China To Change Property Investment Rule

Source : The Business Times, June 23, 2008

BEIJING - China's Commerce Ministry will soon allow provinces to register inbound foreign investment in property, which would smooth the path for money to flow into the sector from abroad, the South China Morning Post said on Monday.

China has been tightening rules on foreign investment in its real estate sector to prevent it from overheating. Authorities last year ordered foreign investors to register with the Ministry of Commerce in Beijing after getting approvals from local governments.

The mooted rule change would shift the registration responsibility to provincial governments from Beijing. Provinces tend to be more keen on attracting investment.

The Chinese-language 21st Century Business Herald last week also reported the rule change, but quoted a Commerce Ministry as saying: 'The policy direction will not change. The new rule simply means you've got to register in a different place.'

However, the Hong Kong-based SCMP quoted an unnamed market source as saying: 'It will be a lot easier to get deals done if that's the case.'

Provincial governments often take less than a month to approve a deal. Registration in Beijing takes up to six months, which has discouraged some foreign investors.

China's property market has cooled a touch this year, with prices declining in some cities and transaction volumes down.

Many in the market think Beijing may ease restrictions on the property industry, which is a pillar of the national economy and grows at an annual rate of about 30 per cent. -- REUTERS