(Reuters) - China is to ban foreign investment in the construction of villas, apparently part of government efforts to cool the real estate market.
To tame 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.
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 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 and difficulties in acquiring land already limited some foreign investment in villas.
David Ng, an analyst at the Royal Bank of Scotland, said "This is just a gesture you see from time to time. Supposedly if you want to cool the market, you should increase the supply. It is counter-intuitive to try and limit money going into the sector."
To tame 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.
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 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 and difficulties in acquiring land already limited some foreign investment in villas.
David Ng, an analyst at the Royal Bank of Scotland, said "This is just a gesture you see from time to time. Supposedly if you want to cool the market, you should increase the supply. It is counter-intuitive to try and limit money going into the sector."
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