GLOBAL GOVTS EASE RESTRICTIONS FOR FOREIGN BUYERS
March 10, 2009
The moves come as the impact of the credit crunch has affected virtually every housing market in the world with over 80% of the locations in the Knight Frank Global House Price Index recording negative price growth in the final three months of 2008 - compared to 27% in Q4 2007.
Thailand, the Philippines and Cambodia are all examining proposals to allow full ownership of property to foreign nationals, while Nicaragua has abolished visa requirements for all international visitors. At the same time, the UAE is introducing a federal law granting residency visas for owners of freehold property to boost the market.
One of the biggest changes is taking place in Mexico, where senator Mario Lopez Valdez of the Institutional Revolutionary Party is calling for an amendment to the country’s constitution to allow foreign, not commercial, ownership of coastal land.
Currently, non-residents can only own property in Mexico through the laborious fideicomiso; a document that remains in a trust’s hands, but gives control of a property in all but name to a foreign buyer. However, any ownership of property within a zone of one hundred kilometers [62 miles] along the borders and fifty kilometers [31 miles] along the shores are not permitted.
If passed, the amendment will be “one of the most dramatic changes” concerning foreign ownership in the country since fideicomisos were introduced in 1971, according to Baja-based broker Flock Dream Homes (FDH).
“The current global economy and the importance of international tourism make such restrictions anachronistic and inhibitors to investment,” said FDH’s Brian Flock. “The current constitution has been viewed by many in the business sector as impeding the proper functioning of the tourist sector.”
The Mexican government has also announced plans for the Pacific Coast Integrally Planned Center (PCIPC), an expanse of tourist development 80 miles south of Mazatlán that will be twice the size of Cancun and officially funded by the National Trust Fund for Tourism Development (FONATUR). Development is scheduled to start this year, with total completion estimated by 2025. Nearly $10bn in funds will be injected into PCIPC from both government and private interests.
Australia reacts to the downturn
The Australian government has also been spurred into action, by lifting the requirement to hold a permanent visa before being allowed to buy, along with the AUD$300,000 minimum threshold placed on students wishing to invest in residential real estate - a popular method of purchase in Australia for south east Asian investors.
Additionally, the need for non-resident nationals to build on a plot of land within 12 months has been extended to two years, along with an existing requirement that only 50% of new projects can be sold to international buyers off-plan, provided developers market the project locally, as well as internationally.
Foreign-owned companies can also now purchase established dwellings for the use of their Australian-based staff, provided that they sell or rent the dwelling if it is expected to remain vacant for more than six months.
On a regional level, the South Australian government has reintroduced its capital investment bond scheme, which gives extra credits on the country’s points-based immigration regulations. Under the programme, a minimum of £44,000 has to be invested for at least 12 months in a nominated Australian bond to qualify.
“Although some changes to will only benefit foreign persons that actually live or intend to live in Australia – such as the purchase of a second-hand dwelling restriction being lifted – other policy changes will have the effect of increasing the supply of permissible investment property purchases,” said Denise Casey from investment company Australian Property Solutions.
Asian giants mull over proposals
Some of the world’s biggest markets are also reacting to the global recession to encourage more foreign investment, although the changes are currently only at the proposal stage.
In India, the Department of Industrial Policy and Promotion has announced it is examining a bill that would allow foreign direct investment (FDI) into the country’s residential real estate sector from non-Indian buyers, while in China, Beijing’s government has lifted restrictions on foreign nationals buying real estate after a significant decline in the amount of FDI entering the country.
In 2007, the Chinese government introduced restrictions on the types of properties that foreigners could buy, along with requiring overseas buyers to have been resident in the country for a minimum period of 12 months. Now, residency requirements and property-type limitations have been removed for 2009, after a consultation between the city’s Municipal Construction Committee, the Finance Bureau and the Development and Reform Commission.
Source - OPP