China will tighten regulations on foreign investments in the property market in an effort to cool down its overheated real estate sector, government officials said today.
The Chinese ministry of commerce said it will increase checks and supervision on property investments that involve foreign investors and strengthen risk controls on the sector.
Foreign-funded developers are not allowed to make profits through buying and reselling real estate, which will be strictly monitored, the ministry said in a statement posted on its Web site.
Foreign investment in China's property sector surged 48 percent on-year to $20.1 billion in the first 11 months of last year, compared with a 17.7 per cent increase in foreign direct investment into the country during the same period.
To cool down the trend, the commerce ministry earlier ordered local authorities to halt the approval of some foreign property investments to stop speculative purchases.
According to real estate brokerage house Colliers International, foreign capital accounted for around 40 per cent of the public deals in Beijing's property investment market in 2010, compared with 20 per cent in 2009.
Meanwhile, the Chinese government is reportedly mulling a fixed property tax in the country's four major cities of Chongqing, Shanghai, Beijing and Shenzhen, in addition to an existing property loan regulation, as the property prices there continue to skyrocket.
China Real Estate Information Corp, a provider of real estate information and consulting services, said earlier this week that the average prices of new homes in Beijing, Shanghai, Guangzhou and Shenzhen soared more than 20 per cent last year.
Beijing saw the largest jump with a 42 per cent increase, followed by Shanghai with a 40 per cent rise.