New China policy could make buying NYC real estate easier

Monetary policymakers to ease capital restrictions despite cash outflows
November 04, 2015 02:11PM

China’s Central Bank is moving forward with capital markets reforms that could make it easier for Chinese citizens to invest in New York real estate.

The country’s monetary policymakers announced on Friday they may soon allow residents of a Shanghai free-trade zone to buy overseas assets directly – a trial run for the rest of China and part of a broader effort to loosen capital controls. The move would also open up Yuan-denominated bonds to foreign companies.

Chinese citizens currently face tight limits on the amount of money they can invest abroad. Those looking to convert funds from Yuan into Dollars to buy, say, an apartment in Manhattan, often have to do so through companies or by smuggling cash to Hong Kong.

The announcement comes despite an uptick in capital outflows from China in recent months, which would normally provide an incentive to tighten capital controls. In September alone, investors pulled $194 billion from the country, according to Bloomberg.

“A lot of people suggested that if the economy slows, if there’s more volatility, the Chinese will drop the reforms,” Andy Rothman, an investment strategist at fund manager Matthews Asia, told Bloomberg. “I don’t think that’s the way the Chinese government views it. They are not worried about the scale of the outflows.”

Gary Barnett announced last month that Extell Development will be targeting Chinese buyers — as well as others in Asia — at his One Manhattan Square condo tower on the Lower East Side, with condos listed between $1 million and $3 million. [Bloomberg]Konrad Putzier