Restrictions on Foreign Investment in the Real Estate Industry
New rules on foreign investment in real estate will further strengthen administration related to the examination, approval, registration and supervision of foreign direct investment in the industry.
Date:
July 2007
Keywords (click to search): [China Real Estate] [FIE] [protectionism] [leasehold] [curb property speculation]
By Dr. Philip Zhang of Boss & Young1
The issuance of Opinions on Regulating the Entry of Foreign Investment into the Real Property Market and the Administration Thereof on July 11 2006 (Opinions No. 171) set thresholds for the entry of foreign capital into the Chinese real estate industry, while supplementary rules in the form of circulars have also been adopted by the government authorities. To cope with and forestall speculation in the Chinese real estate market by foreign investors, the recent regulations set out various pre-conditions which must be satisfied before an overseas entity or individual is entitled to purchase real estate in China2. As a matter of principle, an overseas entity must have established branches and/or representative offices in China, and any foreign individual must have worked and/or studied in China for more than one year before they are eligible. According to the regulations, the properties to be purchased have to be designated for the buyer's business operations or personal use, and therefore they must be in line with and cannot be more than the buyer's actual needs.
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