China has made it easier to sell homes to Russians

The authorities of the People's Republic of China (PRC) have simplified the process of buying housing for foreign citizens. After the innovations, persons located abroad can make payments in foreign currency through the bank before registering the transaction. RBC talks about the changes, advantages and prospects of the Chinese real estate market on January 28.

Information about the changes appeared in September last year on the website of the State Monetary Administration of China. At the moment, the actual conditions of their application are being established in the country. Previously, foreign investors located outside the People's Republic of China (PRC) could make a payment on real estate only after handing over all the necessary documents on the registration of the transaction.

Now foreigners have the opportunity to pay for real estate first and only after that provide documents. The new rules also allow buyers to use a contract or agreement to purchase an asset in order to make a payment for it through a bank until they receive a certificate of registration of the transaction.

Allegedly, the relevant rules were adopted against the background of earlier difficulties faced by foreigners when purchasing housing in China. The early condition of the need to register a transaction before payment created an obstacle in which developers and homeowners in the secondary market demanded to make an initial payment for real estate before the transaction was completed. At the same time, buyers did not have the opportunity to transfer money to sellers.

To solve this problem, the Chinese authorities have developed new payment rules. Initially, the scheme operated only in Hong Kong and Macau, but later it was extended to the whole country. Subsequently, the change was included in a set of measures that the agency has developed to optimize the processes of attracting foreign investment to China. At the same time, the State Monetary Administration of China clarified that the new rules do not affect the basic principles of regulating transactions for the sale of housing to non-residents of China.

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Alexandra Kurdyumova, partner of the fintech, Intellectual property and Technology practice at BGP Litigation, stressed that the scheme removes one of the practical barriers that previously created difficulties in advancing the transaction. Albert Trofimov, adviser to China Window Consulting Group, in turn, drew attention to the fact that the impact of the new rules may be noticeable for individuals and small businesses from countries that actively interact with China, including Russia and Southeast Asian countries.

The international broker Tranio stressed that at the same time, China is still a difficult and niche market for Russians. Allegedly, real estate in China is of interest to investors who conduct business in the country, live for a long time or have capital within the jurisdiction and do not plan to repatriate.

According to Trofimov, China has not yet become popular for Russians in the context of relocation. He clarified that this is also due to linguistic and legal difficulties. Kurdyumova also notes that the Chinese real estate market is considered difficult to enter due to fragmented regulation and the large role of banks and the State Monetary Authority. At the same time, the practical implementation of formally authorized operations largely depends on the specific bank and the investor's profile.

Among the advantages of buying real estate in China, experts cite the potential for market growth in specific regions, namely in various urban clusters or on Hainan Island. This also indicates a well-developed infrastructure and high quality of new housing in large cities. Speaking about the shortcomings, Trofimov drew attention to changes in China's migration and currency legislation, as well as certain difficulties with the inheritance of real estate by foreigners.

Analysts at MR Analytics and NDV Real Estate Supermarket, in an interview with Izvestia on January 28, reported a 3.7-fold increase in housing prices in 10 districts of Moscow. Thus, the cost of the capital's square meter of business class housing increased by 96.3%, amounting to 568.6 thousand rubles. Experts recommended considering investing in housing for several years.

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