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Vanke as city operator: Vanke Changyang Penninsula as a test case

January 20, 2015

konjaku: under the topic of “education real estate” we saw that Jin Mao Palace, a high-end residential project in Chaoyang, arranged to build a branch campus of the prestigious Beijing #2 Experimental Primary School on its site, for the use of its residents.

https://konjaku.wordpress.com/2014/08/14/education-real-estate-a-new-twist-to-the-rule-that-every-child-can-go-to-a-nearby-school/

In Yanjiao, a rapidly developing city just outside Beijing with cheaper real estate prices, the large-scale Shou’er Tiancheng project is building a multi-school campus to supply a full twelve years of schooling for its residents. They may not offer the services of a famous, already established, school, but they do score points for having a comprehensive education plan.

https://konjaku.wordpress.com/2014/09/12/education-real-estate-12-years-guaranteed/

Both these efforts offer prospective buyers the guarantee of a school in an area in which educational resources are strained. They also attempt to take advantage of the Ministry of Education directive that every child may go a “nearby school.”

Large real estate companies are beginning to see themselves as doing more than putting commodity housing on the market. They offer schools (educational services), hospitals (medical services), ferris wheels, restaurant and shopping complexes (lifestyle and entertainment services). They put up office buildings and research and development facilities, holding out the hope to residents that they will be able to arrange to live and work in the same location, finding all their needs met in the new “micro-city.” In positioning themselves to offer all these services, they define themselves as “city operators.”

https://konjaku.wordpress.com/2014/12/11/real-estate-developers-transform-into-city-operators/

The question arises: how will these powerful and influential city operators interact with local government and the public to achieve their particular aims? The following story is a test case of the kind of problems that can arise.

Vanke, the largest real estate developer in China, in collaboration with Zhongliang, another large developer, built a new residential community for 7000 residents in the Fangshan District, southwest of Beijing. Fangshan is relatively undeveloped, and Vanke promised prospective residents schools and a hospital. It contracted to build branch campuses of two very prestigious schools in Fangshan: the Beijing Primary School, and the Beijing #4 High School. The Beijing Primary School is the only primary school that is simply named “Beijing Primary School,” not Beijing Experimental School, or Beijing #2 Primary School, etc., as the first school established by the Beijing Municipal Party Committee after the founding of the People’s Republic in 1949.

Vanke Changyang penninsula curtails their “complete set” –200 demonstrators brave the cold wind

http://house.qq.com/a/20111212/000228.htm

2011-12-12

60244259

On 2011-12-10, over 200 Changyang penninsula buyers held out horizontal banners and delivered wreaths, standing in the cold wind to protest Vanke’s decision to shrink the complete set of services planned for Changyang penninsula. Namely, the planned Tertiary First Grade Comprehensive Hospital was changed to be a hospital offering only specialized services, not a comprehensive hospital; and the quota of students for Beijing #4 High School (Sizhong School) is only for a six year period.

Apparently the majority of buyers were given the understanding at the time of the sale that Vanke promised a complete set of facilities including a school, a hospital, and a kindergarden. Most of the buyers are first time purchasers who definitely need the kind of services a young family raising children requires. They think of Beijing #4 High School as a famous school with an international reputation, and for many of them admissions to this school was a major selling point.

The Vanke deputy-chief Xiao Jin said in an interview with this reporter, that Vanke Changyang Penninsula had been prepared to offer residents the services of a Tertiary First Class Comprehensive Hospital, but the original plan for a full service hospital was scrapped and replaced by an orthopedic hospital instead.[A Tertiary Hospital refers to a large hospital of 500 beds or more, serving a city area or above. “First grade” is the top of three specified grades for hospitals.] Several days later, Vanke announced the 6 year limit for the student quota going to Beijing #4 High School, namely, from 2014-2020, but said the limit might be renegotiated before it expires. In any case, the promise that Changyang Penninsula would be a “school district residence,” with one student per household having access to Beijing #4 High School, had turned out to be an illusion.

