Savills: China real estate registration moves forward with more detailed rules announced. The registration database aims to improve transparency and lead to a healthier property market

The Ministry of Land and Resources (MLR) of China announced more detailed rules for the provisional real estate registration system (link) on 1 January 2016. The details cover but are not limited to, bodies, procedures and types of registration. The detailed rules follow a previous draft of the regulations released by the State Council in December 2014.

All real assets, including land, bodies of water as well as real estate and forested areas, are subject to this set of rules and will be guided and supervised by the MLR. The regulations apply to first-time registration, ownership changes, objections, advance notice and frozen assets.

Most notably, the rules on requests for information have been clarified. National authorities such as the People’s Court, the People’s Procuratorate, National Security and other supervisory authorities can make queries or copies of registration information. At the same time, real estate owners and related parties can also research and copy registration information as long as their applications are endorsed by the owner. Third parties, unless provided with power of attorney and identification documents, will be prohibited from obtaining access to the information.

While it is viewed by some as merely a prerequisite for a nationwide property tax and clamp down on corruption, the registration system will have many more far reaching consequences and benefits for the real estate market, most notably increased transparency. This is essential as the Chinese property market, estimated at being worth RMB270 trillion* compared to a GDP of RMB67 trillion (2015) and a stock market of roughly RMB40.3 trillion (RMB22.9 trillion & RMB17.4 trillion for Shanghai and Shenzhen respectively). That means that real estate assets are valued at four times the yearly output of the whole country and six times larger than the stock market (3.8 times larger even when the stock market was at its peak).

As China’s real estate sector continues to evolve and mature it is becoming more complex and interconnected. In order to better understand and manage the markets, it is important to put in place a comprehensive registration system and set of procedures. The real estate registration database also needs to be connected and cross referenced with existing systems in order for authorities such as tax, urban planning, healthcare and education, to make the best use of this wealth of information.

If properly implemented nationwide, it will mark a major stepping stone for the property market, with the real estate registration system helping to foster a healthier long-term market, and the database able to better protect the legal rights of property owners as well as regulate the overall real estate market.

Improved market transparency will also help the government to make more informed policy decisions, and investors to identify new investment opportunities as well as areas of the real estate sector which are currently under invested.

*1.375 billion people, average space per capita of 30 sq m and RMB6,500 per sq m