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Shanghai shortens term for industrial land-use rights

The Shanghai government recently issued sweeping changes to the regulation of industrial land-use rights (the ‘Rules’). Together with a new standard form of the Land Grant Contract (for industrial land-use rights, current draft to be adopted prior to 1 July 2014), the Rules will have a major impact on the acquisition and financing of industrial and logistics properties in Shanghai. Set out below is a summary of key changes and practical consideration regarding the Rules.

Shortened land-use term
With very few exceptions, the term for new grants of industrial land-use rights will be shortened from 50 to 20 years. Industrial land-use rights granted prior to the effective date of the Rules will not be affected. However, the renewal of existing land grant contracts that have a 50-year term is subject to the approval of the land administration authority.

Draft land grant contract
Shanghai’s land administration authority is currently developing a standard form contract (‘Land Grant Contract’) to be used for granting industrial land-use rights. Upon finalisation of the draft Land Grant Contract, it is likely that this contract will be required to be used for all grants of land-use rights for industrial land…

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