China has relaxed its real estate investment rules for foreigners in the hope that it will help boost slowing economy.
A government statement issued Thursday, August 27, by the Chinese Commerce Ministry and other local officials, changed previous rules which governed foreign property investors, reports Reuters. According to the Commerce Ministry, foreign investors are no longer required to pay registration fees when applying for domestic and foreign loans to finance property investment in the country, or when settling foreign exchange transactions.
Aside from this, foreigners and foreign companies are now allowed to buy more than one property, provided the foreign investors stay within the local housing purchase limit set for the area. Previously, foreign residents are only allowed to purchase one home after staying and working in the mainland for at least a year, states Reuters.
According to Alan Chiang, DTZ's head of residential in the Greater China region, a global property consultancy firm, the move is seemingly aimed at discouraging capital outflow after the yuan's devaluation, reports the South China Morning Post (SCMP). Chiang added that the Chinese authorities' decision to ease its rules will offer alternative opportunities for "foreign corporates to invest if the government decides to stop the capital outflow."
The SCMP report also mentioned that despite the recent changes, analysts are wondering whether the policy revisions will help the country's slowing economy. In the first seven months of the year, real estate investment made by foreigners in the mainland dropped 24.5 percent from previous year, according to the National Bureau of Statistics. Foreign capital reportedly accounted for less than 1 per cent of the total real estate investment.
However, a few analysts are still optimistic about the recent easing in foreign investment rules. Steven McCord, North China head of research of consultancy JLL in Beijing, told the publication, "This is a carefully measured step that is happening at the right time to add a small boost to market demand."
Meanwhile, China's housing market has stabilized in the past months, states Reuters, due in part to the recent rate cuts effected by local authorities. Home prices are also up for the third straight month in July, given the increase in home sales and market sentiment.
