First-tier housing market: no more "extra space" allowed!
By: Feitian Xiaojingnyu Source: Geelonghui Real Estate
The race for higher floor area ratio has a red line drawn.
Old renovation new house fined
A new house in Guangzhou was fined for "stealing area".
Recently, Licheng Rongchengwan, a village-in-city redevelopment project on Chajiao Road, Liwan District, Guangzhou, was found to have converted decorative columns into structural columns without permission, involving nearly 200 square meters, and was fined nearly 100,000 yuan.
Simply put, the developer was fined nearly 100,000 yuan for stealing area.
Some netizens joked that spending 100,000 yuan now makes the whole of Guangzhou know about it, and 100,000 yuan in advertising wouldn't have such an effect.
The project, launched for sale in 2023, features 85-168 sqm river-view units, near Huadi River and Metro Line 1. Currently, units of 76-165 sqm are on sale, with several hundred unsold units.
Second-hand housing listing prices show that a roughly 98.8 sqm unit, southeast facing low floor, is offered at 3.65 million yuan.
Nearby, Baoli Huawan, a 2020-2021 community, had a transaction unit price of just over 30,000 yuan per sqm in May. On May 26, a mid-floor unit of about 128.59 sqm sold for 3.92 million yuan, equivalent to about 30,500 yuan per sqm; on May 11, a low-floor unit of about 101.43 sqm sold for 3.23 million yuan, equivalent to about 31,800 yuan per sqm.
Across the street, Licheng Fenshui Garden had a high-floor unit of about 69.06 sqm sold on June 1 this year for 1.675 million yuan, equivalent to about 24,300 yuan per sqm; on May 29, a unit of about 68.98 sqm sold for 1.68 million yuan, equivalent to about 24,400 yuan per sqm.
In recent years, new homes in Guangzhou have seen a trend of higher floor area ratios. A 100% floor area ratio is common; some projects boast 120% under new regulations, and fourth-generation homes even reach 140%. It seems the bolder the developer, the higher the floor area ratio.
Competing on floor area ratio has been a consensus in the Guangzhou housing market over the past two to three years.
Although Licheng Rongchengwan's converted area is small, and the penalty is minimal—less than 100,000 yuan is just a tickle for developers—it nonetheless signals that Guangzhou's new homes cannot indefinitely push floor area ratios without limits. This year, Guangzhou has repeatedly sent such signals.
First, in March this year, the Guangzhou Municipal Planning and Natural Resources Bureau and the Guangzhou Municipal Housing and Urban-Rural Construction Bureau jointly issued the "Several Opinions on Supporting High-Quality Residential Construction," specifying that, except for the ground floor, the proportion of public open space not counted in the gross floor area (GFA) for a building shall not exceed 5% of the building's total GFA. In other words, the total area of "free" public space cannot exceed 5% of the building's total GFA. Essentially, this prevents loopholes. The original intent was to encourage more public amenities, but without a cap, developers could use "public open space" to create unlimited free area, possibly converting it into usable indoor space, thereby exceeding GFA limits.
Second, at the spring land promotion conference in March, the Guangzhou Planning and Natural Resources Bureau clarified boundaries for new homes competing on area: reporting structural columns as decorative columns, and compressing indoor area early on, then later converting balconies, flower pools, bay windows, etc., to artificially increase floor area ratio, are all illegal and subject to key supervision. Licheng Rongchengwan exactly touched this red line, so it was penalized as a typical case.
Braking the race for floor area ratio
Why regulate this "stealing area" behavior? The reason is simple: excessive "stealing area" and competing for floor area ratio could affect building safety. Licheng Rongchengwan changed decorative columns to structural columns, meaning owners could later demolish the decorative columns to increase indoor space. However, when applying for construction approval, the structural columns that should not be altered or removed were reported as decorative columns. The developer's main motivation is to boost the usable rate of units by "stealing" structural column space, making the project appear more cost-effective compared to competitors. Since decorative columns are not included in GFA, buyers do not have to pay extra for the area, yet they get additional "free" space from the developer, greatly facilitating sales in a sluggish market. This is a risky move on the edge of regulation and rules. If undiscovered and passed inspection, after delivery, if owners demolish decorative walls themselves, it becomes their own action, unrelated to the developer. But converting structural columns into decorative columns essentially violates the main load-bearing structure of the building. In the short term, no obvious abnormality may appear, but in the long run and under extreme conditions, the risk is extremely high. Structural columns are the vertical skeleton of the building, responsible for carrying the loads from floors and beams over multiple stories, while also resisting horizontal forces from earthquakes and wind. Changing them to decorative columns directly lowers the structural safety baseline. Over time, floor slabs and beams may crack from overloading, and the building may experience uneven settlement. The lateral stiffness of the floor decreases, weakening the building's seismic capacity. If walls and slabs deform due to stress redistribution, even after repair, cracks will reappear and become wider and more numerous—this is irreversible structural damage. The absence of structural columns can also increase the actual span of floor slabs, reducing stiffness, causing noticeable vibration and shaking when people walk. This practice may take a long time to manifest its hidden problems. Therefore, it's not that developers are prohibited from "giving away extra space," but such "stealing area" behavior poses significant safety hazards to the building's service life. And a shortened building life means higher future maintenance costs for owners. So, it's not that "giving away area" is banned, but there must be a limit to competing for floor area ratio. If excessive competition continues, we may see strict restrictions on high floor area ratios in the future. For now, the ones suffering are the owners who bought Licheng Rongchengwan. After all, the fine is minor; the main issue is that if the project fails inspection, property certificates or other procedures may be delayed.
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The author's views do not represent Geelonghui's position.
