New Measures on Foreign Investment in China Real Estate

September 02, 2006 | BY

clpstaff &clp articles

Prohibits direct offshore ownership structure, guaranteed fixed returns for foreign-invested real estate enterprise, and heightens scrutiny in the area of equity interests transfer and merger & acquisition in real estate-related industry.

China issued new rules aimed at curbing property speculation by foreign companies and individuals and preventing excessive investments in the property sector. However, will these rules cool down an otherwise overheated market, or will they have minimal impact and merely represent broad pronouncements of policy objectives?

By Joel H. Rothstein, Paul, Hastings, Janofsky & Walker, Beijing

Sensing an overheated property market and the need to take steps to cool speculative investment, particularly with respect to foreign investors, six governmental ministries and regulatory authorities, including the Ministry of Commerce, the Ministry of Construction and the State Administration of Foreign Exchange (SAFE), jointly issued, on July 11 2006, the Opinions on Regulating the Entry of Foreign Investment into the Real Property Market and the Administration Thereof (关于规范房地产市场外资准入和管理的意见) (the Measures) targeting the regulation and supervision of foreign real estate investors in China.

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