Has China fallen out of love with American real estate?
Has China fallen out of love with American real estate?
Chinese projects in New York City come to a near standstill
It’s an on-and-off love affair for China-US relations, at least as far as real estate goes.
This time around, Chinese residential real estate developers are deferring US projects or abandoning them altogether, The Wall Street Journal reported.
Vertical developments for Pacific Park, a 22-acre mixed-use development in Brooklyn, have been delayed, its developers Greenland Holding Group and Forest City Realty Trust announced earlier this month. Meanwhile, plans by CL Investment Group to convert a heritage office building into a luxury condominium block in New York’s Gramercy Park were shelved in October.
“We revised the schedule due to a number of factors, including almost unprecedented concentrations of new rental supply in downtown Brooklyn, which will take time for the market to absorb,” said David LaRue, CEO of Forest City, which took a USD307.6 million impairment charge for Pacific Park.
More: Do Asian investors still want to be top of the heap in NYC?
“I see a danger in the real-estate market in the US,” John Liang, managing director of US operations at Xinyuan Real Estate, told the Journal. “With its seven- to eight-year cycle, you get a sense now that it’s peaking.”
Soho China CEO Zhang Xin echoed Liang’s views, saying he would be “very cautious” on making a large investment in New York real estate.
The Chinese government is clamping down on capital flight anew, with focus on foreign acquisitions amounting to USD10 billion and real estate investments by state-owned firms of more than USD1 billion. As it stands, Chinese investors are experiencing difficulting in deploying capital amounting to more than USD50 million outside the mainland.
Chinese nationals remain among the most active foreign home buyers in the US. Commanding a 26.7 percent share of sales to international buyers (in terms of US dollar value), the Chinese bought 29,195 units or USD27.3 billion in stateside homes between March 2015 to 2016, making them the largest class of international buyers in the US, above Canadians, according to a report by the National Association of Realtors.
Read next: Hey, Chinese home buyers: Welcome to Seattle
Source: Property Report