REALWorld Law


Routes for investment

How can investment in real estate by an individual/organization/company be set up?



For real estate acquisitions that are not for self-use, foreign investors must establish a Foreign Invested Enterprise (FIE), specifically set up for the proposed investment project.

As with foreign investment generally in the PRC, real estate investment is subject to a system of multi-tiered approvals. The establishment of a real estate FIE requires approval from the relevant local government and the Ministry of Commerce ("MOFCOM") or its local counterpart and must be filed with central MOFCOM, and the acquisition process may involve approval from the Land Administration Bureau and Real Estate Administration Bureau where relevant. In addition, investors will need approval from the State Administration of Foreign Exchange (SAFE) to enable settlement into Renminbi of foreign funds for the proposed acquisition.

Foreign investment in the PRC typically takes the form of either a joint venture (JV) or a wholly foreign-owned enterprise (WFOE). JVs were the first investment structure allowed and therefore were the most common vehicle for many years. Since the PRC began to liberalize its investment policies, and particularly after its accession to the World Trade Organization (WTO), WFOEs have become the preferred FIE structure in most unrestricted industries.