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BEIJING-Are your investment bags packed for a trip to the Far East? You might want to rethink your travel plans. The Chinese government plans to restrict property acquisitions by foreign investors in a bid to limit speculation and prevent a property bubble, a government official says.Lin Zheying, deputy director general of the commerce ministry’s Foreign Investment Administration, told a press conference that new rules spelling out what type of overseas investor can buy property may be announced this month.

The regulations may threaten plans by investors including Citigroup Inc. and Morgan Stanley to increase holdings of Chinese real estate after Shanghai housing prices more than doubled since 1999. Premier Wen Jiabao has curbed lending to cool an economy that grew 10.3% in the first quarter and to prevent a drop in property prices from causing loan defaults.

The clampdown comes as Beijing is spending about $34 billion on construction projects in preparation for the 2008 summer Olympic Games. 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, say analysts.

Foreign investors are entering China’s property market by investing in Chinese developers or forming a locally registered entity such as a private equity fund to acquire existing properties. Over the past five months, international investment banks and real estate funds have announced plans to invest more than $5 billion in Chinese property. Citigroup’s property unit plans to increase investment in China’s real estate market 10 fold, to $800 million, in the next three years, Stephen Coyle, chief investment strategist at Citigroup Property Investors, said last month. Citigroup Property Investors will buy office, retail and industrial properties as well as residential.

And Morgan Stanley, the world’s third-largest securities firm by market value, plans to triple its investment in Chinese property to $3 billion this year.

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