New Foreign Investment Controls In Chinese Real Estate Sector

by : Gregory Smyth

The proposals were jointly enforced by the Ministry of Construction, the Ministry of Commerce, the National Development and Reform Commission, the People's Bank of China, the State Administration of Industry and Commerce and the State Administration of Foreign Exchange.

The proposals also provide information on revised regulations concerning building projects, share structures, loans and foreign exchange sales of real estate enterprises funded by foreign investments. The proposals necessitate that, foreign institutions setting up branches or representative offices in China and individuals employed or studying in China for more than one year can purchase apartments for their own requirement. The proposals also demand local governments to monitor foreign investment flowing into China's real estate market.

The Chinese government is also committed to woo foreign investment into their country and started easing many constraints to smooth the path for those looking to buy property in China back in 1998. Their efforts to lift their economy via the encouragement of foreign direct investment met with grand success and lead to the government getting concerned that speculators would render the property market unstable. Because of this the Chinese government has now made it tougher for investors to achieve short term gains from the property market. As a result of this fact the market now triggers less interest with those real estate investors aiming for short term gains and more attractive with those searching for a reliable market with extensive potential for demand and flourishing over the medium to long term.

Considering foreigners rights regarding ownership of real estate in China, all overseas buyers are protected by Chinese law but actual real estate law and the property buying process in China are fresh concepts that are comparatively young and naive. This implies that investors who are looking to purchase property directly in China is required to access the services of a recognized lawyer to receive the necessary help to deal with the complexities of the real estate purchase process.

For those who are looking to achieve the pinnacle in terms of the gains available in Chinese property but who are also looking to remain relatively free from any investment made, there are unlimited property investment funds focusing in Chinese real estate now available. Such funds launched by larger, recognized financial institutions are becoming increasingly favored by both local and international investors. Such real estate investment funds enable an investor to benefit from the potential of the property market in China without requiring to invest significant sums of money directly to the market. Furthermore, by investing like this an investors underlying money is far easier to get hold of than if it were utilized to directly purchase real estate in China.

No matter whichever way an investor wishes to deal with investing in the real estate sector in China one thing is for certain - never has the Chinese property market generated such huge interest with so many international real estate investors. Even though there are some restrictions enforced of late, foreign property investments in China is still very much a profitable sector.