REAL ESTATE - China’s concern that overseas buyers are causing an overheating of the country’s real estate market has resulted in further measures being considered to restrict foreign ownership.
Local banks in Shanghai have already come under pressure to seek official approval for large loans to foreign buyers. The government is now considering extending this rule for all foreign investments.
Earlier this year, the State Council announced a series of measures aimed at dampening speculative demand at the high end of the property market, while increasing the availability of homes for low and middle-income Chinese.
The Chinese authorities are anxious not to kill the golden goose, but there is increasing ill-feeling against rich foreign investors, who are blamed for driving local buyers out of the market and causing the recent price slumps in Hong Kong and Taiwan.
In a statement, the State Administration of Foreign Exchange announced that it “will take technical steps to control and limit investment, such as tightening the approval procedures for foreign currency exchange and increasing controls on property firms attracting foreign investment and raising money on foreign markets.”
Meanwhile, Deutsche Securities in Japan is working with the owner of several hospitals to raise funds on the back of their real estate assets. Deutsche will set up and operate an investment fund for the Caress group, that will buy land and buildings from hospitals in Japan, then distribute the rental income to investors.
Deutsche will manage the fund with a view to taking it public as a REIT in 2007. The fund is expected to attract interest from domestic and international institutions. It will begin investing in March 2007 with assets of $250m.
The fund will select medical institutions that undergo regularly scheduled audits or which have obtained a sound assessment from a credit rating firm. If a hospital raises money through the investment fund, it will be required to disclose its finances to investors.
As a result, the arrangement is expected to improve the transparency of hospital operations.