Protesters said that in accordance with the market Vanke was lowering prices on residences at Changyang Penninsula, and taking back promises made at an earlier stage, amounting to false advertisement.

Background:
The Zhongliang Vanke Changyang penninsula project [a collaboration between Vanke and Zhongliang, in English COFCO, one of China’s largest state-owned companies] is located in Fangshan district Changyang town, near high-speed roads leading toward central Beijing, but without facilities such as schools and hospitals.

As late as the fall of this year, at real estate fairs, Vanke promotional literature was still stating, “a light rail transportation system, a complete educational system from kindergarden through middle school, a Tertiary First Class Comprehensive Hospital, to manifest your lifelong dream.”

http://news.xinhuanet.com/house/2011-12/07/c_122387994.htm

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

Changyang Penninsula

However, more recently a Vanke spokesman has stated: “Current understanding is that the use of the southeast corner of the Number 2 [land] parcel, next door to the Beijing #4 Fangshan campus, is subject to negotiations by 301 [People’s Liberation Army General Hospital] and the Peking University 3rd Hospital to build an orthopedic hospital. The Tertiary First Grade Comprehensive Hospital called for in the original plan shall not be.”

This “shall not be”refers to the hospital the developer previously promised buyers as a recommendation to purchase in the Changyang Penninsula community. This reporter looked at the map of the revised district plan, and found that the change to an orthopedic hospital had indeed been made.

If you want to go to a comprehensive hospital, we can only wait for the new Police Commander’s Hospital to be built,” said a Changyang Penninsula service center staff member. The Fangshan district Liangxiang Hospital is a comprehensive national Secondary First Grade hospital, but it is 8.5 kilometers away, by bus it takes about 50 minutes to get there [A Secondary Hospital serves a “medium sized” area, has 100 beds or more, smaller than a Tertiary Hospital].

The developer previously stated that buyers would have access to city-level well-known schools such as the Beijing #4 High School, Beijing Primary School, Beijing #4 Kindergarden and the Honghuanglan [red-yellow-blue] kindergarden, even to the point of putting this catch-phrase in their promotional materials: “if you buy in Changyang Penninsula, your child will go to Beijing #4 High School.” Many buyers were influenced in their purchase by the high renown Beijing #4 High School enjoys.

This year on 11-25, Vanke Changyang Penninsula concluded a contract with the Beijing #4 High School, a “one residential unit –one student” quota. The Beijing #4 High School Fangshan campus agrees to admit one student to the school for each Changyang Penninsula residence (“residence” defined by a fixed number of rooms). On the weekend, Vanke held a special conference to explain the school admissions policy, and divulged that the contract came with a fixed period of validity, between 2014 to 2020. “After six years, the decision whether to renew or not will be based on whether there are changes to the education and real estate policy on a national level.”

Upon hearing this, the group of those who had purchased residences in Changyang Penninsula hit the roof. “In six years, my child will still not have graduated from primary school, and now you are saying the promised upper middle school is just a mirage?” “We don’t have a child yet, so we’ll miss the chance. Vanke has really let us down.” Most of the buyers in Changyang Penninsula were born after the 80s, for the majority their children will not be old enough in six years for upper middle school. What kind of explanation did the developer have for this state of affairs?

A Vanke sales representative responded, Vanke has made a contract with Beijing #4 High School fir six years, each year investing 2.7 million yuan. It is not clear whether after six years they will renew the contract or not. If the contract is not renewed, the students will be given the opportunity to take the school entrance exam, and based on the results the school authorities may offer them priority, but they cannot guarantee 100 percent of the Changyang Penninsula students will enter.”

The present author through investigation has discovered cases such as this are not limited to Changyang. Buyers in the Yuanyang Yifang at the time of sale were promised the Fangcaodi Primary School and kindergarden, but in the end this promise disappeared.

