Buying Property in China as a Foreigner?
Being a responsible adult seems to eventually require buying a home. Highly frugal expats overseas can invest and save their paychecks, and walk out of Asia rich. China might not be the best place to invest in real estate, since you don’t get any special rights. Thailand gives out permanent residency to expats that buy enough property. Saving up RMB 300-600k in China and investing it real-estate is not an impossible task. It was certainly easier to do 10-20 years ago. The nomadic life of expats can include responsible investments and frugal living. China might not be the best market anymore for buying a home. It still is better to save and invest than just blow money on rent.
China is not a country where expats often buy property. The Chinese economy has no interest in getting foreign money for real estate investments. The outflow of capital from Chinese people to buy property overseas is staggering. The government already limits the amount of speculative property investments a person can own. The price of homes in Chinese cities has been constantly going up for decades.
Foreigners have made considerably amounts of money from buying property in China. If you want to buy property in China, you need to consider a few things. You can’t ever truly own property in China, since all land is basically leased by the government for 70 years at a time. Foreigners can only buy one piece of property and can’t rent it out. Often it is only expats married to Chinese natives that buy properties in China.
Should you however decided to take the plunge, please refer to the following:
“Below are the steps to be followed:
Step 1: Obtain proof of your one year residence in China from the local Municipal Bureau of Public Security. As you do that, you can either hire an agent or you can search for your ideal residence by your own.
Step 2: Once you or your agent find a suitable property, the next step is to submit a preliminary agreement of which you will need to set out the terms and conditions of purchasing the targeted house. A deposit of 1% of the agreed selling price should be paid to the seller. That is if the seller agrees to your proposal.
Step 3: The seller and you will then draft and sign the official sale contract and it has to be notarized if the buyer is foreign.
Step 4: This step is unique for foreign buyer. You are supposed to go to your local Foreign Office for you to have the purchase approved by the government.It is important to note that if a mortgage is needed, you will need to secure a loan by taking your signed and notarized contract as well as any other document that is required by the bank. Depending on the specific rules of your bank, you can take your loan either in RMB or in Foreign Currency. You need to pay the deposit and an initial 30% of the selling price as a down payment to the seller in terms of RMB. Even though most foreigners wire their foreign exchange to their bank accounts in China, one needs to remember that you have a foreign exchange quota of $50,000 every year. You therefore need to let your seller know, that if you don’t have sufficient cash in RMB you will need time to remit and convert your currency.
Step 5: This is the last step of becoming the home owner in China and all you need to do is to visit the Deed and Title Transferring Office so they can transfer the title of the house under your name. The ownership Certificate will be issued to you after a few weeks and you will now become an official home owner in China.”
Source: https://www.sinojobs.com/en/career-job-application/laws-salary/pension/purchasing-properties-in-china-as-a-foreigner.html
Chinese home loans usually require a 30% down payment. Few expats are going to have that much cash lying around. The good thing about these kinds of loans, is they also operate as credit cards with mortgage like interest rates, since you basically have insane credit with such a deposit. You can borrow large sums with credit in China, once you get a home loan.
Home buying in China has seemed to reach a peak. No one can predict a property bubble bursting. China has a massive over supply of houses, and therefore rising house prices are unlikely. Many wealthy people in China buy homes, that they never use nor never rent. The number of unused properties is on the increase, even as China highly restricts such use of property.
China is estimated to have 50 million unsold properties, which account for 1/5th of the entire market. Few homes are being bought to actually live in and use for people, as prices have skyrocketed. You can spend more on one square meter of property in Beijing than for an entire normal humans’ home. Property is seen as a safe investment even if prices get out of hand. The people that own property never lose money.
The Chinese stock market has been unstable in China. Apparently, the money that exited the stock market in its crash in 2015, has been propping up the real estate market the last few years. Unsafe stock money was converted into safer real estate investments. As this money dries up, it may reduce any new surging house prices.