08.06.07 18:11 Age: 17 yrs

Investment Approval Tightened in Real Estate Market

A stricter approval process will be applied to foreign investment into China's real estate market, especially in the high-end sector, according to a notice jointly released by the country's two top regulators.

According to the notice, all foreign real estate companies that have been approved by the local government must be put on the record of the Ministry of Commerce (MOFCOM) in the future.

The notice, published by the MOFCOM and the State Administration of Foreign Exchange (SAFE), will give the MOFCOM the final say in deciding whether to approve a project. The notice will also give the MOFCOM a better idea of the scope in China's property market, experts say.

Insiders said the note was sent to the MOFCOM and the SAFE's local bureaus last month.

The notice also imposes a very strict threshold on foreign investors' application to set up real estate companies. Only those who have got land-use rights and own property can establish real estate firms.

The notice asks local bureaus to stop the practice of foreign investors taking over local project companies.

Despite the government's dampen measures to slow the flow of foreign capital into the country's property market, the move is unlikely to restraining the interest of overseas investors, according to Robert Lie, CEO of ING Real Estate Investment Management Asia.

"Foreign investors are attracted to the strong growth prospects of China's real estate market. The opportunity to develop new real estate to cater to the rapid growth of increasingly affluent urban populations is a compelling one," he said.

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Source: by Han Xiao (China Daily)