Highlights of the Opinions on
Regulating the Entry and Administration of Foreign Investment in
the Real Estate Market:
--Foreigners intending to purchase
real estate in China not for self use must first establish a
foreign-invested enterprise in China.
--For foreigners investing in real
estate enterprises with a total investment exceeding US$10 million,
registered capital shall be no less than 50 percent of the total
investment. If the total investment is less than US$10 million, the
amount of registered capital follows prior
regulations.
--Branches and representative offices
of foreign companies and foreign individuals who have stayed in
China more than one year can purchase a commercial apartment or
house for self use, but cannot purchase an apartment or house not
for self use.
--Foreign companies without branches
and representative offices in China and foreign individuals who
have stayed in China less than one year cannot purchase a
commercial apartment or house.
The Chinese real estate market experienced abnormal and
unhealthy price hikes in 2006. During the first five months last
year, average sales prices of commercial houses nationwide were up
8.9 percent, according to the National Bureau of Statistics.
In order to crack down on speculation from foreign investors,
the Opinions on Regulating the Entry and Administration of Foreign
Investment in the Real Estate Market were jointly issued by six
ministries and commissions including the Ministry of Construction,
the National Development and Reform Commission and the People’s
Bank of China on July 11, 2006.
This document established far-reaching policies governing
foreign investment in China’s real estate sector. Though many
industry insiders believe that speculation by foreign investors
will be hindered by these policies, some also worry that the
Chinese real estate industry may be influenced negatively as a
result.
However, concrete analysis needs to be made of this concrete
problem.
“Foreign capital will not significantly affect the office
building market in Beijing, especially in the western part of
Beijing,” said Shi Zhiyong, Assistant General Manager and Chief
Marketing Officer of Beijing ChemSunny Property Co. Ltd.
In ChemSunny World Trade Center, an office building that Shi’s
company is developing, most clients are domestic-funded
companies.
“We have negotiated with some foreign companies, but did not
strike deals because of price factors,” Shi said. “The purchasing
power of foreign capital is not as strong as Chinese companies
right now.”
With nine years of experience in the real estate industry, Shi
believes prices of landmark office buildings will still increase
rapidly, largely because buyers are confident about China’s overall
economic situation and because of the renminbi exchange rate.
“Moreover, the quality of office buildings is greatly improved,
promoting the price hike,” Shi told Beijing Review.
Nevertheless, in his opinion, since the supply of office
buildings in Beijing is quite large-3-5 million square meters are
added every year-prices for offices outside of popular sections of
Beijing are stagnant, while the number of diamond properties on the
market remains thin.
“For office buildings, locality is of vital importance,” Shi
said. “Especially in western Beijing, there is not much available
land and the height of buildings is strictly limited, hence costs
of developing office buildings there are higher.”
Located in Beijing’s prime real estate Xidan area, ChemSunny
World Trade Center stands on the Chang’anjie Avenue, the longest
and widest street in the world. It is close to the Ministry of
Finance, the Ministry of Education, the Financial Street and
subway, and is surrounded by numerous hotels and shopping
facilities. The uniquely designed water scenes, a sky garden, a
double atrium and the world’s biggest ecological fa?ade system
constructed in intelligent double-layer breathing style rank
ChemSunny World Trade Center among the top office buildings in
Beijing.
Among the three buildings parallel to ChemSunny World Trade
Center, two are for rent and one for sale. About 30 percent of the
sales plan has been accomplished, with buyers mainly from financial
institutions and joint ventures. ChemSunny’s goal by 2008 is to
have 95 percent of the buildings sold or rented, with at least five
transnational companies among world Top 500 housed in the
complex.
“There is no doubt that the office building market in Beijing
will be better in general thanks to the prosperous economy,
convenient transportation facilities as well as continued
investment and increased migration,” Shi told Beijing Review.
(Beijing Review, April 20, 2007)