New Regulations: Real Estate

Monday, June 19, 2006 8:37

Introduction
Effective June 1, 2006, the central government released new regulations for the buying, selling, and development of real estate in China. These new regulations
are much like the rules released June 1, 2005 as they are designed to curb real estate speculation that is believed to be in the market. With many local governemnts beginning to believe prices may now be out of reach of the average resident, these regulations are also seen as a way to ensure stability and local participation inthe market.font>However, unlike the regulations of 2005, these regulations also go further by restricting the size and type of housing that can be built. While not only banning the development of single unit sites (i.e. a ban on villa complexes), the central government stipulates that 70% of units must be under 90sqm.

Implications
1) Developer and investor activity will stagnate for the next 1-2 months as options and workarounds are evaluated
2) Villa and apartment flats over 90sqm will gain value as supply will be greatly reduced (assuming take-up continues to increase)
3) Rental and serviced apartment models will see increase in rates as more short term residents choose to rent vs. buy rather than risk the sales tax once assignments are over.
    

 

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One Response to “New Regulations: Real Estate”

  1. All Roads Lead To China » A Rough 6 Weeks for Real Estate Investors says:

    August 9th, 2006 at 9:28 am

    […] China Strategic Development Partners « August 6 Regulatory Roundup A Rough 6 Weeks for Real Estate Investors […]

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