The last several weeks have seen efforts by regulators in China to cool the Chinese property market by restricting purchases by both foreigners and PRC nationals. These efforts follow other recent policy efforts aimed at reigning in the rapid rise of property prices, especially in the major cities where the lack of affordable housing has become an issue; such as the tightening of credit in the real estate sector.

The more highly publicized effort was the Circular on Further Regularizing the Administration of Real Estate Purchases by Foreign Entities and Individuals (“Circular 186”), jointly issued on November 4, 2010 by the Ministry of Housing and Urban Rural Development and the State Administration of Foreign Exchange, which targets foreigners. Circular 186 provides additional teeth in the enforcement of now long-standing restrictions on real estate purchases by foreign nationals and foreign companies.