Officials and analysts have played down recent news reports that the city has been loosening rules on foreign investors buying land.
Media outlets in Shanghai and Beijing have interpreted this year's No 1 land tendering notice from the Shanghai municipal housing land & resources administration bureau as evidence of a relaxation.
The announcement, which was released before the May Day holiday, says foreign nationals, legal representatives and other organizations are qualified to participate in land bids.
In the past, only foreign companies that had registered firms on the Chinese mainland were qualified, local news media reported.
However, an examination of previous land tendering notices from the bureau showed that this was not the case.
Foreign nationals, legal representatives and organizations have been qualified to take part in land bidding since the No 2 land tendering notice of 2006 was released last October, while the No 1 notice of 2006 defined foreign investors as those who had been registered as living in China for at least one year.
"I have checked with relevant officials, and they are not aware of any noticeable changes from previous notices," said a spokeswoman from the bureau who did not want to be named.
However, the latest notice does include some changes. For example, deposits for land bidding can now not only be paid with RMB, but also US dollars, Hong Kong dollars, Japanese yen and euros, payable to the municipal land bureau. This was not the case in the past.
Paying large deposits in RMB could be difficult for foreign companies that do not have access to large amounts of funds on the Chinese mainland, experts said.
Terence Tang, international director of Jones Lang LaSalle China Investment, said this was purely a currency issue.
"The government does not want too much pressure on the RMB," Tang said.
Yao Honglai, a researcher from the real estate research center of Shanghai Academy of Social Sciences, agreed that there was nothing significant in the land tendering notice.
But he also hinted that Shanghai had been stricter in observing relevant central government rules than other cities.
Lifting controls on foreign investment in the city's property market has been a sensitive topic since last July when six central government ministries tightened up rules on such investment to prevent overseas funds from pouring into the white-hot sector and pushing up housing prices.
According to a market insider, some foreign buyers have circumvented government restrictions on obtaining land, such as through subsidiaries or by cooperating with local companies.
But Tang said foreign investors, mostly listed companies, were playing by the rules.
Successful bidders from overseas still need to get the nod from the State Administration of Foreign Exchange for both payments and to register their projects registration, an analyst said.
The Ministry of Commerce, said in the foreign investment guide it released in March that foreign investment in the property sector would be tightly controlled.
Foreign investment in Shanghai's property sector dropped sharply in the first four months this year. The US$639 million in contractual foreign investment represented a plunge of 45.25 percent from the same period last year, the China News Media reported, quoting officials from the city's foreign investment commission.
(China Daily May 11, 2007)
