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Legal Update

Foreigners Expressly Restricted from Investing in Non-Residential Properties in Guangzhou

15 March 2012
Mayer Brown JSM Legal Update

Guangzhou Municipal Land Resources and Housing Administrative Bureau recently issued to its sub-branches an internal circular under which foreign individuals and individuals from Hong Kong, Macau and Taiwan are prohibited from purchasing any non-residential properties in Guangzhou. This internal circular does not make any change to the prevailing real estate market control policies. Instead it merely strengthens the enforcement of these policies.

Up until recently, despite the real estate market control policies laid down by the central government, foreign individuals and individuals from Hong Kong, Macau and Taiwan have been able to purchase certain types of non-residential properties in Guangzhou.

The Guangzhou Municipal Land Resources and Housing Administrative Bureau (the "Bureau") issued to its sub-branches an internal circular, titled "Circular on Publication of the Opinions on Further Strengthening the Supervision of the Real Estate Market" (the "Internal Circular"), which became effective from 7 March 2012.

Upon the Internal Circular taking effect, foreign individuals and individuals from Hong Kong, Macau and Taiwan are strictly prohibited from purchasing non-residential property in Guangzhou. The below types of properties all fall into the category of non-residential property under the Internal Circular:

  • Office
  • Retail shop
  • Serviced apartment constructed on land zoned for commerce

The prohibition on foreigners' purchase of non-residential properties in China has been in place as early as 2006. The PRC central authorities imposed restrictions on foreign investment in the real estate market in China, by issuing such regulations as Circular 171 (Opinions on Regulating the Entry of Foreign Investment into the Real Property Market and the Administration Thereof ) and Circular 186 (Notice on Further Regulating the Administration of Premises Purchase by Overseas Institutions and Individuals). However, foreigners in Guangzhou could still find ways to purchase non-residential properties like retail shops. Now this is no longer possible because the Internal Circular expressly prohibits such conduct, stipulates a wide scope for the concept of "non-residential property", and urges the sub-branches of the Bureau to strengthen their enforcement of the relevant national regulations and policies.

Although a copy of the Internal Circular is not publicly available, the Bureau clarified to the media recently that there is no change to, whether in tightening or loosening, the prevailing real estate market control policies. The purpose of the Internal Circular is merely to strengthen the enforcement of the prevailing national policies.

For inquiries related to this Legal Update, please contact Andy Yeo, or your usual contacts with our firm.

Learn more about our PRC offices, Real Estate practice.

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