China to limit foreigners on realty
Updated: 2006-06-23 18:50
China plans to restrict purchases of real estate by foreign investors in
order to reduce speculation and prevent a property bubble, a government official
New rules defining what type of overseas investors can buy property could be
announced this month, Lin Zheying, deputy director general of the Commerce
Ministry's foreign investment administration, said in Beijing.
The regulations may threaten plans by investors like Citigroup and Morgan
Stanley to increase holdings of Chinese real estate after prices rose 7.1
percent in Beijing through May. Prime Minister Wen Jiabao has curbed lending to
cool an economy that grew 10.3 percent in the first quarter and to prevent a
drop in land prices from causing loan defaults.
"The government is worried that overseas investment is bringing too much
foreign currency into China and that it will cause property bubbles," said Liu
Yang, a fund manager at Atlantis Investment Management in Hong Kong. "But people
are buying because they see real growth prospects and real returns from Chinese
Policies to cool foreign property investment come amid a raft of other
measures that Wen is implementing to cool a credit-fueled investment boom driven
by swelling inflows of foreign capital.