Hundreds of billions of yuan are pouring into China’s real estate market. Apartment complexes and entire neighborhoods are built in the blink of an eye. Apartments are sold before construction is finished; and everyone’s attention (both good and bad) is riveted by China. However, uncertainty lurks. Can China’s real estate boom continue, or will the bubble burst like the US dot.com industry in the nineties? Regardless, many investors have successfully navigated the Chinese market and many, many more are on their way. And, they are all asking, “Where should I buy?” and “How do I buy?” You could search the internet for weeks reading the latest reports and articles on the subject, but the truth is: if you want to take advantage of the opportunities in China, you have to be here. Everyone knows China is the “new” big frontier and although one should always be cautious when making investments, there is a lot that can be done. Whether you are looking to invest in one unit or a couple of thousand, foreigners can successfully navigate the Chinese market.
1. Foreigners can invest in real estate in China.
2. Foreign investors can get a mortgage.
3. The Chinese government can not just take your home, as defined and clarified by laws promulgated in March and October 2007.
4. The China market can provide fantastic investment opportunities.
LOANS & LAWS:
From 1st October 2007, mortgage down payments for additional units were likely to rise from thirty to forty per cent. Also, the seventy "lease term" for a property could be automatically renewed. Thus, clarifying land ownership. The subject of how much one can borrow is a little trickier, however, and depends on the bank and the investment. Most private investors can get a mortgage relatively easily. And as a bonus, mortgages in foreign currency are locked into an exchange rate. But, the bargaining power over mortgage rates is smaller as a private investor. Banks will not usually loan more than five million yuan which may make it difficult to finance more expensive properties without a larger down payment. In most cities, prospective buyers must make a down payment to the seller before applying for a mortgage. If a loan should be denied, the seller must return the down payment. In most cases, there aren’t any problems, but there have been some first-time buyers who, without the support of an agency, have had to resort to legal action to get deposits refunded.
Chinese real estate laws, especially with regards to foreign investors, are relatively new and can be difficult to navigate if searching alone. It is also important to keep in mind that although a law may be put into effect, it can often take time to reach full implementation (especially in more remote areas of the country), so it is important to do research on an area’s practice as much as the law itself. In the end, going directly to the city one wishes to invest in and talking with existing investors and agencies that have experience dealing directly with foreigners is a good choice for finding accurate and useful local market information and help. At any rate, second-tier cities like Xi’an are exciting places for real estate investment in China. With the new Metro underway, and the thousands of families already scheduled to relocate in the next few years, the Xi’an market is booming and will continue to experience growth for some time.