Yuanyang Yifang is in the Chaoyang district, [Beijing]. Originally Yuanyang promised buyers they would be able to admit their children to a branch of the Fangcaodi Primary School to be built at the site. This was not written into the contract, but many people made a decision to purchase based on the developers’ publicity. But before two months had past, the promise burst like a bubble. “It was clearly written in the advertisements that the development would build branches of two international kindergardens, one priority primary school, and one priority middle school. Of these, the primary and middle school came to nothing, and the kindergardens are still a mirage.” Yesterday a Ms Tian came to this newspaper, bringing copies of the publicity materials of the developer and recordings of phone conversations with salespeople. “When I was going to buy, the salesperson told me that Yuanying would be able to bring in a Fangcaodi Primary School campus, because Yuangying had a long association with the school.”

As more and more buyers discovered, a Fangcaodi Primary School campus was not being built at Yuanyang Yifang, because the new campus was being built at the Yuanyang Xinyue [another Yuanyang real estate development in Chaoyang]. Although Yuanyang Xinyue was not far away from Yuanyang Yifang, the purchase price between the two was different, and the developer made very clear, with a special announcement, that the campus would not be shared between the two.

This author, upon looking around at the promotional announcements put out by Yuanyang Yifang, found that they still have an advertisement out stating “in all the real estate projects in Beijing east, only we enjoy the favors of Fangcaodi Primary School.”

Actually, in 2009 Yuanyang Yifang signed a three year contract with Fangcaodi Primary School, agreeing that every year Yuanyang Yifang would select and send some 30 or more students to attend Fangcaodi. This September the last batch of students started school there. “At present it is not certain whether the contract will be renewed, or whether an arrangement can be made with another school. At this point, our residents had better handle school admissions for their children themselves.” This from a Yuanyang Yifang customer service representative.

Yuanyang Yifang 远洋一方
Yuanyang Xinyue 远洋新悦
Fangcaodi Primary School 芳草地小学

note: Fangshan Campus
Opened in 2014, the Fangshan Campus is the newest campus of Beijing No.4 High School. It is located in Fangshan, a satellite town outside of central Beijing. Buildings and facilities in this campus are totally environmental friendly. Similar to the Shunyi Campus, Fangshan Campus is only considered as an affiliated school to BHSF although its administration is totally under the Main Campus.

Zhongliang Vanke Changyang Penninsula experiences a rights [weiquan] demonstration — buyers in the residential community demand school admissions priority

2013-05-29

http://finance.qq.com/a/20130529/007568.htm

Last weekend, some 200 ZhongliangVanke Changyang Penninsula residents staged a demonstration outside the project sales office, demanding that Vanke give back to them the right of preferential admission to Beijing Primary School.

The problem started this way: It seems that Beijing Primary School was designated for ZhongliangVanke Changyang Penninsula as forming a complete set of services, but recently the Fangshan Education Commission in a sealed document listed many residential communities in the vicinity whose children were eligible for Beijing Primary, without giving Changyang Penninsula any priority rights. In response to this, Vanke corporation stated they fully understood the buyers’ anxiety, and that if the time came that the children of the Changyang Penninsula residents were not admitted to the school, they would take responsibility.

Why were they demonstrating? A spokesperson for the demonstrators, Ms Wang, said that the Fangshan Educational Committee had issued a school district opinion, in which it listed a number of residential communities in the area eligible for the Beijing Primary School Fangshan branch, including Changyang Penninsula. The problem is, as Ms Wang describes it, “The current school zone of the Changyang Branch of Beijing Primary School now comprises 14,000 households. Most of those who purchase properties from Vanke did so because of Vanke’s reputation as a big provider of education. If they do not get school admission preference, the school admissions process will be a total washout for them. The Vanke purchasers in Changyang Penninsula consider that a part of the price they paid for their residence includes money for school construction, and now it seems if they will end up without a school for their children to attend.”

Ms Wang stated emphatically that at the time Vanke started sales in Changyang Penninsula, it publicly announced that buyers would be given the right of school admissions priority. At that same time, the Fangshan Government website said, in answer to a question posed by one of the Changyang Penninsula buyers, “Since the plan calls for providing a complete set of school places, school admissions priority should be given to the residents as a service. The children of the community residents should enjoy the right of attending school, they have a preferential right.” However “at present the Education Department does not acknowledge this, therefore we are having this demonstration[weiquan], only hoping that the developer [Vanke] will make good their written promises [in publicity materials],” Ms Wang said.

