Restrictions on overseas property investments issued on Monday sent a warning signal to individual investors from Hong Kong, Macau and Taiwan even though detailed rules were not unveiled, analysts said.
Under the new rules issued on Monday, foreigners won’t be allowed to buy homes or apartments in China’s mainland until they’ve been here at least one year. But Chinese residents of HK, Macau and Taiwan and overseas nationals can still buy houses at any time for personal use up to a “certain” size, which the central government hasn’t specified.
“The impact on buyers appears limited as Hong Kong, Taiwan and Macau residents, who account for the lion’s share of overseas demand, face limited curbs compared to expatriates,” said Morgan Stanley in a research note published yesterday.
Individual investors from Hong Kong alone have spent 4.7 billion yuan (US$587.5 million) buying property on the mainland in the first half, a 10 percent rise over the same period of last year, according to Centaline China’s latest report.
At least one third of luxury apartment buyers in Shanghai are residents of Hong Kong, Taiwan or overseas Chinese, industry insiders estimated.
Beijing introduced a new rule last week, setting caps on the number of properties that Hong Kong, Macau and Taiwan residents can buy. A resident of Hong Kong, Macau or Taiwan can buy one apartment in Beijing, the Beijing News reported yesterday.
Though detailed restrictions in Shanghai have not been unveiled, continued speculation about new measures has had an unsettling affect on the market.
New launches of luxury apartments such as Jing’an Four Seasons on Weihai Road and Lakeville Regency near Xintiandi reported strong sales recently as buyers accelerated purchases prior to possible restrictions.
“Individual investors are inclined to follow suit after foreign institutional investors jumped into the residential sector in the first half,” said Ye Ying, an analyst with Shanghai-based E-house R&D Institute. “They are betting these big firms have better calculations on investment return.”