Global Governments Ease Restrictions on Property Investment

They say that every cloud has a silver lining and the current global economic problems are bringing some unexpected silver linings for overseas property investment. A number of governments around the world now have newly-pressing agendas – how to stimulate both their property industry and their residential tourism sector to help boost their flagging economies.

Some of the world’s biggest markets are reacting to the global recession with changes which they hope will encourage more foreign investment, although some are still at the proposal stage. Many countries which currently have fairly stringent visa requirements and restrict property purchases by foreigners and non-residents are now looking to ease or remove those restrictions. The governments of countries such as Thailand, Cambodia, the Philippines and most notably, Mexico, are all making moves to kick-start their property industries. Mexico’s constitution does not permit foreigners to enter into real estate contracts within 48km of the coastline or 96km of an international border. Foreigners wishing to buy property in these areas must enter into a trust agreement with a bank, known as a fideicomiso. Now, senator Mario Lopez Valdez of the Institutional Revolutionary Party in Mexico has called for changes to the country’s constitution to allow foreign (but not commercial) ownership of land, in the hope that it will boost Mexico’s property market.

The Australian government has also rushed to help the residential real estate sector with a raft of new measures which include the lifting of visa requirements for foreign buyers. From December 2008, temporary residents on any type of visa are allowed to buy property – previously it was restricted to those on permanent visas only.

James Gonzalez, Market Analyst at Obelisk Investment Property, highlights the fact that the Indian and Chinese governments are also joining the ranks of those considering changes. “The Indian government has just announced that it is considering a bill which will allow non-Indian buyers into the country’s residential real estate sector and in China, the Beijing government has already lifted restrictions on foreign nationals buying real estate. These are all quite dramatic developments for overseas property investors.” The easing of Beijing’s tough controls came after a noticeable decline in the amount of FDI entering the country. According to China’s Ministry of Finance, foreign property purchases dropped from 8% (before the restrictions were reduced) to only 0.5% in 2008. As a result, all residency requirements and limitations on the type of property that foreigners can buy have been removed for 2009.

News submitted by Anne Hall, Obelisk Investment Property

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