China yesterday issued a raft of regulations that will make it tougher for overseas investors to invest in the nation's booming property market, in another attempt to curb rampant speculation.
Capital requirements for overseas individuals or firms will be raised while they will also have to have been in China for at least one year before they can buy property, under the regulations approved by the State Council.
The regulations were published in the official Xinhua news agency and confirmed by an official at the construction ministry although there were no details on when the reforms would be introduced.
PHOTO: AP
They come as the central government continues to struggle to rein in what many economists warn is unsustainable investment and price rises in the property sector.
Under the regulations, overseas investors who do not plan to occupy the properties they buy will only be able to do so by setting up a foreign-funded enterprise in China first.
Foreign-funded property firms investing more than US$10 million will need to hold registered capital of at least half the value of the investment -- potentially a huge hurdle for firms investing tens of millions of dollars.
Overseas firms will also face restrictions on taking out loans or engaging in foreign exchange transactions if the capital they contribute is less than 35 percent of the amount of their total investment.
In a push for greater transparency, overseas investors will have to use their real names when buying property.
Transfers of projects or stakes in foreign-funded property firms, and their acquisitions of domestic property companies, will also need approval from the government.
By overseas investors, China means investors from Hong Kong, Macau and Taiwan as well as from other countries.
The rules were formulated by six agencies -- including the central bank, the construction ministries, and the National Development and Reform Commission.
Measures China has taken to prevent a potential bubble in the overheated real estate market this year have included an interest rate hike in April and curbs on banking lending to property developers.
Foreign investors are seen as playing a key role in the boom. In the first three months of this year, foreign investment in property more than tripled compared with the same period last year, Xinhua said.
Overseas investors bought US$3.4 billion worth of property in China last year, accounting for 15 percent of total property purchases, state-television CCTV cited a study by the foreign exchange commission as saying.
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