Foreign investors now face significant limits on the manner in which they can acquire property in China for investment purposes. FIEs acquiring property for their own use are not affected by the restrictions. The limitations, introduced in July 2006, include:
- FIEs required
Foreign investors may no longer purchase property in China using an offshore vehicle. Rather, an FIE must be first set up to hold property being acquired for investment purposes. As with all FIEs in China, a property investment FIE may only engage in activities set out in its business licence.
- Loan restrictions
A property development FIE may not take out RMB or foreign exchange unless (i) its registered capital has been fully paid up, (ii) it has obtained loans the relevant land use rights certificate, or (iii) 35% or more of the project can be funded by the FIE's own funds.
- One property per individual
Individuals resident in China for one year or more may only purchase one premises for use as their own residence