imposed by the Chinese government, increased regulatory scrutiny and more attractive opportunities in other countries, according to a report by Cushman Wakefield released this morning.
While experts had expected a sharp decline, the numbers reveal that the bottom fell out.
Last year, Chinese companies funneled $7.3 billion into U.S. commercial real estate, compared to 2016, when firms spent $16.2 billion, the report showed.
Los Angeles suffered the steepest percent drop, with deal volume down 67 percent. In New York, investment fell 54 percent — including investment in Hong Kong — and in Chicago, it was down 20 percent.
In fact, all three cities, together with San Francisco and Seattle, accounted for two-thirds of all Chinese investment in the U.S. in 2017, according to the report. Overall, China fell to the third spot in total foreign investment in U.S. real estate, according to the Cushman report, titled, China-US Inbound Investment Capital Watch. Canada returned to the top spot, while Singapore slid into second.
In May, property search portal Juwai had estimated Chinese investment would fall closer to 20 percent.
Cushman report co-author Xinyi McKinny said the drop mainly came from a decrease in hotel investment nationwide.
In Los Angeles, there was a 90 percent decline in hotel volume, said McKinny, Cushman’s senior managing director of China Direct Investment.
In the fall, The Real Deal reported that China’s largest mall owner, Dalian Wanda Group, was selling five foreign developments, including One Beverly Hills, a $1.2 billion condo and hotel project. In July, the company sold $9.4 billion worth of its hotel portfolio.
In 2016, meanwhile, there were a handful of big-ticket acquisitions from Chinese companies, notably Anbang Insurance, which acquired Strategic Hotels Resorts for $6.5 billion from Blackstone.
But Anbang is perhaps the poster child for the fall in Chinese real estate investment in the U.S. The insurance conglomerate acquired New York’s Waldorf Astoria from Hilton Hotel Group for $1.95 billion in 2014 amid the rush of Chinese investment here.
In February, China’s insurance regulator seized control of Anbang and said its chairman had been prosecuted for economic crimes, TRD previously reported.
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