Top Biz News

Foreign acquisitions of property surge

(Xinhua)
Updated: 2006-07-21 15:31

The report says China's new policy restricting foreign investment in the property market will slow the flow of foreign capital into the sector, with prospective investors choosing to stay away for now.

Rather than buying property in the market directly, more foreign investors may choose to partner up with Chinese property developers and take part in project development, the report says.

Rocketing housing prices in major Chinese cities and reports of big deal foreign acquisitions have recently caused a public outcry about potential foreign involvement in fuelling the property bubble in China.

Yi Xianrong, a financial scholar with the Chinese Academy of Social Sciences, was reported as saying that speculation by foreign capital has become a major threat to China's property market.

The new policy issued by the Ministry of Construction and other authorities says only foreign entities with a physical presence in China and foreigners working or studying in China for over a year could buy property for self-use.

The DTZ report says foreign investors in China's property market fall into two types. One type is mutual funds, which usually buy property directly from the market. The other type of investors usually develop their own property and manage them by themselves.

Nicholas Cho denied that foreign money is involved in speculation in the property market, saying that most investors are drawn here by China's economic potential, and hence tend to retain their property for long-term returns.