China Real Estate

Measures to discourage the real estate speculators overseas

The Chinese government continues to slow down the speculators overseas in the market of the property of the country while now requiring some Strangers the obtaining of an approval before sending out of the country funds won at the time of real estate transactions.

According to a circular on the management of the foreign investment in the real estate sector in China, that has been published jointly by the administration of state of the Foreign currency (State Administration of Foreign Exchange - SAFE) and the Ministry of the Construction, the investors overseas that want to buy or to acquire some parts in Chinese real estate societies should come with the full price of purchase.

If they want to qualify for loans in the Chinese or foreign banks, the financed overseas real estate societies should provide 35% of funds required for a project of their own resources, indicate the circular.

The circular demand also to the departments appropriated to increase the surveillance on the transactions of property using some foreign currency, demanding of the banks and the administrations of foreign currency of the country to return all purchase of property done by means of foreign currency.

The Chinese government also asks overseas the establishments to provide a documentation of their presence in China for all purchase of property for their personal use. These documents will be obligatory when they will bring the foreign currency or will record their properties.

According to the circular, funds of the foreign real estate investors should go directly in the accounts to Renminbi of the real estate promoters.

These new measures of China on the investments overseas in the real estate sector and property aim to close the door overseas to the speculators, according to sources with the Ministry of the Construction.

A recent regulation allows the resident overseas that worked either studied in China for more of one year to buy a receiving unit for their own uses.

Resources of earth in China are rare and his/her/its enormous population, so the government must adopt a long-term position and must intensify the surveillance of the real estate investments and properties overseas by the establishments and/or the foreign individuals, indicated the Ministry in a press release.

Funds invaded the industry of the building overseas in China, because the investors make a double bet:  they hope that the RMB will continue to appreciate itself and they expect what the prices in this domain continue to go up.

The price of the lodgings in some Chinese cities doubled these last years, displacing the possibility of accession again farther to the property of lodging of the local citizens.

The establishments overseas and the foreign individuals are strongly in activity on the market, but there are not no rule and norm adjusting their presence, indicated the Ministry of the Construction otherwise.

The new policies aim to improve the quality of the information on the market available to the real estate regulators. The civil servants have a partial picture of the type and the volume of transactions that is done currently only.

The faces of the IMF (International Monetary Fund) show that of its 187 members, 137 control the investments overseas on their domestic real estate market, indicating that the new measures of China are current practices and admitted internationally, according to the ministry.