SOEs Exit Property Market

China's agency for the management of state-owned assets has announced that 78 large SOEs will be required to restructure their real estate businesses

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(Caixin Online) Amid public concerns over high housing prices and the heavy reliance of local governments on land sale revenues, the Chinese central government is requiring state-owned companies (SOEs) withdraw from the red-hot real estate sector.

The spokesman of State-owned Assets Supervision and Administration Commission (SASAC) said at a press conference on March 18 that 78 SOEs, which are focused on industries outside of real estate, will exit the market gradually. The 78 heavy-weight companies will restructure to spin off their housing arm, after they have completed existing projects.

SASAC has already singled out 16 SOEs that report directly to the central government with real estate as their main business focus. Another 78 SOEs of the same level that have peripheral, property-related businesses are targets of the new policy. The number of housing subsidiaries of the 78 SOEs amounted to 227 in 2008, but revenues have been limited.

In 2009, real estate sales revenues of SOEs' soared to 220.9 billion yuan, with 86 percent contributed by the 16 companies.

Despite the public uproar over high housing prices aired at the National People's Congress earlier this month, SOEs have continued to break property auction records.

(Translated by LX)