In the Changyang Penninsula publicly released documents this reporter found the following: “within the one million square meter western Beijing education area, we have already succeeded in drawing to our area the Honghuanglan Kindergarden, the Beijing City #4 Kindergarden, and the Beijing Primary School, and with the help of the Fangshan Education Board are drawing in other Beijing schools.”

Vanke in response states that it understands the residents concerns, and they will be able to take care of the matter

So, will the Changyang Penninsula residents get school admission preferences or not? This reporter, pretending to be the purchaser of a property, called the sales office to ask. The salesman who took the call answered that purchasers will have access to a complete set of educational resources, but “some details still need to be ironed out with the Education Commission. When progress is made I can give you a call back.”

After that this reporter got in touch with Vanke Customer Services Center. Head Inspector Wang at the Center responded that he was aware of the demonstration. He said, “ there are school admissions rights, and they are limited to those inside the Changyang Penninsula residential community.” But he did not spell out how all the details and problems related to the issue would be resolved.

Vanke issued a statement saying they will take responsibility, but they have not offered a concrete solution. A lawyer in the Beijing Haodong office weighed in as to whether the residents have school priority rights or not. Zhang Chunjie said, that although school admission priority rights may be written in the Vanke publicity announcements, it is not written in the purchase contract agreement, unless the purchaser demanded it be added as a supplemental clause. “In reality, the developer (Vanke) cannot completely guarantee school admissions, because this is a matter determined by the school itself and the Ministry of Education plan, neither of which Vanke has any say in. Therefore Vanke can only say it will try its best to coordinate matters.”

Fangshan Changyang purchasers fall into a school zone dispute–their ”priority admissions” gets spread thin

http://news.xinhuanet.com/house/bj/2013-06-21/c_124890338.htm

Beijing Primary School Branch Campus

Beijing Primary School Branch Campus

The Beijing Primary School Changyang branch campus buildings are being constructed, to open in time for the beginning of the school year. Meanwhile, a conflict brewing between residents in Vanke Changyang Penninsula, and other real estate communities in the vicinity, such as China Railway Construction Corporation Changyang International City, grows steadily worse.
New Beijing News reporter, Li Dong

Ad on wall during Changyang Penninsula construction naming Beijing Primary School and Beiing #4 High School as part of a 15 year education plan for residents

Ad on wall during Changyang Penninsula construction naming Beijing Primary School and Beiing #4 High School as part of a 15 year education plan for residents

On 6-15, Beijing Primary School Changyang branch became accepting applications for new students for its first year of operation. In Changyang, there are eleven residential communities within its school zone.

The same day, several hundred Vanke Changyang Penninsula residents held a protest at the Changyang Penninsula sales office, shouting slogans about the unfairness of the school zone, and that their promised right of priority school admissions had been weakened. This was the third large protest since the school district issued its guidelines on 05-22.

“We had to pay one third more than other real estate communities in the area, because we were paying for access to Bejing Primary School and the Beijing #4 High School branch campuses.” Vanke Changyang Penninsula resident Mr Wu became more agitated as he continued his story. “Vanke rights of priority admissions was a stipulation we agreed on.”

But, a resident of Changyang International City wrote into a forum, “The plan for a Beijing Primary School branch campus is not just for any one residential community, it is for all of them.Educational facilities is a public service, as far as posible it needs to be fair and impartial.”

According to this reporters investigation, the school admissions priority rights is based on a written agreement between the Fangshan Education Commission, Beijing Primary School, and the Vanke real estate company, which was concluded in 2010, but never made public.
“We repeatedly applied to the government to release the agreement, and filed demands to get a copy of it, but without success,” said Ms Wu. She said they hoped the government would release the document and carry out its provisions. It has been leaked that one of the clauses of the document does give Changyang Penninsula residents priority admission rights to Beijing Primary School.

