Shanghai housing authorities began using a new computer bidding system yesterday to improve transparency in the leasing of city land.

The city announced plans yesterday to lease out 20 plots of land in five districts using the computer system, which replaces city officials in analyzing bidding prices and development plans.

The Shanghai Housing and Land Administrative Bureau said yesterday that the results and criteria used to decide which developer gets to lease a plot will be published on the bureau's Website three days after the bidding is completed.

Developed by the Shanghai Information Technology Development Commission, the new system also records and analyzes data from land transactions, including prices and volumes.

The computer bidding system is expected to reduce personal intervention and mistakes, the bureau said. In the past, critics have claimed that developers used their close relationships with city officials to lease land at cheap prices.

One of the city's biggest developers has been under investigation since last summer over questionable loans and inside dealing.

Developers, particularly smaller companies, applaud the new system.

"Previously, the criteria used to evaluate developers' plans were not published," said Ma Zhijiu, a manager with Shanghai Sitico Real Estate Co Ltd. "That disappointed the bidders."

Having that information published online will help small companies compete against government-backed developers, said Ma.

Some analysts think the new policy will help bring down housing prices in the city.

Yin Kunhua, a professor at Shanghai University of Finance and Economics, said some bidders in the past had offered irrationally high prices to win a land-leasing auction because it was the only way they knew how to compete.

"Overly high bidding prices will eventually drive up the housing prices and raise their management risks," Yin said.

Housing prices have been on the rise in Shanghai for the past three years.

To keep prices down, the city plans to lease out 2,500 hectares of land this year. In 2003, the city leased 1,900 hectares of land for development.

The city is also pushing real estate companies to start developing land they have already leased but are sitting on until prices rise.

Cai Yutian, director of the Shanghai Housing and Land Administrative Bureau, said developers currently hold 6,000 hectares of land in reserve in Shanghai.

"As the city's housing prices keep surging, some developers tend to hold the land in a bid to gain more," Cai said. "We will introduce policies to push them to start construction."

Developers can be fined up to 20 percent of the price they paid to lease land if it sits idle for more than one year.

(eastday.com February 26, 2004)