China's first property taxes kick in

China's long-awaited first property taxes took effect on Friday in Shanghai and the mega-city of Chongqing in the southwest, as the country tries to reform its booming real estate market.

People buying higher-end second homes in Shanghai, China's wealthiest city, and Chongqing, home to 30 million people and the country's fastest-growing municipality, now have to pay a 0.4-1.2 percent annual tax, officials said.

But Chongqing Mayor Huang Qifan said the pilot tax programmes were not aimed at clipping the soaring real estate prices that are a top consumer concern across the country.

"People will ask if I think the real estate tax will definitely bring property prices down.... No one believes the property tax will hit the nail on the head and bring prices down," Huang told a news conference late Thursday.

He estimated the tax would generate 150 million yuan ($22.8 million) in revenue for the municipal government this year, according to an official transcript, although state media cited him as saying 200 million yuan.Michael Klibaner, head of China research for property company Jones Lang LaSalle, said the ultimate aim of the tax was not to rein in prices, but rather to prevent hoarding of properties, a pressing problem in recent months.

"Previously there was very little holding cost for residential property because many people paid 100 percent cash for these properties.

Now the holding cost is no longer zero," Klibaner told AFP.

"When the holding cost is zero, it's very easy to let these homes sit idle.

It doesn't cost you anything to let them sit there. It's like gold," he said. "Now there's a holding cost -- the hope is it will change the way people perceive real estate as an asset class.

"The two cities announced different tax pilot projects almost immediately after the State Council, China's cabinet, said it had approved the trials on Thursday.Shanghai announced a flat 0.6 percent tax on new second homes that are double the average market price.

New second homes costing less will be subject to a 0.4 percent tax.Chongqing introduced a progressive tax ranging from 0.5 percent for homes that are double the market average price and rising to a maximum of 1.2 percent depending on the value of the home.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

Property prices in China's major cities posted their fourth straight month-on-month rise in December and sales picked up pace, according to the latest government figures.Prices in 70 major cities were up 0.3 percent last month from November and were 6.4 percent higher than a year ago.

The annualised surge peaked in April, when prices soared 12.8 percent, but growth has since slowed.But prices have remained stubbornly high, despite a range of government measures such as hiking minimum down-payments on property transactions to at least 30 percent in a bid to avoid a damaging price bubble.

By AFP

China to launch property tax on trial basis

China said Thursday it would start imposing property taxes on homes in some cities on a trial basis, in the government's latest move to try to cool the red-hot real-estate market.The State Council, China's cabinet, approved the trial but said the tax levy method would be decided by the governments of the provinces where the cities are located, the official Xinhua news agency said. It gave no more details.

A statement posted on the finance ministry's website said the tax would help "adjust income distribution and promote social equality.""People's living standards have hugely improved, but the income gap is also widening.... Property tax is one important method to adjust income and wealth distribution, and levying property taxes helps reduce the wealth gap," it said.It added the tax would help "rational" home-buying.

The trial is the latest in a range of measures taken by the government to curb spiralling property prices, as polls have shown the difficulty in affording housing has become the top consumer fear.On Wednesday, the government raised the minimum down payment for second homes to 60 percent of the property's value and ordered authorities to rein in real estate prices.

The central bank has also raised interest rates twice since October, and has increased the amount of money banks must keep in reserve in a bid to curb lending.But despite these policies, property prices in China's major cities have continued to increase, posting their fourth straight month-on-month rise in December as sales picked up pace.

The statement did not mention which cities would trial the tax, but Xinhua said Shanghai was one of them and had already set the tax rate at 0.4 to 0.6%.

The southwestern municipality of Chongqing is also one of the trial locations.According to a report on popular web portal sina.com, authorities in Chongqing have set the tax rate at between 0.5 and 1.2%.Chongqing mayor Huang Qifan estimates revenue from the tax will reach 200 million yuan ($30.4 million) and will be used to build public housing, the report said.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

By AFP

China property prices climb in December

SHANGHAI: Property prices in China’s major cities posted a fourth straight month-on-month rise in December and sales picked up pace, data showed yesterday, despite efforts to cool the market.

