A stricter approval process will be applied to foreign
investment into China's real estate market, especially in the
high-end sector, according to a notice jointly released by the
country's two top regulators.
According to the notice, all foreign real estate companies that
have been approved by the local government must be put on the
record of the Ministry of Commerce (MOFCOM) in the future.
The notice, published by the MOFCOM and the State Administration
of Foreign Exchange (SAFE), will give the MOFCOM the final say in
deciding whether to approve a project. The notice will also give
the MOFCOM a better idea of the scope in China's property market,
experts say.
Insiders said the notice was sent to the MOFCOM and the SAFE's
local bureaus last month.
The notice also imposes a very strict threshold on foreign
investors' application to set up real estate companies. Only those
who have got land-use rights and own property can establish real
estate firms.
The notice asks local bureaus to stop the practice of foreign
investors taking over local project companies.
Despite the government's dampening measures to slow the flow of
foreign capital into the country's property market, the move is
unlikely to restraining the interest of overseas investors,
according to Robert Lie, CEO of ING Real Estate Investment
Management Asia.
"Foreign investors are attracted to the strong growth prospects
of China's real estate market. The opportunity to develop new real
estate to cater to the rapid growth of increasingly affluent urban
populations is a compelling one," he said.
Lie said that China is becoming an increasingly important part
of the global real estate market.
"As it grows and becomes more transparent, China's real estate
market will become an essential part of an international investor's
portfolio," he added.
Lie also noted that despite rising foreign investment, China's
property market remains mainly domestic-driven, with 95 percent of
total investment coming from local parties.
According to Violet Lee, managing director of GuocoLand China,
the government's restrictive attitude toward foreign investment in
property projects has a limited impact on long-term foreign
investors.
"The move only drove away speculative investors, which is good
news for long-term investors," said Lee, adding that the company's
accelerated expansion is an expression of this confidence.
(China Daily June 8, 2007)