House Seekers Search for Dream

The 32-year-old information technology engineer wasn't seeking celebrity when he unified some Beijing house-seekers behind the idea of building an apartment project on their own rather than buying flats from developers.

But his act of defiance instantly drew him into the media spotlight.

Yu Linggang, the engineer, who works at Lenovo - a leading computer company in China - confesses he is not a professional in the real estate business. But now some famous real estate firms are doing all they can to try to co-operate with this "nobody."

Yu initiated his housing project in mid-December of last year to "counteract profiteering in the real estate trade," he says.

For his apartment tower project near the northern Fourth Ring Road, a golden housing area in Beijing, he says participants can buy an apartment with the maximum floor area of 120 square metres at just 40 percent of the price charged by most developers.

Beijing's real estate sector has been notorious for its rising redhot prices, with commercial housing averaging 6,325 yuan (US$760) per square metre in the first nine months of 2004, 8.23 percent more than the previous year, according to Beijing Real Estate Administration figures.

Some insiders estimate that at least 30 percent of the prices paid go straight to developers' wallets as profit.

In addition, homebuyers of ready-made apartment buildings usually have no say on who is hired as estate manager, let alone sharing income from businesses like community billboard advertising and leasing at ground-floor shops.

For those homebuyers frustrated at such a high profit rates and poor estate managers at their complexes, Yu's promise of substantially lower costs and future bonuses - including income sharing from estate management - are a big lure. Within one day, his online billboard bulletin attracted more than 200 participants.

Pretty soon he received contacts from 300 people, each offering 150,000 yuan (US$18,000) in trust money and a share of a bank loan of 225,000 yuan (US$27,000), a minimum to set the project in motion.

Now the project, once dismissed by some as a Utopian dream, is "going well," says Yu.

And "the blueprint will be much more concrete" if, in the next step, all the want-to-be participants really have the ability to pay the price needed for their involvement.

Liu Jingjing, a candidate in her 20s who is now living with her parents, says she took interest in the project because of its brand-new operational mode and conception. "Everybody hopes for a house where he or she will feel happy, but a ready-made product from a developer always seems disappointing with its high price," she says.

Market shaker

Yu's move has shaken the foundation of the real estate sector in Beijing and is regarded by some real estate analysts as open defiance to the current market order of the profitable industry dominated by developers.

Yet Yu is not alone in challenging the system. Similar housing co-operative ventures have emerged in other major Chinese cities like Shanghai, Chongqing and Shenyang.

Kuang Weida, a real estate researcher with the Institute of Finance and Trade Economics at the Chinese Academy of Social Sciences (CASS), says the emergence of these housing programmes is by no means accidental or a sudden impulse by their initiators.

"It's a reflection on and outcome of dysfunction in the housing market. It's very natural that house seekers, frustrated by high housing prices, will unite and take action when the government fails to intervene in the profiteering of the real estate industry and regulate the market handicapped by a low elasticity of supply," Kuang says. "Housing co-operatives are popular in Europe and are a good way to balance the market."

Even without Yu, Kuang says, there might be others.

Surrender to developers?

Yu, who grew up in Beijing, is not houseless himself, but says he believes this alternative can better protect estate owners' rights and save them money.

Though the do-it-yourself scheme was sneered at as a children's toy bricks game by some when Yu first posted his online messages to promote his idea in 2003, Yu says he was confident at the very beginning that the apartment tower will one day stand firm among forests of high-rises in the nation's capital.

Based on the project, a consultancy service company was set up in mid March. The company has a 50-member board of directors and is composed of four management teams, including administration, finance, project and legal teams. At the end of March, the company reached an agreement with Vantone, a leading developer claiming to provide personalized real estate service, for apartment design and construction. About two months before that, the Minsheng Banking Corporation, a large private bank in the country, expressed its willingness to provide lending, with a dozen other banks promising support for the project.

Aside from problems in the process, such as land selection and bidding and project supervision, misgivings over the prospect of the housing co-operation mode have always followed Yu.

In some observers' eyes, the situation is aborting the true concept of the housing co-operative model after Yu joined hands with Vantone, ascertaining that Yu surrendered himself to estate developers at the cost of his partners' interests.

"We cannot design and construct the project with our own hands," Yu contends. "Vantone is actually employed by us."

Doubts still looming

Liu Hongyu with the Real Estate Research Institute of Tsinghua University says that the future of the fledgling housing project remains ambiguous in spite of its current impetus.

"The initiators' and participants' intent should be appreciated. But they might meet many difficulties when operating. They cannot do this without professional management from budget and design to construction, since their co-operation is after all a loosely organized group and most participants are not professionals," the professor says.

The involvement of professional agents, such as the design and construction contractor Vantone, however, will inevitably add expenses to the non-profit-seeking move, Liu says.

Some real estate analysts predict that the housing co-operative is doomed to be a failure, since it flies in the face of economic rules of social labour division and will restrain social labour efficiencies.

CASS researcher Kuang Weida, however, says that the emergence of such co-operatives themselves is significant even if they cannot be sustained. "It is a signal to remind us that the government isn't playing its role in the current real estate market."

Kuang says he hopes the non-market housing mode, as a good supplement to the current real estate market, can survive, but adds that depends on whether the organization is well-organized with definite management rules. Otherwise, the mechanism cannot run effectively and might serve as a tool for personal interest.

What's more important is a favourable environment created by policy support and legal guarantees, which are currently absent in the country.

A line city

Nothing, however, seems to be able to blur the ambitious Yu's vision of the future. He says that two things are driving him forward: memories of a childhood tragedy and an incentive to seek self-improvement.

Yu lost his mother in a road accident when he was at primary school age. "Ever since then I dreamed of creating a city linked only by undergrounds, where people may feel safe without cars running across streets and thus can see fewer family tragedies like that of mine," Yu says.

The childhood tragedy, the engineer says, can partly explain why he takes deep interest in urban planning.

He once spent time in the National Library perusing publications on city planning and urban construction.

His ideal model is a line city - residential and functional clusters strung by undergrounds and light rails, which is green, low-cost and energy-saving. The current move to build an apartment tower under the framework of a co-operative is only a pilot project of a bigger aim, where he will try most of the ideas of his line city, Yu says.

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