Xiongan acts to curb hot rental markets

SOEs rush to set up offices as prices surge as high as 400%

Authorities in Xiongan New Area are endeavoring to curtail the rising rental prices for commercial properties that have doubled or quadrupled since April, through efforts including investigations into housing resources and crackdowns on speculation, local market insiders said Sunday.

Xiongan New Area, development of which was announced on April 1, is in North China's Hebei Province and some 100 kilometers southwest of Beijing. It spans three counties, Xiongxian, Rongcheng and Anxin, which sit at the center of the triangular area formed by Beijing, Tianjin and Shijiazhuang, Hebei's capital.

"Rental prices of commercial properties on Aowei Lu in Rongcheng, where Xiongan New Area Management Committee is located, soared as much as 400 percent in the past five months," said Li Yun, a local businessman in his 40s, who runs a supermarket on the road on Sunday.

The rent for a five-story building opposite the Rongcheng government office building on Aowei Lu is now more than 3 million yuan ($460,000) annually, Li said. The building used to be a hotel and was rented by a central State-owned enterprise (SOE) in late April, he noted.

The Global Times found that more than 30 central SOEs, such as China Communications Construction Co (CCCC), China Railway Construction Corp, China Southwest Architectural Design and Research Institute Corp, have already set up offices along Aowei Lu.

"These companies came to Rongcheng in the past few months one after another, and many of them rented commercial properties like restaurants, hotels and clothing stores on Aowei Lu to establish their Xiongan branches," a security guard working near the CCCC building, who would not give his name, told the Global Times on Sunday.

"But most of the branches aren't in operation, they are still closed for decoration and preparation," he said, noting that the demand for commercial and residential properties from tenants from other places has kept rising while the market supply is tight.

Given the current situation, local authorities have strengthened efforts to crack down on housing speculation and illegal activities in the area's property rental market, and the market will see stable growth in the future, one housing agent surnamed Liu in Rongcheng, told the Global Times.

On Tuesday, the Management Committee of Xiongan New Area released six measures to tighten the local rental market, read an article posted on the committee's official WeChat account.

The committee said that rental prices in Rongcheng rose 200 to 400 percent year-on-year after April 1, primarily driven by the rising market demand after 65 large companies moved in.

To rein in the market, local authorities have made efforts to collect information on properties, create a service platform for real estate owners and tenants and to encourage cooperation between property developers and companies that have demands for renting commercial properties, the committee said, noting that local authorities have so far found about 270 illegal housing rental cases.