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China: Restrictions Eased on Foreign Investment in Real Estate Market

(Sept. 9, 2015) On August 19, 2015, China released the Notice of the Ministry of Housing and Urban-Rural Development (MOHURD) and Other Departments on Amending the Policies Concerning Access by and Administration of Foreign Investment in the Real Estate Market . (Zhufang Chengxiang Jianshe Bu Deng Bumen Guanyu Tiaozheng Fangdichan Shichang Waizi Zhunru he Guanli Youguan Zhengce de Tongzhi [2015 Notice] (Jian Fang [2015] No. 122, Aug. 19, 2015), Ministry of Commerce of the People’s Republic of China (MOFCOM) website; English translation, Westlaw China online subscription database.) The 2015 Notice was jointly issued by the MOHURD, MOFCOM, National Development and Reform Commission, People’s Bank of China, State Administration for Industry and Commerce, and State Administration of Foreign Exchange. (Id.)

According to the Notice, overseas companies and organizations’ Chinese branches and representatives, with the exception of those already approved to deal with real estate, and individuals from overseas studying or working in China are allowed to purchase property that meets their actual needs, for their own use or residence. (Id. art. 3.)

Under a 2006 document regulating access of foreign investment to the domestic real estate market, foreign individuals staying in China for less than a year were prohibited from purchasing property. (Guanyu Guifan Fangdichan Shichang Waizi Zhunru he Guanli dee Yijian [Opinions for Regulating the Access by and Administration of Foreign Investment in the Real Estate Market] [2006 Opinions] (Jian Zhu Fang [2006] No. 171, July 11, 2006), art. 3(10); English translation, Westlaw China.) With the issuance of the Notice, that restriction is removed.

The Notice may also lift a 2010 restriction that eligible foreign individual buyers may only purchase one residential property and that branch or representative offices may purchase non-residential properties for office use only in the cities of their respective registration. (Guanyu Jinyibu Guifan Jigou he Geren Goufang Guanli de Tongzhi [Notice on Further Standardizing the Administration of Housing Purchases by Overseas Institutions and Individuals] (Jian Fang [2010] No. 186, Nov. 4, 2010), MOHURD website.) However, local policies limiting the purchase of property in some cities will still apply. (2015 Notice, art. 3.)

The 2006 Opinions required real estate companies with foreign investment to pay in full the registered capital needed to apply for local and foreign loans; the foreign exchange authority would not grant approval to such companies’ settlement of foreign exchange loans if they failed to do so. (Id. art. 2(7).) This requirement has been removed by the Notice. (2015 Notice, art. 2.)

With the exception of the changes announced in the 2015 Notice, the 2006 Opinions remain effective. (Id. last paragraph.)