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China Matters: New Rules Restrict Offshore Structures For Investment in China Real Estate

July 17, 2006

By Mitchell Dudek, David Blumenfeld and Joel Rothstein

New regulations have just been jointly submitted by six key Chinese ministries to the State Council which prohibit foreign investors from directly investing in PRC real estate from offshore, thereby effectively forcing foreign investment into the more traditional on-shore corporate structure. As part of this regulatory tightening, establishment of onshore companies to invest in PRC real estate will also be subject to a higher level of administrative scrutiny and will require a higher level of equity contribution as a percentage of the total investment.