Brokers seek ruling on investment guide

PUBLISHED : Wednesday, 14 November, 2007, 12:00am
UPDATED : Wednesday, 14 November, 2007, 12:00am

Foreign-funded property agencies operating in the mainland are scrambling to obtain clear rulings of how their business might be affected by the 'Catalogue of Guidelines on Foreign Investment' issued by the central government last week.

The guidelines, issued by the National Development and Reform Commission last Wednesday, for the first time included the sector in a restricted category for foreign investors.

Existing players say it remains unclear if the new rule covers them as well as prospective entrants. First issued in 2004, the guidelines that were updated last week classify industries in the mainland into three categories: prohibited, restricted and encouraged.

The revised list taking effect on December 1 also restricts foreign investment in businesses such as the mining, manufacturing, retailing and financial sectors, according to a document published on the NDRC website on Wednesday.

'There is only one line in the revised guidelines saying foreign investment in the real estate brokerage or agency companies will be restricted,' said Andy Lee, a general manager of Centaline (China) in Shenzhen.

'So it is difficult to evaluate the impact. We have contacted local government officials but they have not yet received any instructions on how to implement the guidelines. Whether it will only affect newcomers or include us, I don't know.'

Mr Lee said property brokerage was a service industry which was supposed to have been more open to foreign investment after the country joined the World Trade Organisation in 2001. 'It is strange that the sector has now been put under the restricted category,' he said.

Mr Lee said since a property broker's role was to encourage transactions, this might explain why the central government would regulate the sector.

There is no official data on the total number of foreign property agents in the mainland, but industry participants said the three major players came from Hong Kong - Centaline China, Midland Realty and Hopefluent Real Estate.

Some agents were optimistic. Jacky Fung, general manager of Midland in Shanghai, said: 'I believe only newcomers will be affected. Their entry is already restricted. We will face less competition.' But he said existing foreign players now faced spending more time and effort clarifying their position.