Capital controls strangle Chinese investment — but some firms find ways around them

Overseas deals fell to $20B in 2017

New York /
Nov.November 01, 2017 06:02 PM

Beijing’s capital controls continue to cut into Chinese investment in U.S. real estate.

Overseas real estate investment from China totaled $19.7 billion in the first three quarters of the year according to Real Capital Analytics – a far slower pace than 2016, when Chinese firms bought $36.8 billion in properties during the entire year.

“One thing that’s concerned the regulators, these rich entrepreneurs were leveraged to the hilt, using investors’ money, using [People’s Republic of China] banks’ money, and leaving all the risk to the PRC investors and PRC banks,” Beijing-based attorney Howard Zhang told the Wall Street Journal. “There’s a strong sentiment among the regulators, as well as among the general rank-and-file who resent how rich these people have become.”

Starting in late 2016 Chinese regulators made it harder for Chinese firms to move money overseas and specifically discouraged risky overseas real estate deals. Some observers expect Chinese firms to sell assets.

Greenland Group, the co-developer of Pacific Park in Brooklyn, is considering selling part of a 42-acre site in San Francisco to Kilroy Realty Corp., the Journal reported.

But investors that follow government mandates and invest in assets deemed strategically important still get the green light for overseas deals. For example, the China Investment Corporation agreed to pay $14 billion for the Blackstone Group’s European warehouse portfolio. [WSJ] — Konrad Putzier


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
A Smurf house? (Caldwell Banker)
Smurf-erriffic! Michigan home seems to be inspired by cartoon
Smurf-erriffic! Michigan home seems to be inspired by cartoon
The home where Christopher Watts killed his pregnant wife is on the market. (Getty)
Colorado home where infamous murder took place quietly listed
Colorado home where infamous murder took place quietly listed
Aby Rosen and Jay Penske in front of 475 Fifth Avenue (LoopNet, Getty Images, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
Aby Rosen teams up with Rolling Stone publisher on $290M office deal
Aby Rosen teams up with Rolling Stone publisher on $290M office deal
L-R: Savanna's Chris Schlank, Eastdil Secured's Will Silverman, JLL's Bob Knakal (Photos by Paul Dilakian)
Office royalty talk conversions, distress and the “downsize upgrade” trend
Office royalty talk conversions, distress and the “downsize upgrade” trend
From left: Amy Schumer and 190 Riverside Drive; Jimmy Fallon and 34 Gramercy Park East (Getty Images, Beyond My Ken, CC BY-SA 4.0 - via Wikimedia Commons, iStock)
Jimmy Fallon, Amy Schumer selling Manhattan pads
Jimmy Fallon, Amy Schumer selling Manhattan pads
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...