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Limits on Foreign Investment in China’s Real Estate Market

      Many foreign investors are considering investments in China’s real estate market. Still, many of them are not familiar with the restrictive articles of various policies that may affect these investments. This column will briefly analyze some of these policies, laws and regulations.

1. Related Laws, Regulations and Standardized Documents

(1) Catalogue of Industries for Guiding Foreign Investment issued by the State Council of China (revised in 2007)

(2) The Notice on Further Strengthening and Regulating the Examination, Approval and Supervision of Foreign Direct Investment in Real Estate Industry issued by the Ministry of Commerce and the State Administration of Foreign Exchange (issued in 2007)

(3) The Notice on Issuing the List of the First Batch of Foreign-Funded Real Estate Projects Having Passed the Procedures for Archiving with the Ministry of Commerce issued by the State Administration of Foreign Exchange (issued in 2007)

(4) The Notice on Further Strengthening the Administration of Foreign Investment Projects issued by National Development and Reform Commission of China (issued in 2008)

2. Limits on the Foreign-Invested Real Estate Enterprises

(1) Limits on Registration

According to the Notice on Issuing the List of the First Batch of Foreign-Funded Real Estate Projects Having Passed the Procedures for Archiving with the Ministry of Commerce, foreign-invested real estate enterprises that have obtained an approval certificate and that have passed the procedures for archiving with the Ministry of Commerce after June 1, 2007, a branch shall not conduct the procedures for foreign debt registration and procedures for examination and approval of foreign exchange settlement for foreign debts. For enterprises that have obtained approval certificates but haven’t passed all procedures for archiving with the Ministry of Commerce after June 1, 2007, a branch shall not conduct the procedures for foreign exchange registration (or re-registration) and procedures for foreign exchange settlements and sales under the capital account

(2) Limits on Business Scope

A. According to the Catalogue of Industries for Guiding Foreign Investment, the controlled foreign-invested real estate projects include:

•      Villa-featured, high-end housing and tourism and recreation complexes.

•      Apartments and office buildings whose cost of per-unit cost of construction is twice of the average cost of civil housing and office buildings.

•      Hotels and restaurants of above the four-star architectural standard (or equal to four-star)

According to the Notice on Further Strengthening the Administration of Foreign Investment Projects, projects mentioned above with an investment involving more than US$50 million shall be examined and approved by the NDRC; while those with an investment of less than US$50 million shall be examined and approved by the provincial DRCs. For foreign-invested projects other than the types listed above, if their investment surpasses US$100 million, the NDRC will take charge of examining and approving procedures while provincial DRCs will be responsible for those under US$100 million.

B. New Projects

According to the Notice on Further Strengthening and Regulating the Examination, Approval and Supervision of Foreign Direct Investment in Real Estate Industry, foreign-invested enterprises that start real estate development or operating businesses, or foreign-invested real estate enterprises engaging in new projects, should conduct required procedures for expanding business scope or scale with approving authorities.

(3) Limits on Investors

Acquiring or investing in domestic real estate companies in the form of returned investment is strictly restricted. Foreign investors shall not evade the examination and approving procedures for foreign-invested real estate enterprises by changing the actual controller of domestic real-estate companies. Otherwise, they will be held responsible for evasions of rules and laws concerning foreign exchange and any criminal behaviour that may result. 

(4) Limits on Transfer of Equities and Projects

Competent commerce departments and other departments shall examine and approve equity and project transfers by foreign-invested real property enterprises and acquisitions of domestic real property enterprises by foreign investors in strict accordance with relevant laws, regulations and policies. Investors shall submit guarantees for their performance of the State-Owned Leasehold Grant Contract, Construction Land Use Planning Permit, Construction Project Planning Permit, as well as their State-Owned Land Use Certificate, proof of the record filing of their amendment issued by the competent construction (real property) department and the relevant proof of tax payment issued by the tax authorities.

