Can co-ops solve Beijing's housing woes?

A local property entrepreneur announced his intentions to build an affordable co-operative housing project in Beijing Wednesday, despite the failure of other similar schemes to get off the ground.

Sun Zhiqun, founder of Beijing Individual Co-operative Housing website, said at a press conference he planned to launch a co-operative housing scheme. He hopes to recruit 1,300 qualified participants, who will each contribute from 250,000 to 300,000 yuan ($39,250-47,100) to buy a piece of land, on which apartments will be built.

The project promises it will give participants the possibility of buying their house in Beijing at a price 40 percent lower than commercial real estate projects.

The day before Sun announced his project, the price of land sold for development hit a record high in Beijing, 42,000 yuan per square meter.

The land was bought in Haidian district by Sinobo Group Company, a Beijing-based investment holding company. Local property owners in the neighborhood with homes on the market immediately raised the list price by 200,000 yuan on the same night, the Beijing News reported Thursday.

"A large number of residents in Beijing can't afford proper accommodation, and I have great faith that a co-operative housing model could be a success under the right management," said Sun.

The biggest difficulty, Sun said, is competing with powerful commercial developers to buy scare land resources, which the government decides when to release to the market.

"The other is building up the trust of over 1,000 individuals who want to be involved in a private organization like mine," said Sun.

So far there are 130 interested members, and yet he could not predict when they could acquire the land and start construction, Sun said Thursday.

Previously, two property pioneers announced they planned to launch individual co-operative housing projects in Beijing in the last nine years, but neither project has been realized so far.

In December, 2004, Yu Linggang, a Lenovo engineer at the time, introduced the concept of co-operative housing to China, but failed to acquire land in Beijing despite four attempts, finally giving up in 2009.

Zhao Zhiqiang, a businessman from Wenzhou, Zhejiang Province, announced a similar co-operative scheme in Beijing last December. His original co-operative project in Wenzhou, for 256 households, got off to a rocky start, but was finally given the go-ahead by local government.

"It's been reported that our project is dead, and was only speculation, which is incorrect. We're planning a bid for a tract of land on the South Fifth Ring Road," said Zhao.

Zhao said compared to Wenzhou, they need more participants on board to have adequate money to buy the land, even though it is not in a central location.

About 400 people have signed up to the project since last year, and 60 percent are migrants living in Beijing, Zhao said.

"I think two facts make our project different from previous ones; we don't ask interested members to pay fees before the actual land purchase, and my 18 years of experience in property sales and development in Beijing," said Sun, who plans to involve Shengjing Bank to supervise the management of the co-operative.

They are looking at land in Daxing and Tongzhou districts, where the current price is over 13,000 yuan per square meter. Ideally, the co-operative apartments would be priced at around over 7,000 yuan per square meter, Sun said.

At present, individuals are barred from buying land, so purchases must be made by a company on behalf of a developer.

Local regulations contain no specific rules about co-operative home projects, which means these schemes should be able to proceed, as long as a certified developer is brought on board, Beijing housing authorities said, according to the Beijing Times in February.

A local resident, surnamed Hu, who saw Sun's project promotion at Guomao Subway Station last week, did not appear to buy into the whole concept.

"The price sounds intriguing and it's well-intentioned, but individuals building apartments is so difficult without government support, and it has no advantage over [mainstream] property developers," said Hu.