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Q: So.... owning real estate in China, how's that work?

Is there an efficient and relatively easy way for a foreigner to hold real estate in China, if at all?

 

I'm trying to see what's viable on my wealth-building options list. Stocks & Trading are off that list, seeing as I found out that foreigners can't trade on the A-market and have to bottom feed on the B-market stocks. Wtf, China? :-/

7 years 6 weeks ago in  Business & Jobs - China

 
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Governor

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Your plan seems to be investment, but I think in China it is a terrible idea.  The government has a law here that the real estate after 70 something years of purchase gets turned back over to the government.  The way I would go is renting but also I have heard of horror stories of Chinese renters and how crappy they take care of their apartments.  Guess thats why they like renting to foreigners if they can better.

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7 years 6 weeks ago
 
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Emperor

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First of all, you will need to get a lawyer and go thru with making a Wholly own foreign corporation, then you as a foreigner can purchase real estate to either rent, or speculate with the market, or both.  By Law in China, as a foreigner, you can only own one apartment, and must live in it, can not rent it (or sublet) legally.

 

Second, and I do not know why, but here in China many foreigners hear something, and later swear it is the Law.  The truth is that the government OWNS all the land in China, and it is only rented (not sold) to farmers, real estate developers, etc with a contract for a fix period of years (from 35 to 70 years in most cases).  At contract expiration date, a new one is made and signed, if the government has no other plans for the land.

BUT, in many cases, as buildings deteriorate with time, some municipal governments and/or developers will buy back apartments from those in them, tear the building down and build a new one.  Or maybe the land is needed for a new street, or avenue, or government office, and the same will be done.  In general, that could happen when buildings are pass 30 years old, maybe at the 40 or so mark.  But you are not kicked out cold, you will be given time to move, and either accept a cash payment or if a new apartment building will be constructed, an option to buy at a reduced price a new apartment there.

My GF just went thru that, she lived at a place close to 30 years old, paid 40,000 yuan for hers when new, and she got 200,000 yuan to move out from the developer.

 

And third, not all Chinese will destroy apartments.  What really happens is that landlords will not do any repairs, and tenants will not do them either because they know that when they move out they will not get the deposit back.  The trick as a landlord is to have photos or video of apartment at move in time, and use deposit money to bring it back to that condition when people move out.  And of course, get a large enough deposit to cover all eventualities.

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7 years 6 weeks ago
 
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I concur with most of what HappyExPat states:

You cannot 'own' any land, that is why almost all apartment / building are on a 70 year leasehold. (The last vestiges of Communism).

Foreigners can only 'own' one apartment and cannot sub let, additionally I've been told they are not permitted to pay by mortgage, i.e. it must be paid in full.

Chinese nationals can obtain a mortgage only on their first property, any subsequent ones must be paid in full, (this may only be true in Nanning) this is to prevent property speculation. The big fear of the Chinese government is a huge property speculation bubble similar to what they think caused the recent economic woes in 'the west'.

 

There are a few exceptions, many Nanning locals, have been given a lifelong lease, what is more they can pass this lease on to their children, the only condition is that the land / property must be in constant use. This is as close to 'ownership' as you get in China and many of these people do think they actually own these properties, but legally they don't. Very often the buildings on such land are the ones that appear of poor quality and made from small 'red' bricks. (I've been in those areas and in reality they are great fun and the locals are very friendly and open), either that or farms. It is this type of ownership that sometimes attracts negative press, when government officials want that land, sometimes they will send in gangs of thugs to prevent the 'tenants' from using the property / land and thereby allowing the local government to reclaim it under the 'not used' clause. Of course this land is then usually 'leased' to a mega-rich developer or international conglomerate.

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7 years 6 weeks ago
 
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