有关政策和法规对外商投资中国房地产市场的限制

如今，很多外商都有投资中国房地产市场的意向，但中国相关部门出台了多项政策交叉调整外商的投资行为，特别是一些限制性条款，外商更是了解有限。现结合有关政策及法律规定简单分析介绍，以便外商投资房地产领域时给予关注。

一、有关法规及规范性文件：

1、中国国务院发布的《外商投资产业指导目录》（2007年修订）。

2、中国商务部、国家外汇管理局发布的《关于进一步加强、规范外商直接投资房地产业审批和监管的通知》（2007年发布）。

3、中国国家外汇管理局发布的《关于下发第一批通过商务部备案的外商投资房地产项目名单的通知》（2007年发布）

4、中国国家发展和改革委员会（以下简称国家发改委）发布的《关于进一步加强和规范外商投资项目管理的通知》（2008年发布）

二、对外商投资房地产企业的限制

1、对登记备案的限制

根据《关于下发第一批通过商务部备案的外商投资房地产项目名单的通知》规定，2007年6月1日及以后取得的商务主管部门批准证书且通过商务部备案的外商投资房地产企业不得办理外债登记及外债。2007年6月1日以后取得地方商务主管部门批准证书但未通过商务部备案的外商投资房地产企业，外汇管理局各分局不予办理外汇登记（或登记变更）及资本项目结售汇手续。

2、对经营范围的限制

投资限制类房地产项目的核准

根据《外商投资产业指导目录》规定，限制类外商投资房地产项目具体包括：

(1) 别墅性质的高档住宅及度假村；

(2) 单位面积建筑设计造价高于当地一般民用住宅、办公楼一倍以上的公寓、写字楼项目；

(3)建筑标准四星级（或相当于四星级）及以上的宾馆、饭店。

外商投资此类项目，按照《关于进一步加强和规范外商投资项目管理的通知》规定，凡总投资额在5000万美元及以上的，由国家发改委核准项目申请报告；总投资额在5000万美元以下的，由省级发展改革部门核准。外商投资除此类项目之外的其它房地产项目，总投资额在1亿美元及以上的由国家发改委核准项目申请报告，总投资额在1亿美元以下的由省级发展改革部门核准。

新增开发项目

根据《关于进一步加强、规范外商直接投资房地产业审批和监管的通知》规定，已设立外商投资企业新增地产开发或经营业务，以及外商投资房地产企业从事新的房地产项目开发经营，应按照外商投资有关法律法规向审批部门申请办理增加经营范围或扩大经营规模的相关手续。

3、投资人限制

严格控制以返程投资方式（包括同一实际控制人）并购或投资境内房地产企业，境外投资者不得以变更境内房地产企业实际控制人的方式，规避外商投资房地产审批。否则将被追究逃骗汇责任。

4、股权及项目转让限制

外商投资房地产企业的股权和项目转让，由商务主管等部门严格按照有关法律法规和政策规定进行审批（审批权限及程序参照外商投资企业的设立审批及项目立项审批）。投资者应提交履行《国有土地使用权出让合同》、《建设用地规划许可证》等保证函，以及《国有土地使用证》，建设（房地产）主管部门的变更备案证明和税务机关出具的相关纳税证明材料。

Wang Fangmin, Lawyer

Professional fields: issuance and listing of securities; infrastructural development and real estate; intellectual property rights protection; enterprise legal affairs.

Wang Fangmin is a renowned lawyer in the field of lawsuits and non-suits. He has offered legal services to a number of major national enterprises, including the clearing of bad assets of the Beijing branch of the Bank of China and lawsuits involving a copyright dispute related to the film Devil 2, made by Hong Kong Xinghao Entertainment Company Limited. He has acted as legal consultant for many companies such as the Chinese General Automobile Sales Company, Chinese Silk and Clothes Import and Export Company and the Hong Kong Xinghao Entertainment Company, Limited.

Tel: +86 13601097828

E-mail: wangfangmin@sohu.com

王方民律师

专业领域：证券上市

                  建筑与房地产

                  知识产权保护

                  企业法律顾问事务

王方民律师精通诉讼与非诉讼法律

事务，先后为诸多大型企事业单位

进行诉讼代理，包括中国银行北京

分行不良资产清欠、香港星皓娱乐

有限公司拍摄的《魔鬼2》电影版

权纠纷等诉讼，先后担任中国汽车

工业销售总公司、中国丝绸服装进

出口公司、香港星皓电影发行有限

公司等多家法律顾问。

电话：+86 10 13601097828

邮箱：wangfangmin@sohu.com