World Union Real Estate Consultancy, a Shenzhen-based real estate consultancy and brokerage service provider, is about to make a ground-breaking IPO.

The China Securities Regulatory Commission has approved World Union’s IPO application, allowing the company to list shares on the Shenzhen Stock Exchange.

Wang Jia, an Industrial Securities analyst said, ‘It is probably the country’s first property consultancy and brokerage firm to float A shares on a domestic bourse.’

Proceeds from the sale will be used to extend the company’s network, establish an integrated service management platform, train staff and increase its national brand awareness, an effort expected to cost RMB319 million ($46.5 million).

Established in 1992, World Union runs 23 branches across the country, expanding its operation primarily by forming strategic alliances with large real estate developers such as Vanke and Gemdale.
Source: Shanghai Daily

Kardan has won an auction with a local partner to acquire land with construction rights of about 109,000 square meters in the city of Hangzhou in China.

Kardan will pay $62 million for the 10,400 square meters of land together with partners.

Of the partners Geely Group will hold 40% of the project.

Kardan’s subsidiary GTC Real Estate China will hold 50% of the project and a third party will hold 10%.

Total construction costs of the residential, retail and office development will amount to $241 million, including the price paid for the land.

Construction is expected to start in 2009 and will take about three years.
Source: Interactive Investor

China´s Ministry of Commerce has authorized provincial commerce administration departments to examine and approve foreign company investment in real estate.

The commercial departments will be asked to take charge of the approval process for foreign investments in the property industry, and lower-level commerce departments are now authorized to examine material filed by foreign investors.

The adjustment aims to simplify examination procedures and improve efficiency whilst strengthening the verification process.

The Ministry of Commerce will carry out spot checks periodically on foreign-funded enterprises with investments in real estate.

Enterprises that fail to meet relevant requirements will have their forex registration and foreign capital inflow filings annulled by the Ministry of Commerce and foreign exchange administrative departments.
Source: Property Report Asia

The Economic Observer, the Chinese language newspaper in Beijing, reports the government is likely to take measures to ease property developers’ funding difficulties caused by loan curbs and falling sales. The source for this is not identified.

The Chinese-language newspaper said the People’s Bank of China, the Ministry of Housing and Urban-Rural Development and other ministries held consultations on stabilizing the property market.

The newspaper, citing a National Development and Reform Commission report, said a decline in property prices will erode demand and disrupt economic growth.

The NDRC report said, according to the newspaper, that housing sales in China dipped 0.4% from a year earlier to 136.6 million square meters in the first four months.
Source: Shanghai Daily

Mondaq publishes a series of excellent reports on Asian estate and legal matters. They are well worth reading in full. This is a short version of the latest bulletin.

More and more foreign investors wish to invest in China’s real estate market to benefit from capital and currency appreciation.

Accordingly, over the past year the Chinese central government has issued numerous laws, policies, and administrative regulations in an attempt to cool down the real estate market.

The most recent measures, which will also affect local developers, include the enforcement of the land appreciation tax and penalties for hoarding land.

Circular 171, which has been in place for nearly a year, requires a foreign investor intending to purchase Chinese real estate to do so through an entity established in China. Further, where a foreign investor purchases a domestic real estate company through equity transfer or by other means, it must pay the transfer fees in a lump sum using its own capital.

Circular 171 also requires a foreign-invested real estate enterprise with an investment amount of no less than RMB10 million to have registered capital of no less than 50% of its total investment amount. Where the total investment is less than RMB10 million, current regulations remain unchanged.

Circular 171 states that first a foreign investor get the formal Foreign-Invested Approval Certificate and Business License before they obtain the State-Owned Land Use Certificate.

Then there is Circular 25 which last year expressly stated that the Chinese government will strictly restrict foreign investment in China’s real estate market.

Circular 50 issued about the same time reiterates many of the principles under Circular 171 but added that foreign investors are required to purchase the land-use rights before they apply to set up a development company in China. Circular 50 confirms the requirement under Circular 171 that the guarantee of direct or indirect ‘fixed revenues’ is forbidden.

There are several more but when read together, these circulars and policies show the commitment of the Chinese government to restrict and supervise foreign investment in China’s booming real estate market, especially high-end real estate development.

The full commentary is seriously worth reading and is miraculously free from legal gobbledygook. You can read it by clicking HERE.
Source: Mondaq