Ministry of Commerce Calls for Stricter Reviews on Approval of Foreign Invested Real Estate Projects

December 27, 2010 Posted by China Briefing Reading Time: < 1 minute

Dec. 27 – China’s Ministry of Commerce (MoC) urges an intensified review process for the approval of foreign capital entry into China’s real estate field, another measure the government is trying in an attempt to rein in the country’s surging inflation.

The MoC released the “Circular on Strengthening the Reviews on the Approval of Foreign Investment into Real Estate Filed” on November 22, requesting intensified reviews on foreign-invested property projects, not only to ensure the complete qualifications of foreign investors, but also to restrain speculative and round-tripping investments.

The circular emphasizes that provincial authorities shall focus their reviews on the integrity of related land use documents, such as contracts allowing the right to use land and contracts transferring the right to use land.

The MoC also attaches great importance to speculative investment restrictions. Not only does it forbid foreign invested real estate enterprises from buying or selling their properties that are completed or under construction in China for arbitrage, it also bans the entry of foreign investment companies into the field of property development and operations.

The document asks for more attention to be paid by the local authorities to the round-tripping of capital that flows into the real estate field as well as the emerging property projects that are generated through mergers, acquisitions and equity exchange.