Economy

China to ban foreign investment in villas

(Agencies)
Updated: 2011-04-07 12:20

BEIJING - China is to ban foreign investment in the construction of villas, apparently part of government efforts to cool the real estate market, Reuters reported.

To tame the record-high home prices and control inflation, the government has tightened bank lending to domestic property developers and introduced a long-debated property tax in Shanghai and Chongqing, the report said.

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Planned revisions to the Catalogue Guiding Foreign Investment in Industry listed foreign investment in the construction and management of villas in the "prohibited" category, it reported, adding that it was previously in the "restricted" category.

"There will be some impact, but it will not be very big," said Albert Lau, managing director of Savills Shanghai. He said foreign exchange curbs in acquiring land already limited some foreign investment in villas.

Foreign investors outside Asia accounted for a record 33 percent of China property investment in 2007. That more than halved in 2008 to 12 percent, before falling to a mere 2 percent in 2009. The ratio has recovered slightly since, rising to 7 percent last year, the report quoted Jones Lang LaSalle as saying.