22 February 2006

South Korea offshore property investment

The government may remove all restrictions on overseas property purchases by next year after moving up its schedule to liberalize foreign currency transactions, officials at the Finance Ministry said yesterday.

At the moment, Koreans are banned from purchasing commercial-use property outside the country. Those purchasing property for residential purposes are subject to a ceiling.

But after raising the limit last month, the government is poised to lift all restrictions by the end of this year.

If the ministry gives the green light on eliminating the restrictions on commercial real estate purchases as well, there would no longer be any restraints on Koreans seeking to buy property abroad.

"We can't confirm it yet, but we already said earlier that the restrictions on offshore investment would be eased by 2007 or sometime soon after that," said Hwang Gun-il of the ministry's international finance department.

Easing the rules on offshore property investment is the second phase of the government's plans to fully liberalize all foreign currency transactions by 2011.

Finance Ministry officials are currently planning to accelerate this schedule amid steady gains by the local currency.

So far this year, the Korean won has appreciated around 4 percent against the U.S. dollar. That surpasses the 2.4 percent increase seen in 2005.

By lifting currency regulations, Seoul hopes to slash the won value.

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