Foreign capital on the up in Beijing

[photopress:Beijingproperty.jpg,full,alignright]Foreign capital is still flowing into the real estate market in Beijing. Statistics show that in last August, the actual use of foreign investment in local real estate market reached $470 million US dollars, 66 percent more than the same period last year. The real estate market attracted 36 new foreign projects during this period, 56.5 percent more than last year.

Last July, six central government ministries and ministerial-level commissions jointly issued a set of detailed rules (called Opinion on Standardizing the Administration of Foreign Capital Access to the Real Estate Market) regarding foreign capital’s access into the Chinese real estate market, the management of foreign real estate developers in China, and restrictions on the purchase of houses by foreign institutions or individuals.

• Foreign institutions and individuals purchasing domestic properties for non-personal use must apply for, and set up, a foreign-invested enterprise (FIE) in China to purchase and hold properties.
• The ratio of registered capital to total investment was increased and strict conditions imposed for obtaining foreign loans.
• Tighter controls imposed on approvals for the transfer of a real-estate FIE’s equity and real estate projects, as well as approvals of foreign mergers with, and acquisitions of, a domestic real estate enterprise.
• A strict prohibition of provisions in any agreement in a real estate Sino-foreign joint venture dor a guaranteed fixed return.

In spite of this foreign capital utilization still surged by 56.5 percent in Beijing real estate market in last August. Insiders say that since the new regulation was released at the end of last July, it would still take some time for the market to react.
Source: International Financial Law Review