All land leasing contracts signed after May 1, 2001, will be reviewed and scrutinized by the Shanghai Supervision Commission and the Shanghai Housing and Land Administrative Bureau.

Since last July, China's Ministry of Land Resources has required all land for commercial use to be leased through open bidding. The Shanghai government began using open bidding in 2001.

While open bidding was supposed to end all backroom deals, it hasn't been totally successful as government officials don't have to lease land to the highest bidder and are not asked to give a reason for their choices.

"Some land is given away at low prices to some developers, who make huge profits afterward," said Cai Yutian, director of the Shanghai Housing and Land Administrative Bureau.

Most of the land sales are hosted by district governments. From now on, the commission and the local real estate bureau will supervise the district governments' decisions.

The investigation will last until the end of this year, making the bidding procedure more transparent and correcting existing mistakes.

"The land which was leased in improper ways will be collected and put into open bidding again," Cai noted. "If the land was leased out at prices below market value, the developers should make up the margin."

Also yesterday, the government announced plans to build 3 million square meters of medium- and low-price apartments annually over the next three years for people to be relocated to make way for some key infrastructure construction projects.

The apartments will be priced between 3,000 yuan (US$361.45) and 3,500 yuan per square meter, lower than the city's average housing price of 4,700 yuan.

The first batch of 12,000 such low-end apartments will be put into use by the end of September. Scattered on six parcels of land, these apartments will cover 1 million square meters.

In addition to meeting the demand of relocated families, the government hopes the move can boost the supply of houses priced below 5,000 yuan.

"The real estate market in Shanghai should meet the demand of ordinary people who live on a salary.

We hope that medium- and low-price homes will make up the bulk of products on the local real estate market," Han said.

The emergence of more low-end apartments will bring down overall housing prices in Shanghai, said officials.

Last year, about one-third of the apartments under construction in the city were expensive homes, located within the Inner-Ring Road.

(Shanghai Daily June 12, 2003)