Chinese Investor Interest in U.S Real Estate Remains Strong

Chinese Investor Interest in U.S Real Estate Remains Strong

Chinese buyers and investors continue to show strong interest in purchasing U.S. commercial as well as residential real estate. 

Chinese investors remain enthusiastic about investing in US Commercial properties at record levels. According to The Wall Street Journal, Chinese investors have completed 47 deals worth $9.3 Billion as of May 2016. Last year they completed 71 deals worth $6 Billion.

Dr. Jin Zhao, CEO of attributed this to Chinese wanting to invest in the safety and security of the U.S. due to the current status of China’s real estate market. Prices in major metropolitan areas such as Beijing and Shanghai have reached bubble levels by international standards whereas some smaller cities in China are going through the process of reducing over-built housing supplies. In addition, the attractiveness associated U.S.’s land ownership makes investing in the U.S. real estate market all the more desirable. He added that investing in U.S. properties is a diversification strategy Chinese investors use to mitigate uncertainty. 

Dr. Zhao also pointed out that as countries like Australia and Canada started to impose regulations to limit Chinese investments there, those dollars are being sent to the U.S. The U.S. has very few restrictions on the types of properties that foreigners can purchase and manage. He believes that the volume of investment in U.S. real estate will continue to grow, even though there might be possible bumps in the short term. Some Chinese individual investors’ purchases of U.S. homes may be slowed by capital controls, but due to more individual Chinese are aware of the attractive prospect of investing in the U.S. real estate market, the temporary slow-down will be off-set by a greater number of new Chinese buyers to the U.S. market. 

A recent study from the Asia Society and Rosen Consulting Group projects that Chinese direct investment “across existing U.S. commercial real estate assets and residential purchases” could hit at least $218 billion from 2016 through 2020 — and that’s excluding new development projects. 

According to this report, Chinese investors acquired at least $17.1 billion of existing commercial property between 2010 and 2015, representing an annual growth rate of 70%. Half of that investment came in 2015 alone. 70% of commercial real estate transactions between 2010 and 2015 was concentrated in the New York, Los Angeles, and San Francisco metro areas.