Prices in 70 major cities were up 0.3 per cent last month from November and were 6.4 per cent higher than a year ago.

The month-on- month gain in November was 0.3 per cent.

The annualised surge peaked in April, when prices soared 12.8 per cent, but growth has slowed since then.

By AFP

Sino-Saudi plan for 7-star hotel

BEIJING: Beijing authorities plan to build a "seven-star hotel" modelled after Dubai's Burj Khalifa - the world's tallest building - in a US$1.3 billion (US$1 = RM3.07) joint project with Saudi Arabia.

The hotel will be erected in western Beijing's Mentougou district some 30 kilometres from the Chinese capital's centre, the state-run Beijing Morning Post said in a Thursday report, quoting a local parliamentary meeting.

A district official, who declined to give his name, confirmed the project and its price tag in comments on Friday.

He said that the Saudi side was expected to foot the entire bill but he refused to provide other details, such as why such an expensive project would be located in the underdeveloped rural area.

The Beijing Morning Post said the building's design would be patterned after the 828-metre Burj Khalifa's distinctive slender, tapering design, but did not say how tall the planned structure would be.

The "seven-star" classification is not officially recognised internationally, as no formal body awards ratings above five stars, but there are a handful of luxury hotels around the world that still use the distinction.

Dubai's Burj Al Arab is one such establishment, and in Beijing, the Pangu 7 Star Hotel built near the 2008 Olympic stadium also claims the rating.

By AFP

China may launch first-ever property tax in 1Q

SHANGHAI/BEIJING: China is set to further clamp down on the country's buoyant housing market by imposing a long-debated property tax for the first time in the southwestern city of Chongqing, domestic media reported on Monday, Jan 10.

Chongqing has "in principle" won approval from the Ministry of Finance and may introduce the property tax as early as this quarter, the China Securities Journal cited the city's government as saying.

Analysts expect the tax to be about 1 percent, the Journal said.

China has debated for many years about having a property tax but held back out of fears it may seriously harm the market.

Domestic media reports in recent months suggest, however, that China's government is finally warming to the idea and may impose a property tax on a trial basis in several cities including Chongqing, Shanghai, Beijing and Shenzhen.

The China Business News said on Monday that Chongqing is likely to only tax high-end properties, in contrast to Shanghai, which reportedly will only tax selected second homes.

Chiþna has taken a slew of measures to cool its red-hot property market since late 2009 as part of efforts to fight speculative "hot money" flowing into the country.

Despite the measures, house prices in China's major cities soared by more than a fifth last year.

Analysts welcomed the tax as a way to restrain the market.

By Reuters

China plans US$1.3b 'seven-star hotel'

BEIJING: Beijing authorities plan to build a "seven-star hotel" modelled after Dubai's Burj Khalifa -- the world's tallest building -- in a US$1.3 billion joint project with Saudi Arabia.

The hotel will be erected in western Beijing's Mentougou district some 30 kilometres (18 miles) from the Chinese capital's centre, the state-run Beijing Morning Post said in a Thursday report, quoting a local parliamentary meeting.

A district official, who declined to give his name, confirmed the project and its price tag in comments to AFP on Friday.

He said that the Saudi side was expected to foot the entire bill but he refused to provide other details, such as why such an expensive project would be located in the underdeveloped rural area.

The Beijing Morning Post said the building's design would be patterned after the 828-metre (2,717-foot) Burj Khalifa's distinctive slender, tapering design, but did not say how tall the planned structure would be.

The "seven-star" classification is not officially recognised internationally, as no formal body awards ratings above five stars, but there are a handful of luxury hotels around the world that still use the distinction.

Dubai's Burj Al Arab is one such establishment, and in Beijing, the Pangu 7 Star Hotel built near the 2008 Olympic stadium also claims the rating.

The announcement of the Mentougou project comes at a time when China is attempting to crack down on high-end developments and use more land for affordable housing, amid general discontent over soaring property prices.

By AFP