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Q&A: What's Next for China Inbound Real Estate Investment?

November 22, 2013

By JOEL ROTHSTEIN

While the past several years saw muted foreign investor activity in China real estate, due to governmental restrictions and competition from domestic capital, a change is now underway. Restrictions in China on shadow banking activities and other domestic sources for capital, combined with selective reduction of barriers to foreign investment in some jurisdictions, are leading international private equity firms and other cross-border investors to take another look at China.

At the same time, however, structuring and completing real estate investments in China continues to be a daunting, complicated task. To provide context for this changing environment and the critical considerations for successful deals, partner

shares his perspective on investing in China real estate:

What are the biggest differences between investing in real estate in China and investing in real estate elsewhere?

In China, land use ownership, the real estate development process, and foreign investment in real estate are all subject to multiple layers of governmental laws, regulations, and controls at the local, provincial, and national levels.

What particular issues should foreign investors be aware of in structuring their real estate investments?

Despite the challenges facing them, a number of foreign investors have successfully structured and completed China real estate deals by adopting the following common strategies.

Is there anything else that will best equip foreign investors?

Foreign real estate investors who have successfully navigated the market have discovered there is no one single path or structure for accomplishing a successful investment in China.

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