Chinese Eye U.S. Real Estate as Safe Haven

September 15, 2015

As China's economy slows and its stock market posts sharp declines, Chinese investors are reportedly looking to park their money in U.S. real estate.

Developers, financial institutions, and high net-worth individuals are seeking "safe investments in income-producing commercial and residential investments rather than luxurious real estate purchases for personal use," says Edward Mermelstein, an international real estate attorney.

Since August -- when the Shanghai Stock Exchange took an 8 percent dive -- Mermelstein says there has been a "positive and consistent interest" from Chinese investors in U.S. properties. "This is very much a flight to safety," he says. Chinese investors are showing a heightened interest in land, office, hotel, retail, and mixed-use properties in the U.S.

Chinese investors already account for nearly 28 percent of the total $104 billion in residential U.S. real estate sold to foreign buyers last year, according to the National Association of REALTORS® (Canada buyers trail at $11.2 billion). Chinese buyers are most often focused on urban West Coast areas, such as Los Angeles, San Francisco, and Seattle, but they’ve also been increasingly eyeing places like New York and Houston.

"The Chinese are continuing to be very aggressive in investing in the market and, in certain cases, have shown greater inclination to come into our market," Mermelstein says. "The perception of safety within our market and the returns that our market is generating right now is substantially greater than anything they can get within their own market."

Source: "How Chinese Investors Found a Safe Haven at the Waldorf-Astoria," (Sept. 14, 2015)