How landlords in the tech mecca of Shenzhen are fighting Beijing

Low-cost housing in Shenzhen is arguably the secret sauce that allowed it to grow into the coast Chinese city to become the 12.5 million-person tech hub it is today, but Beijing doesn’t see it that way.

Authorities from Beijing are locked in a legal battle with local landlords to demolish the so-called “urban villages” of cheap housing where hundreds of thousands of Shenzhen’s workers live. According to the Financial Times, authorities posit that the valuable land, which currently houses old residential buildings, could be better leveraged by developers ready–and some with paperwork in-hand–to build high-end new projects.

Such was the case for Shenzhen’s largest “urban village,” Baishizhou, now home to 150,000 residents. Hong Kong-based developer LVGEM issued a demolition notice in 2014 to make way its new malls, hotels and skyscrapers. But land ownership, which is a complicated matter in Shenzhen, has engrossed the project in delays ever since.

When the Communist party came to power in 1949, residents from five rural villages were given land holdings in what is now Baishizhou as part of reallocating private assets throughout the country.

Many of those original landlords retained their properties and, in the 1990s, when local authorities rezoned the area to spur more housing development, they complied, creating cheap housing close to the influx of major manufacturing and now tech companies setting up shop in the city.

Since the demolition notice, landlords have been engaged in lengthy negotiations for compensation for handing over their land–a process that’s already lasted years and has many residents feeling secure their homes will be standing for awhile.

“There is more respect for property rights in Shenzhen than in Beijing, but most of [Baishizhou has not been demolished] because the property owners have a much higher degree of co-operation and unity with one another,” local architect Duan Peng told the Times.

Some landlords don’t even believe  demolition will actually occur: “The government will never solve the problem of Baishizhou. They have talked about demolishing it for years but the ownership structure [of property here] is just too complicated,” one property owner said to the Times. [FT]