June 18, 2012
Translated by Tang Xiangyang

Chinese developers may find it more difficult to find land on which to construct villas following the announcement of a new set of rules by the Ministry of Land and Resources yesterday. The ministry has published an updated "Catalogue of Prohibited Land Use" which includes a requirement that all residential property projects have a plot ratio above 1.0, those project with a plot ratio below 1, will not be approved.

The plot ratio refers to the ratio of the general construction area to total land area, so that if a housing development is built on plot of land that is larger than the total construction area, the plot ratio for such a development will be less than 1.  

This is the first time the Chinese government has issued regulations that specifically prohibit the awarding of land to villa projects. Before that, residential land projects with a plot ratio under 1.0 had been experiencing difficulty in gaining land.

However, the new regulations don't explicitly prevent property developers from raising the overall plot ratio by developing both villas and ordinary residential properties as part of the same project.

Earlier media reports had noted that developers were using this tactic to avoid existing land use restrictions.

Links and Sources
Beijing Business Today: 别墅类地产首进限制禁止用地目录
MOLR: 最新限制和禁止用地项目目录发布