gradual process.

The ministry also said cities need to make detailed plans based on their local situations and public opinion should be taken into consideration.

In recent years, a large number of gated residential communities have been built, featuring lawns, high-end clubs and facilities, offering a better living environment. The internal environment of a residential community has become a key factor influencing housing prices. In most Chinese cities, there is a big price gap between neighboring communities if they have different internal environments.

If the walls of these communities are removed, the price gap is likely to narrow, which could damage the interests of some apartment owners.

This may also hurt the already weak second-hand housing market in some Chinese cities.

The guidelines may also have a broader impact on China's real estate market. For example, how can property management companies collect fees from apartment owners if the interior roads and other facilities are being put into public use?

In this regard, a one-size-fits-all approach in opening up gated communities to public road systems needs to be avoided, and compounds in densely populated areas with serious traffic congestion should be opened first, so the apartment owners will benefit from the improvement of the traffic situation, partly offsetting their losses.

Even if the guidelines help to optimize the structure of street networks and promote urban development, their broader impact on the real estate market and the interests of apartment owners should also be taken into consideration. The economic picture is increasingly complicated in China, with different policy goals interweaving and sometimes conflicting with each other. It will be a test of Chinese leaders' wisdom to find a balance among the interests of different groups and more detailed plans need to be made to implement the guidelines.

The author is a reporter with the Global Times.

Posted in: It's Your Business

blog comments powered by Disqus