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Chinese investment in Los Angeles and U.S. real estate plunged in 2017 on new restrictions

Chinese investment in Los Angeles and U.S. real estate plunged in 2017 on new restrictions
The DoubleTree by Hilton Hotel Los Angeles Downtown was one of the big local purchases last year by Chinese investors. (Jerome Adamstein / Los Angeles Times)

Speculation that Chinese investments in U.S. real estate would plummet after Beijing enacted tighter regulations on outbound investments last August has proved correct.

There was a 55% drop in new Chinese investment in U.S. commercial real estate in 2017 compared with the year before, as spending fell from $16.2 billion in 2016 to $7.3 billion last year, according to a report Tuesday by real estate brokerage Cushman & Wakefield.

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China fell from first to third place among foreign investors in the United States, behind Canada and Singapore.

In the Los Angeles metropolitan region, acquisitions by Chinese investors declined 67% last year, compared with an overall reduction in commercial property investment of only 1%.

While investor activity has declined noticeably, established Chinese investors who already have a presence in Southern California “remain active pursuers of large high-profile offerings in this region,” property broker Jeffrey Cole of Cushman & Wakefield said.

“We still expect Chinese capital to flow into Southern California, albeit at a reduced and slower pace in the short term,” he said.

Notable Chinese acquisitions in the Los Angeles area last year included the $117-million purchase of the Alhambra, a mixed-use complex of housing, offices and shops created out of the former C.F. Braun Engineering campus in Alhambra.

Another large deal was the $115-million purchase of the DoubleTree by Hilton Hotel Los Angeles Downtown.

Janice Stanton of Cushman & Wakefield, who advises overseas investors, said that she believes money from investors in other countries will continue to flow into the U.S.

“The acceleration of the U.S. economy will continue to provide international investors with a compelling investment opportunity in 2018,” she said.

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