The Real Deal New York

Chinese investment abroad falls by 67% amid capital controls

Regulatory crackdown is impacting the NYC real estate market

Cheesegrater building in London, England. (Credit: Getty Images)

Chinese outbound investment fell by 67 percent in the first four months of 2017, according to Bloomberg — the biggest decline since 2009.

The drop comes after a record year in 2016, when Chinese firms bought $246 billion worth of foreign assets. Tighter capital controls, designed to shore up China’s currency and promote investment within the country, are likely to blame. Regulators now discourage splashy real estate deals abroad and investments by Chinese companies in overseas assets that aren’t strictly related to their business.

“China’s outbound M&A activity will likely remain slow for the rest of this year,” Bee-chun Boo, a Beijing-based lawyer at Baker & McKenzie LLP, told Bloomberg.

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Fearful of Chinese buyers not following through on their promises, some sellers now demand higher deposits. For example, C C Land Holdings agreed to put down a 287.5 million-pound, or $371 million, deposit when it offered 1.15 billion pounds, or $1.48 billion, for the so-called Cheesegrater tower in London.

In its May issue, The Real Deal broke down how capital controls are already impacting the New York real estate market.

“There are larger deals that were effectively halted and a few deals that got killed,” “There are larger deals that were effectively halted and a few deals that got killed,” Wendy Cai-Lee, a former executive at East West Bank, told The Real Deal. [Bloomberg]Konrad Putzier