BY Richard Summerfield
The Chinese economy has been experiencing a well documented slowdown and re-tooling. As a result, many Chinese businesses have begun to look overseas for their next growth opportunity.
Chinese foreign direct investment has climbed considerably, with investment into the US skyrocketing, according to a new report from the Rosen Consulting Group and the Asia Society, titled 'Breaking Ground: Chinese Investment in US Real Estate'.
In 2014, Chinese outward FDI flows totalled $116bn, around $18.1bn of which entered the US market. A year later, Chinese outward FDI flows totalled $118bn, with $22.3bn flowing in to the US
The real estate market has been an increasingly attractive investment destination for Chinese businesses in recent years. In the US residential segment, Chinese acquirers spent around $93bn between 2010 and 2015. Accordingly, China has overtaken Canada as the lead foreign investor in the US residential space.
Much of the foreign capital has been concentrated in New York, Los Angeles and San Francisco, with the remaining volume spread widely across the rest of the country. The housing market in California and New York accounted for 35 percent and 7 percent of all transactions, respectively.
Furthermore, Chinese funded projects under construction or planned in the US totalled at least $15bn by the end of 2015. “What surprised me most is the speed of Chinese investment growth, but also the breadth of asset types and geographical locations,” says Arthur Margon, a partner at Rosen Consulting Group and lead author of the report.
Although the tightening of capital controls may impact upon Chinese acquisitions in the residential space in the short term, it is likely that Chinese investment in the US real estate space will continue to climb - particularly as there is an ever widening field of Chinese real estate investors, many of whom have yet to dip their toe in the American market.