Lam Yuet-fung expected 1000 people a day to visit his booth at a five-day convention in Shenzhen starting October 1 to inquire about buying homes in neighbouring Hong Kong. By day four, more than 10,000 had stopped by.



“The reaction has never been as good,” said Lam, who credits the interest to the Shenzhen government’s September 30 announcement that it is restricting home purchases by most local residents to two units. Lam, the regional project associate director at Hong Kong-based Centaline Property Agency, said almost half of the visitors made appointments to look at properties in Hong Kong, or left contact details.



China’s effort to prevent a housing bubble in cities such as Shenzhen, the country’s first special economic zone, is hampering Hong Kong’s own battle to curb a 50 per cent surge in home prices since early 2009. Chinese buyers accounted for a third of new luxury home purchases in the first half, up from about 20 per cent in the previous six months, Centaline, the city’s biggest closely held real-estate agency, said.



“More curbs in the mainland will trigger more funds to move across the border,” said Eddie Hui, a professor in the real estate and construction department at the Hong Kong Polytechnic University. “All that money needs a way out. There’s a strong belief among mainland Chinese that investing in property is the best way to preserve capital value.”



China property tax


China unexpectedly raised borrowing costs on October 19 for the first time since 2007. Consumer prices jumped 3.6 per cent in September from a year earlier, while home prices in 70 cities rose 9.1 per cent in September from a year earlier, even after officials extended curbs on property purchases.



The country may start levying a property tax on a trial basis before March, the China Securities Journal reported October 25, citing Nie Meisheng, president of the China Real Estate Chamber of Commerce. The government said in September it will speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country.



Hong Kong developers are increasing efforts to lure mainland buyers. Sun Hung Kai Properties, Hong Kong’s biggest developer and the world’s largest by market value, has sold about 300 houses in a luxury project in Sheung Shui, a district about 30 minutes drive from the Shenzhen border, since sales began early October, the company said.



The company, which has set up in Shenzhen a showroom with agents, models and artists’ impressions of the project, estimates as many as 60 per cent of the buyers were from the mainland or Hong Kong businessmen who base their businesses across the border, said Andy Chan, a senior sales and marketing manager at Sun Hung Kai, in a statement.



Henderson Land Development, the Hong Kong developer controlled by billionaire Lee Shau-kee, has also held regular roadshows in “multiple locations,” including Shenzhen, to promote its Hong Kong projects, spokeswoman Bonnie Ngan said.



“If you can identify where those Chinese investment dollars are going next, you’ll make a fortune,” Michael Klibaner, head of China research at Jones Lang Lasalle in Hong Kong, told the Hedge Funds Asia Summit last month. “You’re talking about a tremendous amount of money. Wherever it goes, asset appreciation would follow.”



Millionaire ranks


The number of millionaires in China climbed 6.1 per cent from a year earlier to 875,000, the Shanghai-based Hurun Report, which lists the country’s richest individuals, said in April. China has the second-most billionaires in the world after the US, according to Forbes magazine.



Hong Kong home prices more than doubled from a trough in 2003 on a recovering economy, low interest rates, and an influx of mainland Chinese buyers whose travel restrictions to the city have been gradually relaxed. Prior to 2003, home values went through a slump that began shortly after the Asian financial crisis hit in 1997, the height of the previous bubble.



Concerns that housing may become unaffordable for the majority of Hong Kong’s population have forced chief executive Donald Tsang’s government to bring in curbs to rein in prices. The measures include stopping offering residency to foreigners who buy property in the city and a plan to build more apartments for first-time property buyers, both of which Tsang unveiled in his October 13 policy address.



Halting the residency eligibility won’t do much to cool Hong Kong prices, said Cusson Leung, a Hong Kong-based analyst at Credit Suisse Group. “Most mainlanders invest in Hong Kong through their relatives or their business. I don’t see how changing that will have any meaningful impact.

”

The city’s residential property prices will likely gain 30 per cent from now until the end of 2011 because a weaker dollar will boost asset inflation, Leung and Joyce Kwock wrote in a Credit Suisse note to clients dated today.



In September, China told commercial banks to stop offering loans to buyers of third homes and extended a 30 per cent down- payment requirement to all first-home buyers.



Shenzhen was the first Chinese city to benefit when the country under then-leader Deng Xiaoping opened its doors to foreign investment in the 1970s. Since then it has transformed itself from a small fishing village into a major manufacturing and financial centre for China. It also has the country’s second-busiest container port after Shanghai.



Shenzhen families with residency status in the city are now limited to the purchase of two homes and those without a permit are allowed to buy one if they can show they have paid taxes in the city for at least a year, according to the Sept. 30 government statement.



“The pool of money will always be there and they’re always looking for speculative opportunities,” said Eric Wong, a Hong Kong-based analyst at UBS. “If you shut down one possible destination then, naturally, they’ll have to find somewhere else to move into, and there’s a chance more of those funds would flow into Hong Kong.”
Bloomberg

[ Last edited by  atomic3d at 9-11-2010 13:18 ]

China limits housing purchases by foreigners  2010-11-15 21:33

BEIJING - China's Ministry of Housing and Urban Rural Development announced Monday that purchases of housing by overseas organizations and individuals in the country would be capped or restricted, a move widely seen as combating speculative money from overseas that might flow into the property market.

The ministry has also joined with the State Administration of Foreign Exchange in issuing a circular calling for standardizing the management over purchases of housing by overseas organizations and individuals.

Under the new rules, foreigners would only be eligible to purchase one flat for their own use, and they are required to provide proof of having worked in the country for at least one year prior to the purchase. Foreigners would also need to provide a written statement proving they have no other homes in the country when making home purchases.

Also, individuals from China's Hong Kong, Macao, and Taiwan would need to provide documents proving they are working, studying or residing on the mainland when they make home purchases.

Regulations announced by the Chinese government in 2006 did not specify the number of home purchases allowed by overseas individuals.

Further, the new rules also require that foreign organizations in the country may only purchase non-residential housing in the cities of their registration to be used as offices, rather than as residential homes. This contrasts with previous regulations, which did not ban foreign institutions from buying residential homes for private use.

China's foreign exchange regulator has repeatedly warned of "hot money" inflows into the country amid heightened fears of asset bubbles and increasing pressure from inflation, which rose to a 25-month high of 4.4 percent in October.

The recent "quantitative easing" monetary policy by the United States has also added to the concerns of hot money inflows into emerging economies with higher interest rates.

http://www.chinadaily.com.cn/chi ... ontent_11552892.htm

I think this is a good idea. No country can afford to have O/S residents pricing the locals out of the real estate market.

Prior to this I believe the rule was a foreigner could only buy one residence in each city, though this wasn't enforced where I was living. It will be interesting to see if the local government officials continue to be lax about enforcement, though it does raise the spectre of confiscation if you've bought a couple of flats and pressure is brought to bear from Beijing. Could be looking at a real estate crackdown along the lines of the recent WG crackdown.

I know a few foreigners who own more than one place ( real estate ) in China.  I think one 141 member has a few places already in Southern China.

Prices of housing really shot up in Beijing and Shanghai and later to other places. Then in Beijing, it passed Laws and conditions limiting foreigners buying property.  The gov't wanted the market to slow down and allow locals people to afford to buy property in Beijing.  After reading this article, it seems like it's nationwide limiting foreigners owning real estate in China.


There might be a way around this when they pass this law.  Maybe someone can build a few places on their own and not buying from others.

Edit: grammer as usually for me.

[ Last edited by  Weelock at 16-11-2010 06:41 ]