Official notification on Monday that the Shanghai's housing market is now open to everyone has provided an outlet to the excitement ignited by the prediction the Shanghai Star, China Daily's sister paper, made in May.

The procedures will be simplified and the fees will be reduced to 500 yuan (US$60) for apartments that sell for 300,000 yuan (US$36,144) or more. The fee for apartments whose price is less than 300,000 yuan will be 250 yuan (US$30).

Formerly, the buyer of foreigner-targeted apartments were required to pay 0.5 per cent of the house price as the procedure fee. The seller and buyer of native-targeted apartments would both pay 0.08 per cent of the apartment's price in fees.

All developers now will pay the same rates when leasing land.

Actually, the transfer of land tenure which is to be developed for commercial purposes is realized through public bidding at auction effective since August 1.

In a Monday afternoon briefing on the new regulations, the government identified the first five pieces of land which will soon be ready for international bidders.

"We will not lose any opportunity to make money," said Alex L. F. Pun, assistant general manager of Hong Kong-based New World China Land Limited.

Land is to a developer what flour is to a baker. The company will send experts to examine these five pieces and prepare its bids, Pun said.

Since 1993, the company has invested nearly 3 billion yuan (US$362 million) in Shanghai's property market. Encouraged by the new policies, the company will increase the investment to 7 billion yuan (US$845 million) in two to three years, he revealed.

Henry B. C. Cheng, managing director of Hong Kong-based Shui On Group, which has accomplished several property projects in Shanghai, said the policies will help the city attract more foreign investment.

Cheng said many foreign developers who previously hesitated to invest in Shanghai because of its chaotic system will be lured to the market.

"The demarcation is a product peculiar to China," he said. "Its removal will help the local market become internationalized, where all players will compete in an open, fair and just arena."

Since 1988, the city has leased land to foreigners at a price three to five times that paid by native developers. Foreign developers also had to pay more fees and taxes and were limited to specific properties.

With investment accumulated in the property section since the late 1980's, the city has successfully schemed out its urban layout and built the city into today's outlook.

"Both emergence and removal are the necessity of the market itself, which displays a process of how the market develops toward maturity," said Cai Yutian, director of Shanghai Housing, Land and Resources Administration.

Cai said the issuing of these policies simplifies red tape and increases administrative transparency and efficiency.

It is the right timing also, because of the need to smooth the way for the country's WTO entry and, even more important, to spur the development of the local property market, Cai said.

The real estate industry has been listed as one of the six pillar industries to promote the city's comprehensive growth during the 10th five-year plan period (2001-2005).

With the execution of the new policies, the current 5 per cent contribution by the real estate sector to the city GDP is expected to increase to 10 per cent by 2005. The living area per capita is expected to reach 13.8 square metres.

Cai revealed that only two-thirds of the 10 million square metres of foreigner-targeted land leased out by the city has been developed. There is some concern by the government about the remaining one-third.

These undeveloped land or uncompleted property projects have brought negative social and economic effects. The government will take some measures such as compensating the price difference of land leasing to encourage these projects to be started, Cai said.

Governmental officials and the developers agree that prices in the local residential market will rise. But no one expects prices to soar.

The government will exert its macro-monitoring function, bringing the supply of land resources in line with demand, which will temper price increases.

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