Beginning in the 3rd month of this year, Changyang International City residents have held demonstrations, demanding that the [Beijing school district reform of 2012] stipulation “of being able to go to a nearby school” be carried out in their case. This has caused Changyang Penninsula residents to become nervous. The Beijing Primary campus will have four classes of entering first graders, so there is a limit on how many spots are available. Changyang Penninsula has 8000 households. Without “admission priority rights” their chances of getting in are quite attenuated. Both sides began holding protests to urge forward their own interests.

On 05-22, the Fangshan Education Commission issued its determination of this year’s school zone. Changyang Penninsula, Changyang International City, Shoukai xiyueshan, Jianbang huating, etc., in all eleven residential communities, were earmarked for Beijing Primary School. This meant that Changyang Penninsula’s admission priority rights were not being recognized, and in the school zone conflict, it had now suffered a temporary defeat.

On 06-20, the Fangshan government website posted a reply from an Eduction Commission staff member, in response to a query from a resident worried about the number of places available in Beijing Primary School. “We have already completed a survey. The Bejing Primary campus has enough space to accommodate all the students of the eligible age in its school zone. There is nothing to worry about.”

With real estate circles it is widely acknowleged that Vanke had a crucial role in bringing the branch campuses of these famous schools, Beijing Primary and Beijing #4 High School, to Fangshan. The author of the “Changyang Penninsula” publication describes in great detail how the Vanke President Mao Daqing brought about a collaboration between business and government, making a “request” for these well-known schools, and how the various district staff members of the Education Commission threw themselves into this matter, even to the point of “rushing directly from the airport in the evening, still wearing flip-flops and shorts, to keep an appointment.”

As more residential communities move to the Beijing suburbs, there is a trend for well known schools to open branch campuses in the suburbs. More and more real estate projects are adding in this option for prospective buyers. However, while the developers do their utmost to put together an attractive “education real estate” package, often they are strong in will but weak in actual power, and the project gets bogged down in indeterminate factors.

Purchasers in Changyang International City, Shoukai xiyueshan, and other Changyang communities say at the time of the sale they were informed,that they were buying “school zone residences,” and that, although without being given specifics, that their children would “be able to attend a well-known school.” Therefore they have held demonstrations asking for their place in the school zone, while accusing the developers of making false promises and cheating them.

The Shoukai shareholders Board of Directors secretary Wang Yi said in response to the demonstrators, “we never gave a clear-cut promise that the purchasers would have access to a particular school. As far as deciding the boundaries of school zones, this is up to the local Education Commission, the developer has no say in admission rights. There is no mention of priority rights in the Vanke contract either.”

Indeed, This reporter examined the Vanke Changyang Penninsula purchase agreement, and found no clause whatsoever concerned with school district matters.

There has been only one public response from Mao Daqing. On 06-01, on International Children’s Day, he posted on Weibo, “When I see many residents demonstrating in front of our sales office, holding their children who are just learning how to walk, I feel as though a knife is stabbing me.” He added, somewhat ambiguously, “after a school has been invested in and begun to operate, whether it becomes a good school or a bad one depends on the cooperative effort of all parties. In our society we have a great lack of trust, but to succeed in this matter trust is the most valuable thing to have.”

Soon after this Weibo post went up, in no time there were more than a thousand responses, but right away the original post was deleted.

Focus: how can the real estate industry escape from creating so many unfair situations?

In drawing famous schools to open branches in their projects in the suburbs, the real estate developers fall into awkward problems. A Changyang Penninsula resident said that although the Fangshan Education Commission had in the past repeatedly publicly acknowledged their priority admissions rights, but after the fourth month of this year they suddenly denied their previous statements. They have also delayed on issuing the school zone plan, it still has not come out. “Its the unpredictable policy changes that keep us from having any sense of security.”

