Foreigners – including residents of Hong Kong and Macao – have been barred from investing in retail properties in Guangzhou.

A ban on foreign investment was implemented on March 1 against a background of a thriving local economy and rising retail sales.

While municipal governments in China welcome investments as a revenue source, the central government sees a need to put brakes on the upsurge in property investment. In a recent statement, premier Wen Jiabao, asserts that the government will take measures to keep home prices, too, at tolerable levels.

Liu Zhizhong of Midland Realty sees the restrictions as a further limitation of investment choices for foreigners. He refers to the fact that foreigners, including those from Hong Kong and Macao, were barred from investing in the property market last year and now, this year, they are also kept away from the retail market.

MD of Centaline Property Agency’s local office, Ellis Wong, refers to the company’s own data: Sales of shops registered a 44 per cent rise in the fourth quarter of 2011 against a 53.6 per cent rise in the second quarter. Wong doubts, however, the new regulations will have any substantial effect on the local property market. The mostly Hong Kong based foreign investors account for just 15 to 20 per cent of shop procurement in Guangzhou.

The upsurge in investment and consumption fuelled an 11 per cent rise in Guangzhou’s GDP in 2011, according to property firm DTZ. 

GB