Developers Sound Alarm on Price Spikes in Yanjiao

Yanjiao, Hebei borders Beijing's Tongzhou district. Beijing is planning to merge itself with Tianjin and Hebei to create a mega city, but Yanjiao already has grown rapidly as Beijing residents look for cheaper housing outside of the district. With Beijing already implementing plans to move government offices to Tongzhou, the Yanjiao area has seen rapid real estate development. Now with prices spiking, developers are worried about a potential revival in speculative real estate investment. Companies in Yanjiao also have exited manufacturing and service industries and gone into real estate development, distorting the local economy.

Price spikes are large, with one development seeing prices rise 6000 yuan/sqm. Another has seen prices rise as much as 7500 yuan/sqm.
"Now the market is so good, a lot of real estate listings are not sold or stock rarely, we do not need to continue the previous policy of low prices." Ideal City project a management source told reporters.
The exiting of industry is raising concern, with 8 industrial developments versus 100 real estate developments:
In fact, due to recent Yanjiao, manufacturers and other regions around Beijing housing prices rose rapidly, the local industry has chosen favor residential real estate market, industrial and economic growth slowdown.

...According to incomplete statistics, there are about eight industrial parks Yanjiao, but Yanjiao residential projects are up to hundreds. The industry believes that excessive development of residential real estate, is bound to squeeze industrial and economic development, improve the industrial park development costs.
While Yanjiao probably isn't destined to become a ghost city, the distortion of the local economy is a pattern seen all over China. It isn't only industry that is a concern, but basic services such as hospitals and schools that often aren't built until years later. If the city doesn't see residents come, perhaps because there is no school or hospitals, then residents abandon it and it becomes a ghost city.

What's new is developers recognize the distortion being caused by real estate speculation.
"Price spike is very unfavorable for industrial operations, from the enterprise to the employees, must be considered to select stationed Yanjiao home to buy a house, housing prices for businesses and individuals will result in increased costs." The senior analysts said, "In addition, skyrocketing housing prices also It will lead to rising land prices, development and operation of industrial parks and increase costs. "

The same dilemma has also appeared in Guan.

"Guan industrial park construction is actually quite difficult due to the slow development of the industrial economy, investment difficult, very long period of capital return, if only rely on the operation of industrial parks, most likely because of funding strand breaks and suspension, so with the Many residential projects to reflux for cash. "Guan former executives of a large development group, told reporters.
Chinese industrial developments aren't paying off, so they're building residential real estate to make money on the projects. Not bullish.

iFeng: 环北京区域楼市困局:房价快速上涨拖累产业

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