Sky-high home prices hurt competitiveness in cities

Sky-high housing prices are taking a toll on competitiveness in many cities like Shanghai, which recently lost its rank as the best mainland Chinese city for business to Guangzhou, according to a 2010 Forbes list of China's best business cities.

In descending order, the 10 best Chinese cities for business are: Guangzhou, Shanghai, Shenzhen, Hangzhou, Suzhou, Beijing, Wuxi, Ningbo, Nanjing, and Tianjin.

High costs brought about by high housing prices can weaken a city's competitiveness. Shanghai scored 0 points in "business costs," while Guangzhou scored 0.2 points. The rent and prices of office buildings are important components of the "business costs."

According to statistics from multinational real estate corporation CB Richard Ellis, the rent and prices of quality office buildings in Guangzhou in the first half of this year were only 46 percent and 51 percent, respectively, compared with Shanghai.

Shanghai's high housing prices have also affected its ranking in the "talent index." Shanghai outshines Guangzhou in both the quality and quantity of colleges and universities as well as scientific research institutions, but scored 0.9 points in "talent index," a mere 0.04 points higher than Guangzhou's 0.86.

Admittedly, high housing prices are a natural result of urban development, but it is obviously wrong for many cities to increase housing prices first and then sell land at high prices. Overpriced office or residential buildings will inevitably increase companies' business costs and thus reduce a city's attractiveness to talent.

By People's Daily Online