Beijing eases rules for property investment by foreigners

China has loosened rules on property investment by foreign companies and individuals, as part of efforts to boost the flagging real-estate market and support the slowing economy. 

China is easing foreign-exchange restrictions placed on foreign companies and individuals when they apply for loans and when they need to change yuan proceeds gained from the sale of a property, said a circular jointly issued by six government bodies, including the housing ministry, the trade ministry, the central bank and the foreign-exchange regulator. 

It is also providing foreigners the same rights as locals on purchases of multiple homes, depending on each city's purchase policies, according to the circular, which is dated August 19. 

In 2006, China introduced measures to prevent foreign individuals and companies from directly owning commercial real estate that wasn't for self-use, though they are able to do so through a local entity. They are also required to put up additional documents and deal with a designated bank when making payments with foreign currencies. Also, proceeds from the sale of property can be converted to foreign currencies only with approval from the relevant foreign-exchange authorities. 

In 2010, when the nation's housing market became increasingly frothy, policy makers reinforced these measures with more limits, adding that a foreigner can purchase only one house for self-use and that a foreign company would be able to buy commercial property only in the city where its office was located. 

Four years later, however, China's property market suffered a sharp downturn, compelling policy makers to subsequently loosen limits on home purchases for locals and cut interest rates to boost the flagging market. 

Concern over the speculation of foreigners in China's property market has diminished in the current environment, where the economic slowdown and the weakening yuan have prompted worries about capital outflows from China, analysts said.