China Clamps Down on Foreign Ownership of Property

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Hoping to slow down speculators, China this week imposed new restrictions on foreign ownership of property.

Under the toughened up rules, foreigners will only be able to own one property on the mainland. And non-Chinese companies will only be able to purchase commercial real estate for their own use, according to published reports.

Individual buyers will also have to show proof of employment in China for at least one year before they can buy residential property.

The government clearly hopes the measures will stop investors from gobbling up apartments and driving up prices. But analysts believe the measures ultimately have little impact. Foreign investments accounted for only 0.8 percent of property last year, the Wall Street Journal reports.


But the moves represent another clear step by the government to prevent the property market from overheating. Prices in investor-friendly markets like Shanghai have jumped 20 percent in the last year.

"The new policy, the most stringent on property purchases by foreigners so far in China, is in line with the country's latest tightening measures to rein in property speculation," analyst Yang Hongxu of the Shanghai-based China Research and Development Institute told the Shanghai Daily.

Many observers are skeptical the policies will change the market.

"Policy makers are trying to put on the brakes on capital inflows, similar to what had been announced back in 2006," Remy Chan, managing director of CBD Commercial Investment Management told the Wall Street Journal. "How these rules are implemented is another matter, and if these rules are followed to the letter, there could possibly be no foreign investment in commercial property at all, but I have my doubts. The mature players will always find exceptions."

 

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