by Toffler

Toffler

Toffler

Chinese Construction

I just finished reading the September/October 2007 issue (yes, I know I’m a little behind, but blame this one on my mom) of Probate & Property which had 3 extensive articles on Real Estate Law in China and the property market.  The reason for the articles was the new Property Law of China that was enacted in March of 2007 and effective in October of 2007.  The articles were much too detailed and in depth to discuss here, but the highlight, which many people already know, is that in China land may not be ‘owned.’

As the Communist Party, continuing to adhere to Marxist principles, the government owns the land.  People can and do own the buildings on top of the land but they don’t own the land.  The land is used for development under ‘land use rights.’  Land use rights last for between 40-70 years, depending on the type of development.

This explains to me why all the construction in China is so poor: there’s point in investing in quality construction when your lease term is only 40-70years.  The construction only needs to last 40-70years, not a lifetime or even many generations like some of the great historical buildings we still admire today.  Why spend the money on something that won’t be around for more than 50years, because you can cut corners and get it done for cheaper if you sacrifice quality.  My apartment, according to my dad’s guess is 10-12 years-old, while in fact, its about 4 years.  It just looks older due to number of factors, among which, shoddy construction, air pollution, and acid rain.

Sure this might sound like a sarcastic post (and it largely is) but have a look for yourself.  Land ownership leads to stricter  standards and higher quality construction than ‘land use rights.’

One Comment

  1. mjbphx |

    Good insight.

    Another factor often is the lack and consistency of experienced labor at all levels of construction, whether laborer or foreman, superintendent or project manager. Still another factor is inadequate checks and balances, i.e. honest inspections by either government inspectors or third party private inspectors.

So, what do you think ?