Difficulties with leftover ‘uncleared land’ projects in China

In the 1990s, for a large number of urban renewal projects, governments everywhere adopted the “grant of uncleared land” method to reduce preliminary land grant costs and lessen fiscal pressures by granting the land uncleared to the real estate developer, who would be responsible for completing the demolition, relocation, compensation and resettlement work.

With the gradual maturity of the “bid invitation/auction/listing” model of granting state-owned land, new projects involving “uncleared land” have become rare in recent years. However, many such projects that have long lain idle due to funding, returns, market forecast or other reasons still remain in many places.

In 2011, the State Council issued the Regulations for the Requisitioning of, and Compensation for, Premises on State-Owned Land, and repealed the then existing Administrative Regulations for the Demolition of Urban Premises and Relocation of Their Occupants, abolishing developers’ qualifications as demolition entities and designating the government as the entity responsible for requisitioning and compensation. Due to changes in regulations and increased requisitioning costs, huge demand for funds, etc., how to develop and use these types of lots have become common problems for governments and developers.

Wang Tonghai is a senior partner of Wintell & Co. He can be contacted on +86 21 6854 4599 or by email at tony.wang@wintell.cn