China is a country in the middle of a transition from a less developed country into a strong and highly developed country. Business opportunities attract many real estate investors trying to get a piece of this giant cake. There are however some obstacles preventing investors to enter the Chinese real estate market. The business environment is confusing at first and might be very different to the Western way of doing business. The Chinese real estate market is controlled by the government through restrictions making it complicated for foreigners to invest. This combined with the cultural differences that exists makes it difficult to succeed without any sort of guidance. Policy and Regulations on China Real Estate Investment (based on chinavista.com) Foreign investors may, in the form of joint venture, obtain the right to the use of state-owned land in Beijing with compensation by means of auction, bid or agreement. 1. Foreign investors may, in the form of joint venture, obtain the right to the use of state-owned land in Beijing with compensation by means of auction, bid or agreement. The allotted time for land-use right is from a minimum of 40 years to a maximum of 70 years, depending on the purpose of use. 2. Foreign investors are encouraged to develop and reconstruct the old residential districts in the city proper of Beijing. They may engage in the development and construction of high-grade residence, industrial buildings, and commercial, tourist and recreational facilities and may also conduct operations and other economic activities with the developed real estate. 3. Foreign investors can sell or rent the real estate they have developed to enterprises, organizations and individuals both inside and outside China. Foreign investors can sell or rent their buildings and the right to the use of land to banks or other financial institutions in and outside China. (http://www.chinavista.com/beijing/invest/policy.html) China Policies on Foreign Investment in Real Estate Market from year to year 1. China Policies on Foreign Investment in Real Estate Market. Before 2006, Chinese government had no clear limits for foreign investment into Chinese real estate market. 2. In July 2006, together with other 5 government agencies, the former Ministry of Construction ofChina released the guidelines on foreign investment in Chinese real estate market, which aimed at better managing foreign investment on real estate development and operation as well as overseas agencies and individuals’ purchase of Chinese real properties. 3. In January 2011, the Ministry of Commerce indicated that it would work with other relevant agencies including land construction, foreign currency, and finance to further monitor foreign funds entering into Chinese real estate market and standardize the approval process. 4. Requirements for foreign fund gaining access to Chinese market Any foreign funds must meet the following requirements before entering into Chinese real estate market: a. getting an approval from local government
b. filing with the Ministry of Commerce for approval
c. registering at the State Administration of ForeignExchange. 5. Other policies:
Housing price controls in recent years|
Jan. 10, 2010| The State Council says it will maintain the minimum down payment for purchases of second homes at 40 percent. | Mar. 10, 2010| The Ministry of Land and Resources requires property developers to pay a 50-percent down payment on land acquisitions within a month of signing the contract. | Apr. 15, 2010| The State Council announces a rise in down payments for second-home buyers to a minimum 50-percent from 40 percent. First-home buyers must pay 30 percent if the property exceeds 90 square meters.| Sept. 29, 2010| Central government ministries issue new rules for all first-home buyers to pay a down payment of at least 30 percent of the...