There are many reasons for this expansion of the China real estate market. The core ones are the high growth of China economy and the appreciation of RMB. How long will this expansion last? This is beyond the scope of this brief memo, but we can see a lot of opportunities in China whichever way the China economy goes.
　　2.　　　 REAL ESTATE FINANCE IN CHINA
　　One of the direct results of the macro control measures is that real estate developers can no longer borrow money from banks as easily as before. The developers are thirsty for funds. This opens the door for foreign investors to enter the China real estate finance market. Many domestic financial institutions are also developing and creating new financial products to cater for the needs of developers. Real estate trusts, REITs and industry investment funds are the hottest topics in the past two years. In accordance with the WTO requirement, China''s financial market will be wholly opened to the world at the end of 2006. It can be expected that foreign investment will enter the China real estate finance market faster and deeper in the coming years.
　　2.1　　　Bank Loans
　　Currently, real estate developers need to satisfy very strict conditions to get loans from banks. According to the recent rules:
　　(1)　　　　No loan can be granted to a developer whose injected capital is less than 35% of the total project capital;
　　(2)　　　　Banks should strictly control the extension of their loans or the grant of any other forms of revolving facility for developers who own substantial idle land or vacant buildings;
　　(3)　　　　Banks are prohibited from accepting as security any commodity houses that have been vacant for more than 3 years;
　　(4)　　　　As from 1 June 2006, the down-payment for a residential house must be no less than 30% of the total purchase price. For properties with a construction area of less than 90 square metres purchased by individuals as their dwelling house, the down-payment remains at 20%.

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