China's Urban Construction Land Securitization

Land is a very important factor of production. Though the land is inexhaustible, but the land becomes scarce when industrialization, acceleration of urbanization, expansion of city and developments of population are focused. How to improve the utility of the land, reasonable distribution of urban land, value-added benefits of the distribution of the urban land and study of the new ways of financing channels to solve the problems of capital are the important subjects of china city construction. The mechanism of Asset Securitization combines the capital market and the land market, and is the efficient way to solve the problem of city development, through the experiences of the developed countries. Based on the theories, practice, legislatures of America, Japan and Taiwan' real estate securitization, this thesis analyzes the purpose and the feasibility of city land securitization, and the model for the city land securitization to provide the reference of the combination of capital market and land market and the development of capital market.Apart the introduction and the conclusion, this thesis is divided into four parts:The first part is the purpose of the securitization of the land-use right of city land and the system and the environment of securitization of the city construction land.. This part introduces the theory of the securitization of city land, namely the general principle of the securitization of capital and the securitization of the land. Asset Securitization is the process of the financial intermediation of the asset which is lack of circulation but have the potentiality of cash flow and forming the asset pool. Asset securitization includes one core doctrine and three basic doctrines. The core doctrine is the analysis of the cash flow of asset, including the valuation of the asset, the risk of the asset, the analysis of the proceeds. Three basic doctrines include the asset reorganization, the risk isolations and the credit enhancement. The asset reorganization is that through the reorganization to reorganize the proceeds of the asset; the risk isolations is that through the division and the reorganization of the risk of the asset to isolate the risk of the basic asset and other assets -mainly the assets of the original owner; the credit enhancement is that through the way of enhancing the credit to guarantee and enhance the credit of basic asset and reduce the risk of the issuance of securities. According the principle of the theory of investment-reducing the risk of investment and improve the investment rate of return, the general doctrine of land securitization divides the land into small right of permit, and change the relationship of the investor and the investment objects from owning the land to owning the creditor's rights of security, gathering the capital through the land securitization market. The following part analyzes the necessity of city land securitization, namely the meaning of the implement of city construction land securitization. It helps improve the circulation of land asset, helps the small investors participate in the distribution of wealth, enhances the infrastructure construction, expands financial channels, reduces the financing costs and spread the investment risks. In addition, the city construction land can be transferred and has the stable future cash flow, so it can be the subject of the real estate securitization. Besides, as the development of the regime of city land system and the perfect of the law of financial market and the security market, the regime base and the market base have the qualification of land securitization.The second part is the comparison of real estate securitization. This part compare the mortgage-backed securitization, real estate investment trusts, real estate limited partnerships and related prescriptions of America and rental-trust and sales-trust of Japan and the real estate securitization practice and legislature of Taiwan to provide the model of city land securitization.The third part is the model design of the city land securitization. Comparing the successful experiences of land securitization and considering the current legal system, this chapter provides specific and feasible model of the city land funds, land development bonds, land stocks, limited partnership for the different land-owner and land development type. The city land funds is that the government or the trust corporation form the land funds, through the land benefit certificate which is guaranteed by the future benefit flow of land of the investors to gather capital, then the land reservation supervision organization -the supervisor of the funds use the capital to operate and utilize the city land. The benefits of the city land transfer, rent and the land as the share come to the land funds, the investors get the benefits by the certificate. In china, there is two model of the trust of land asset. One is the Taiwan's model. The owner of the land transfers the land-use right and the related rights to the trustee, and the trustee issues the benefits certificates of land asset trust to investor through the trust property and the owner of the land get the capital to manage the land, the investors participate in the distribution of the land benefits by its certificates. The other one is the Japan's model. The land owner transfers the right to the trustee, and the trustee as the beneficiaries-trustor or third party manages or deals with the trusted land. The beneficiaries obtain the benefits of the trust from the benefits of the trustee's management and deal. The bond of land development is that the issuers, the government or the authorized bodies and the real estate enterprises, reserve and prepare the capital for the land, commissioning the security issuing body. The capital will be used in the land development, bond investors require the principal and the interests in the agreed deadline. The land stock model belongs to the company-type real estate securitization, the enterprises of land development issue the stock about the utility of the land to develop the land. The limited partnerships model is that the enterprises of the real estate establish the limited partnerships, and sell the rights of the limited partnerships and use the capital to develop the land, basing on the land-use right and the ownership. The investors share the profits of the land development.The forth part is the analysis of the progress of the city land securitization and the breakthrough. Though the fundamental requirements of the land securitization are mature, the land securitization refers to many regime innovations, because of the complicated and professional system. So the regimes and the policies have to confront the restrictions in the current market environment and the regime environment, the restrictions of special purpose vehicle of the legal system and the selling of basic assets, the restrictions of credit rating system, credit enhancement system, security system and the supervise of the intermediaries. To create a good city land securitization regime environment and market environment, solutions of solve the barriers should be proposed and stipulate the corresponding regimes so that the land securitization will in benign development. Thus, the laws and by-laws should be perfected and the special security law should be used to sweep the barrier of the land securitization; the intermediaries should be established; the government should intervene the land securitization; the managers should be cultivated and the operation should be perfected; the risks be prevented and the market should be prepared.