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China's First Cooperative Housing Project
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A bright light shone on China's Wenzhou, Zhejiang Province Wednesday when it was announced that the country's first individual cooperative housing project would break ground within five months.


Zhao Zhiqiang, general secretary of the Wenzhou Marketing Association, released the news at the Second China Individual Cooperative Housing Seminar on November 15. Zhao told the seminar that a piece of land had been secured from the government through a trusted property company. If all went well, construction would begin in five months, he said.


The significance of the Wenzhou housing cooperative's success is that it sets an example for similar developments. At a cost of 104.58 million yuan (US$13.26 million), Zhengyuan Real Estate Development Co., Ltd. from Rui'an City, Wenzhou bought the development rights for a piece of land of about 2 hectares.


Previously the Zhengyuan company had signed a contract with Wenzhou Marketing Association to develop the land for the latter, which acted on behalf of 260 members of the Whenzhou Housing Cooperative.


The balance of the interlocking relations is subtle. The 260 housing cooperative members entrusted Wenzhou Marketing Association to act on their behalf and the latter then signed a development contract with a property company, which has the legitimate right to buy and develop the land.


Zhao Zhiqiang admitted that "acquisition of land" was the major bottleneck for China's individual housing cooperatives. "Wenzhou's success came from a set of combined favorable factors: the legal status of the marketing association as a social organization, the expedient financing channels and a hung property market," said Zhao.


As China's property market is mushrooming at seemingly unstoppable pace, governments are constantly issuing measures to tighten control over the sale of land, thus pushing up the price to some extent.


The project will give the 260 housing cooperative members great leverage to cut their housing costs. By having a company to build their houses on a piece of land bought with their own money, the members will finally be able to buy their homes for around 5300 yuan (US$762) per square meter. The average price of a tower block home close to their site is around 11,000 yuan (US$1,394) per square meter.


"As is shown by this housing project, land accounts for over 70 percent of the total cost while the actual construction and development price per unit is less than half of the current market cost for tower block apartments in this area," Zhao said.


Current membership of the Wenzhou Housing Cooperative is around 400. “If this project proves successful, we'll start the next one," Zhao said. He's the main mover and coordinator of the Wenzhou Housing Cooperative.


Seven representatives from Beijing, Guangzhou, Shenyang and Wuhan's housing cooperatives attended the Second China Individual Housing Cooperative Seminar.


(Oriental Morning Post, translated by Wind Gu for, November 18, 2006)



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