China Investors still Moving into U.S. Real Estate
That massive 44% collapse in the Shanghai Composite lead to worries that Chinese investors would cut back sharply on investments in U.S. real estate. But those fears, as pointed out by myself and Real Capital Analytics, “are a little unfounded.” In fact, as I’ve long discussed, the capital inflow into U.S. real estate from China isn’t showing any signs of a slowdown. In fact, the slowdown in China is what has forced a great deal of money into commercial real estate value in the United States. As of July 2015, China has already invested $5 billion in U.S. real estate this year.
That’s about a billion more than what it invested last year. They’re expected to invest up to $12 billion this year alone.
I would not be surprised if the chaos in China led to even more interest and capital inflow into U.S. residential and commercial real estate. As pointed out by appraisal firm, Miller Samuel, as quoted by Yahoo, “You have the [Chinese] housing market, which is a pretty significant bubble. You have thousands of ghost cities that have been constructed. On top of that, you have a pretty volatile stock market situation. So there is some speculation that there actually will be outflow as a result of this and maybe that will end up in the U.S.”
“Chinese investors have to diversify their portfolios,” he added. “It needs to go to assets that have a little less risk than they have been taking on in other places, and U.S. commercial real estate still fills that role.”
There’s still a great deal of value in commercial real estate. China, bubble fears, and fearful investors can try to fuel the fear, but it’s tough to argue that commercial real estate remains a great investment tool.