In order to regulate transactions involving state-owned land-use rights (Land Transactions) and to add transparency to the transaction process, the Shanghai Municipal People’s Government (the Shanghai Government) opened the Shanghai Land Exchange (the Exchange) on March 1, 2008. In conjunction with the administration of the Exchange, the Shanghai Government issued the Administrative Measures for the Shanghai Land Exchange (the Measures) on February 28, 2008 and the Measures took effect on March 1, 2008.
The Exchange dually serves as an information center for data concerning land transactions in Shanghai and a market with uniform rules in which to conduct industrial and commercial land transactions in Shanghai. The Shanghai Municipal Housing, Land and Resources Administration Bureau supervises the relevant land transactions and the Shanghai Municipal Real Estate Transaction Center (the Transaction Center) manages the Exchange and offers relevant services.
Under the Measures, the following land transactions must be conducted on the Exchange: (1) the transfer and lease of state-owned land-use rights; (2) the partition and transfer of land-use rights in economic development zones; (3) the transfer of land-use rights and affiliated building construction projects; and (4) the transfer of real estate involving land-use rights obtained via government allocation. Notably, transfers in which the government seeks to reclaim allocated land-use rights are excluded from the Exchange.
If relevant laws and regulations require that certain land-use rights be transferred or leased through an invitation to bid, auction, or list (collectively, Public Transactions), the Transaction Center will conduct Public Transactions at the Exchange. People who win the bid or auction will then sign land-use right transfer agreements or leases with the appropriate land resource administration.
If, after the release of a public announcement of proposed transfers or leases of a tract of land (excluding industrial land and certain types of commercial land), only one applicant comes forward before the announcement expires, the competent authorities may sign a letter of intent with the applicant and publicize it on the Exchange. If nobody objects during the mandatory publication period, the authorities may then proceed with signing a land transfer or lease contract with the applicant; the Measures also require that the competent authorities publish the outcome of such transactions at the Exchange. However, if during the initial public announcement the competent authorities receive more than one applicant, the Transaction Center must conduct a Public Transaction.
Partitions and transfers of land-use rights in economic development zones must be conducted publicly if either of the following conditions are satisfied: (1) the proposed transaction concerns commercial land involving industry, business, tourism, entertainment or commercial residential housing; or (2) the proposed transaction concerns other types of land involving more than one potential purchaser.
With respect to the transfer of land-use rights together with affiliated building construction projects, the seller and the intended purchaser must file an application with the Transaction Center so that the Transaction Center can report to the original land resource authorities and have them review the proposed transaction. If the land resource authorities approve the transaction, the parties involved may then enter into a letter of intent that will be disclosed on the Exchange. After a fiveday waiting period, if no other potential purchasers come forward, the seller and the intended purchaser may complete the transaction. If there are other potential bidders, however, the Transaction Center must conduct Public Transactions.
Finally, relevant land administration authorities must examine all proposed transfers of real estate involving land-use rights obtained through government allocations. The land administration authorities must decide whether the government will reclaim the land-use rights or repurchase the land-use rights before approving the proposed transaction.