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In another attempt to rescue its beleaguered real estate sector, China’s securities regulator has opened up the China property market to foreign investors. A pilot has been announced by the China Securities Regulatory Commission (CSRC) that allows private-equity (PE) investors to launch PE investment funds, potentially raising at least 30m yuan ($4.36m) per fund.
The regulator’s statement said the offering is open for institutional investors and others who are willing to pay at least 10m yuan (~$1.5m) each to participate in the pilot.
Privatising China property market?
CSRC is encouraging foreign investors through a facility called the Qualified Foreign Limited Partnership (QFLP) to invest in the funds which will be open for applications on March 1. These funds will invest in residential (unfinished projects, rental projects and affordable housing) as well as commercial properties.
The new move seems to be part of the wider support to the real estate sector in China, which recently eased some of the funding rules for developers. Data from the National Bureau of Statistics (NBS) showed that China property investments fell 10% YOY in 2022 for the first time in over two decades.
The securities regulator has also set down certain rules for the private equity funds and claims to have designed the funds keeping investor safety in mind. Previously, investments in the China property sector were only allowed through debt.
Last October, China’s new home prices fell 1.6%, the largest fall in over seven years for the month. Shortly after Beijing announced a horde of support measures including the 16-points rescue package. New home prices rose 0.1% month-on-month in January, the first time in a year.
“The investable segment of the China property sector has shrunk sharply. Fundamentals continue to matter. The opportunity space is largely with the property developers who are benefiting directly from the expanded credit lines,” writes Justin Ong, Senior Research Analyst, Asian Corporate Debt, Columbia Threadneedle Investments.