Beijing real estate committee secretary Chen Zhi believes that the real estate industry can actually offer an exit from the overall prevailing unequal distribution of social resources. The local governments are not able to plant the flag of “educational impartiality,” swept along by the so-called popular will. They violate the agreements made between themselves and a business company that have been negotiated in good faith, causing the business to feel bruised and lose its enthusiasm to continue. Chen Zhi said, the local governments, in both thought and action, should keep up with the high speed pace of the real estate industry. They should respect their commitments and also respect the norms of the market. It is possible for suburban development and the redistribution of educational resources to go hand in hand.

Reporter’s notebook

Whose school?

The Changyang residents of the various real estate communities are doing nothing more than scrambling for the best educational resources available, in the outer city suburbs where top quality educational facilities are few and far between. From the past up to the present, Beijing educational resources have not been equally distributed, especialy between urban and non-urban areas there is a grave disequilibrium. As urbanization spreads, more of society is drawn in to participate in the process. How can there now be a dialogue between the various parties, a negotiation of how to share resources?

The prospective buyers who pace back and forth in from of the scale model of the real estate project in the sales office, are inside filled with fears and misgivings. In this far away suburban area under development, can things really turn out well? They have hopes, but how many of these can they depend upon to actually come true?

Vanke’s problem: bringing a well-known school ends in demonstrations

http://www.time-weekly.com/html/20140605/25075_1.html

This year 4th month, the Ministry of Education issued a notice requiring the 19 focus cities to implement the two stipulations of compulsory education –for children to be excused from exams, and to be able to attend a nearby school. As a result of this policy, there began a new round of agitation over the process of choosing a school. In Beijing, because of the upsurge of business in “school district residences,” the unit price of some buildings went as high as 30,000 yuan per square meter. [4,500,000 yuan per 150 square meter residence 724,000 dollars]

There is no doubt that areas around well-known schools sell extremely well, but as city areas continue to be built up, the hot spots in the vicinity of well-known schools becomes completely saturated. There is almost no space left to build anything further. In Beijing new building complexes have spread, concentrating in the 5th and 6th rings. But a number of these really large complexes, because of where they are located, are not near any famous schools. They have no choice but to invite schools to their sites, and then promote the superiority of their educational assets to buyers.

This year, in Beijing Daxing district, Zhuzhong Vanke Orange brought in the Beijing Yucai School Daxing branch campus (the primary school division) Since this project represents the marriage of Zhuzhong and Vanke, both very large, key enterprises, the Daxing Education Commission, the Xicheng district Education Commission [Xicheng is the location of the original campus], and Yucai School cooperated to sign a contract. Under the support of Daxing government, a branch of Yucai School was set to be built in the SE corner of the site.

Before this, Zhongliang Vanke Changyang Penninsula drew in Beijing Primary School and Beijing #4 High School branch campuses, and WuKuang Vanke Ruyuan in Haidian already succeeded in signing a contract with Zhongguancun #2 Primary School, and the Capital Normal University Affiliated Middle School. Regarded as an industry leader, Vanke is in the vanguard in signing contracts with well-known schools, and getting agreements from them to open branch campuses in the suburbs located on the Beijing periphery. However, Beijing Vanke has in the effort fallen into a number of problems difficult to fully explain. The Changyang Penninsula residents have staged demonstrations, complaining that their admissions priority rights have been diluted.

Real estate consultant Han Changji believes that Zhongliang Vanke has taken positive steps to confront the problem openly and publicly. It has fully explained the situation to its residents and helped them to link up and coordinate with the school. He hopes that the residents will understand and support Vanke for its efforts, and that in the end the whole process will be beneficial to Vanke’s public image.

It takes a three way collaboration to make a local educational system complete

In bringing a school to the suburbs, it is important that Vanke, the school, and the local district collaborate. Vanke must not only construct the school campus, but the key thing is to marshal the educational resources and keep the process on track.

For instance, in the Vanke Changyang project, under the support of the Fangshan assistant district head Wu Huijie, , Vanke began arrangements with Beijing Primary School in 2010, and both parties worked out the details together. They produced a written agreement, along with the Fangshan and Xicheng Education Commissions as signing parties, and planned a long-term partnership of a “well-known school with a well-known real estate company.”[This agreement is referred to as the “Four Parties Agreement”] The branch campus, situated inside the site of Changyang Penninsula, included specialized classrooms for music, art, dance, construction, science, computers, etc., as well as a playground and an indoor sports arena underground.

