In an article titled Chinese investment in US real estate expected to slide: report on The New York Real Estate News website, E.B. Solomont reports that changes are happening, and quickly, in investments by Chinese real estate buyers.
There are several factors involved with the decline, the biggest being that the Chinese domestic economy is wavering, reports from the Asia Society confirm. Chinese officials are taking longer to approve investments happening abroad, and the effects are already wide-spread. Solomont writes:
"Overall, Chinese investment in the U.S. commercial real estate reached $8.5 billion in 2015, a record high and a 70 percent jump from 2010, according to the 111-page report, released on Monday. Compared to other countries, China ranked No. 3 among foreign investors in commercial real estate around the U.S. in 2015, behind Canada ($24.6 billion worth of investment) and Singapore ($14.6 billion)."
Because of this large investment surge over the last half decade, the U.S. should feel the slowing of the spigot in Chinese investment, specifically in commercial real estate. Many developers and CEO's advise real estate companies to look for other sources of capital over the next few years as China pulls their resources close to home to mend their economy.
Other stats found by the Asia Society include:
- $93 billion in residential investment between 2010-2015
- $17.1 billion in commercial real estate investment between 2010-2015
- $9.5 billion investment via the EB-5 visa program;
- a $207.9 billion position in the U.S. government-backed mortgage bonds; and
- $8 billion in loans made by Chinese banks for commercial real estate projects in the U.S.
What this means for the U.S. -- simply that over the next few years, real estate investors and companies will need to be creative and rely on other sources of capital to mend the gap created by former Chinese investors, but that after a couple years the flow of investment should return as before.