The new rules, issued by the State Administration of Foreign Exchange and the Construction Ministry, state that foreigners must obtain approval before repatriating proceeds from the sales of property. They also require that foreign investors who want to take over or acquire stakes in Chinese property companies must buy them in cash, and that banks and local foreign exchange administrations step up supervision over property purchases involving foreign currency. Banks will have to report any property purchases made with foreign currency. Furthermore, overseas institutions will have to provide evidence of their presence in China when buying property for their own use. This documentation will be compulsory when foreigners bring in foreign currency or register their property.
A government statement says that China's land resources are scarce and its population huge, so the government needed to tighten up supervision of property investment by overseas institutions and individuals. In recent years, overseas investors have sought increasingly to buy property in China on the expectation that the currency will continue to appreciate and property prices continue to soar. Housing prices in some cities have more than doubled over the past few years, driven in part by overseas investors.
The statement adds that until now there had been no clear rules and standards regulating foreign investment in property. The new policies are intended to improve the quality of information available to regulators.
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