China to limit foreigners on realty
(Bloomberg)
Updated: 2006-06-23 18:50
The International Finance News, a publication owned by The People's Daily,
this month said that the State Administration of Foreign Exchange could use
"technical" restrictions, like tightening transaction settlement procedures and
strengthening supervision of real estate companies receiving foreign funds or
listing overseas.
With foreign investors poised to pour billions of dollars into Chinese real
estate, restricting investment from overseas could help slow growth in foreign-
exchange reserves and ease pressure on property prices.
"Funds from all over the world are trying to get into the Asia-Pacific, and
on top of their list is China," said Guy Hollis, head of the U.S. real estate
consultant Jones Lang LaSalle's investment arm. "About $30 billion in overseas
funds wants to find a home in China."
Speculation that China will let its currency gain at a faster pace increases
the lure of property. China revalued the yuan almost a year ago and loosened its
peg to the dollar.
"One way that you can bet on an appreciation in the currency is to own assets
in China, and real estate has been the favorite one with capital gains being
pretty good," said John Kyriakopoulos, a currency strategist at National
Australia Bank in Sydney.
Overseas institutions bought property worth of $3.4 billion in China last
year, the State Administration of Foreign Exchange said in April. That did not
include "lots" of transactions that cannot be tracked and confirmed, said Remy
Chan, the head of markets at Jones Lang LaSalle, who is based in Shanghai.
Foreign investors are entering China's property market by investing in
Chinese developers or forming a locally registered entity like a private equity
fund to acquire existing properties.
In some cases, foreign lenders are involved in financing such operations,
said Jun Ma, head of China research at Deutsche Bank in Hong Kong.
In the past five months, international investment banks and real estate funds
have announced plans to invest more than $5 billion in Chinese property.
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