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.
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.