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Chinese investors could exit US in favor of Asia

The days of yuan depreciation may be over
March 06, 2017 05:00PM

Buildings in the Jiading district of Shanghai (credit: Getty images)

From the New York website: After two-year stretch during which the yuan depreciated against the dollar, the Chinese currency is on the rise in 2017, which could lead to a shift away from New York City real estate.

“The bulk of yuan depreciation has probably already happened, and if that’s the case there is less incentive for Chinese investors to place money in dollar-denominated assets,” Andrew Haskins, director of Asia research and advisory services at Colliers International, told Bloomberg.

Haskins added that political concerns such as President Donald Trump’s protectionist policies “may also slow the pace” of Chinese investment in the United States, especially if his rhetoric starts to materialize as policy.

Over the past two years the yuan has declined 13 percent against the dollar, but it’s gained almost 1 percent so far in 2017. At the same time, most other Asian currencies have strengthened, most notably the Korean won, which has appreciated 4.3 percent.

Asian investment in U.S. real estate peaked at $33 billion in 2015, but slid by 12 percent last year to $29.1 billion.

Chinese insurance firms, some of the most active buyers in the past few years, have been notably quiet so far in the first few months of 2017. They haven’t made any acquisitions thus far in 2017, amid a sweeping movement to stave off outbound capital and limit speculation.

Haskins said he expects Chinese investors to turn to Asian markets. He added that while the portion of China’s investment within Asia – 17.4 percent in 2016 – is still not dominant, Chinese investors will still look to place their money in foreign real estate markets and “increasingly directed towards Asian rather than non-Asian markets.” [Bloomberg]Rich Bockmann