Although it seems like a situation in which “the real estate company –the school –the district — the real estate community residents –all win,” actually materializing a school policy that fulfills this, turns out to be difficult.

2013-6-15 Beijing Primary School Branch Campus formally began soliciting applications for first grade students. Right away the conflict over the school district issue broke out. On one side were residents of Changyang International City (in the first rank of Beijing commodity priced housing, on market starting 2011, 12,000 to 12,500 yuan per square meter, 2000 residential units) and on the other side Changyang Penninsula residents, both vying for spots in the not yet completed Bejing Primary Fangshan Branch Campus.

The logic of the Changyang Penninsula residents who then staged a demonstration outside the real estate sales office is this: the branch campus was constructed under contract by Vanke, and the bulk of the fund to build the school buildings came from the funds paid by the residents when they purchased their home. In addition, according to reports, now that the initial stage of construction of the campus has been completed, Vanke continues to pay for school operating expenses. As for the so-called “priority admissions rights” these are precisely specified in the “Four Parties Agreement.” In the agreement it states, “The primary school is part of the complete set of educational services of Changyang Penninsula, in principle the residents’ children have priority to attend the school.” Before 2013-05, the Fangshan Education Commission, in response to any inquiry, repeatedly answered that they upheld this principle as stated in the Agreement.

Because they were given a dual guarantee from Beijing Vanke and the Fangshan Education system that Changyang Penninsula would be a “school zone residence,” prospective buyers decided to relocate to faraway Fangshan. At the time Changyang Penninsula first went on the market, its price was 1/3 higher than other real estate projects on the Beijing periphery, and for a while it even exceeded the price of Beijing South inside the fourth ring. [Changyang Penninsula was more expensive because buyers understood they were paying for the schools included in the package as well.]

Changyang Penninsula purchaser Ms Li said they bought a residence here with their child’s schooling in mind.At the time, the seller gave them verbal assurance that school admission “would on the whole not be any problem.” “We considered the Beijing Primary branch campus to fit the definition of a ‘nearby school’ therefore we felt there wouldn’t be a problem.” But she and others did not have a 100% guarantee, nor did they have a written agreement.

This year third month, 24 Vanke residents filed a suit against Zhongliang and Vanke for going back on what they advertised. Vanke, for its part, felt aggrieved. Its chairman Mao Daqing had expended great effort to bring Beijing Primary School to Changyang and constructing the branch campus on time to be ready for the school year. In all, Zhongliang and Vanke had spent 7.5 billion yuan to bring in famous schools to form its complete set of education services.

A Vanke spokesperson said, “we are the ones who did the constructing, and we are the ones who made the link with the schools, and there certainly is a signed agreement. But as for promising spaces in the school, this is not something we can completely determine, the school has its own position. The written contract only deals with the collaboration between Vanke and the schools, it does not touch on the purchasers’ rights. As for the school zone, this is set by the local government and the Ministry of Education, and is not something we can have much effect upon.”

This turned into a big embarrassment for Vanke. “Although we strive to do out utmost for our customers, there are limits.Nothing will convince them that we cannot do certain things, cannot guarantee certain things, that we are not all -powerful.” The Vante spokesperson had no better answer.

Wang Shizi, the former Vanke shareholder’s group president, has called for Vanke, which has been in business 30 years in 2014, to now “transform itself:” to pare down, and concentrate on building residential communities and providing a complete set of residential services, in coordination with the cities in which Vanke is building projects.

Real estate consultant Han Changji believes that since the majority of the funds used to build schools in a residential community originate in the purchase price paid by the new residents, it seems fair and reasonable for them to enjoy priority rights of admission. However, schools are regarded as public resources, and access to them is based on the census register and other factors. For residents in one real estate community to have their particular interests fully met is not an easy matter.

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