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Chinese investment in American residential real estate

On Behalf of | Sep 2, 2015 | Residential Real Estate

Delaware residents may recall how some media outlets compared the 2014 purchase of the Waldorf Astoria Hotel in New York City by a Chinese investment group with the buying of iconic Manhattan real estate by Japanese companies in the 1980s. Japanese investors quickly abandoned American real estate when economic conditions in their home country deteriorated, and recent economic setbacks in China have sparked fears of an exodus of Chinese investment funds.

However, many analysts feel that such fears are based on media speculation rather than sound economic analysis. These observers believe that high-profile investments such as the Waldorf Astoria purchase have given the public an inflated view of Chinese real estate investment in the United States. They point out that the $5.9 billion invested by China in major commercial real estate projects in the U.S. between September 2014 and August 2015 is dwarfed by the $19.7 billion spent by Europeans and the $13.2 billion invested by Canadians.

Chinese investors have been far more active in the American residential real estate market. According to data from the National Association of Realtors, Chinese investors account for about 28 percent of the foreign investment in the U.S. residential property market. Chinese buyers generally look for luxury residences in good neighborhoods, and economic analysts feel that this sort of investment is likely to become more popular in the coming years. They say that a slowing economy at home will prompt Chinese investors to seek diversification and high yield opportunities like foreign real estate.

Real estate transactions are often difficult to close even when foreign investors are not involved. Problems often crop up when least expected, and the parties involved are often unprepared to deal with them. Experienced real estate attorneys may have encountered such situations, and they may be able to help property buyers and sellers to identify potential roadblocks and develop strategies to avoid them.