Chinese Real Estate Investment Policy

2. Brief introduction of
1
《China Construction News》
《China Construction News》 was initiated in 1987 by the Ministry of
Construction of China. It was the only comprehensive daily news paper of
national housing and urban development. The circulation is about 190,000
pieces, the main readers are the related authorities from different
government level, industry associations and enterprises.
《China Construction News · China Housing》 weekly news paper started
its first issue in 1999, the reader including government authorities, real
estate entrepreneurs, design institutes, investors and construction
material suppliers. It is the most authoritative and professional real
estate financial media.

3. I.Basic information Jan. to Aug. 2012
From Jan. to Aug. 2012,
the total investment in
the Chinese housing
sector is about $700
billion, a 15.6% growth
over last year, among
which the residential is
$480 billion, about 69%
of total real estate
investment.

4. China Investment Market
The Chinese government has been
encouraging foreign investment in the real
estate market though there are some
restrictions because of the over-heating
market in recent years. So the market is
slowing down since early this year. However,
we believe that there are still lots of
opportunities.

5. II. China Policies on Foreign Investment
in Real Estate Market
1. Before 2006, Chinese government had no clear
limits for foreign investment into Chinese real
estate market.

6. In July 2006, together with other 5 government
agencies, the former Ministry of Construction of
China released the guidelines on foreign investment
in Chinese real estate market, which aimed at better
managing foreign investment on real estate
development and operation as well as overseas
agencies and individuals’ purchase of Chinese real
properties.

7. In January 2011, the Ministry of Commerce
indicated that it would work with other relevant
agencies including land construction, foreign
currency, and finance to further monitor foreign
funds entering into Chinese real estate market and
standarize the approval process.

8. 2. Requirements for foreign fund
gaining access to Chinese market
1). Any foreign funds must meet the following
requirements before entering into Chinese real estate
market:
• getting an approval from local governemnt;
• filing with the Ministry of Commerce for approval;
• registering at the State Administration of Foreign
Exchange.

9. 2). According to relevant regulations, foreign investors
investing in real estate ought to form a project
company.
They need to obtain the certificate of land usage
right. Or, they may work with local management
agency, real estate developers or land owners. There
may have other ways of getting into the real estate
development business in China.

10. Opportunities and expectation
According to government data, the actual use of foreign capital in
the real estate market decreased 12.4% from January to June
this year. On the other hand, China’s overall FDI is about $59
billion, down by 3% over at the same period.
However, the investment climate of China has not changed much.
For example the sevice apparment market has been growing in
Beijing.

11. In the first half of
2012, the vacancy rate
of service apartments
in Beijing has reached
a new level of 5.2%. In
the 2nd quarter, rent
increased 2.7% over 1st
quarter and 11.7% over
a year ago.

12. Current situation of foreign investment in
real estate market
1). According to some reports, major international investment
companies including Morgan Stanley, Goldman Sachs, CapitaLand
and other groups have all entered into China one way or another.
2). Due to the macro-control, current Chinese real estate market
is slowing down and may provide some opportunities for foreign
funds.

13. Current situation of foreign investment in real
estate market
3). The foreign investment mainly focuses on office building,
shopping mall, high-end residence, and gradually enter into the
quality service apartment, high end hotels and industrial real
estate and others.
4). Overseas companies usually work with local companies so
they can obtain help in overcoming barriers when going into the
new market.
5). The return rate varies depending upon factors such as who
the local partner is, market situation, project itself, and etc.

14. III. The US market is equally attracting Chinese
investors
We believe U.S. market is attractive to Chinese investors because of the
following reasons:
1. Advanced management and mature market.
2. Relatively better game rules and good faith.
3. Open, transparent and fair legal system.
4. A large high-end consumer group.
5. Flexible financing process for loans.
6. Investment opportunity under the financial crisis
7. Better education system and Immigration possibility

15. IV. Case study of Chinese real estate
investment aboard
1. As reported, Wantong Industrial Investment has
invested $80 million into the WTC restoration project,
which is a business center integrating conference,
business road show, culture exihibition and catering
business.
Feng Lun Rendering of New York
Chairman of Vantone Holdings International Center Reconstruction

16. 2. In May, Dalian Wanda Group signee agreement with AMC to
invest $2.6 billion, including 100% stock rights and assumed debts.
Wanda may put additional $0.5 billion operational fund which would
make the total investment $3.1 billion.

17. Dalian Wanda Group is a comprehensive private enterprise with
business mainly in China. Their annual tunrover is $16.7 billion,
total assets $35 billion. Their business mainly includes 5 areas:
commercial property, high-end hotel, tourism, cultural innovation
business and retail chain business.
Wang Jianlin
Distributions of Wanda Group in China Board chairman and president of
Dalian Wanda Group Co., Ltd.

18. 3. In 2004, Zhongkun Group
invested $34 million to
develop a 20,000 sm
business center project in
LA.
In 2007, they bought a
ranch with an area of 1,200
acre in Tennessee. Huang Nubo
Chairman of Beijing Zhongkun
Investment Group Co., Ltd.

19. 4. Beijing Contemporary Group is seeking
investment opportunity in US now.
Zhang Lei
Beijing Contemporary MOMA
Board chairman and president of
Beijing Contemporary Group

20. V. How to Attract Chinese Investors
1. Globally influencial project. For example Wanda chose to
merge the second biggest cinema chain AMC in US and
retained 18,000 workers; Wantong chose the high profile
project “China Center at the WTC tower, bringing high
profit and build a Chinese profile at the same time.
2. A good profit at a low cost. For example, during the financial
crisis, Zhongkun Group looked up overseas market for
opportunities.
3. Marketing your projects to potential investors through local
media in China.

27. Thank you !
谢 谢