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Chinese Homebuyers Likely to Be Hurt by Currency Restrictions

By Allison Halliday | September 12, 2017

Recently China formally imposed new currency restrictions and according to the SF, these are most likely to affect the middle-class in China and in the United States. Those most affected may be the Chinese buyers already living and working in the United States and who are reliant on money from China to purchase property.

The biggest foreign investors in US real estate this year are Chinese, making up 53% of buyers, investing a total of $31.7 billion. This is the fourth consecutive year that Chinese buyers have topped the list. Although California accounted for 12% of international real estate purchases, the number of Chinese buyers has been falling since 2014 and accounted for just 3% of all foreign buyers last year. These latest government currency restrictions may cause this figure to drop even further. While buyers reliant on money from China may be deterred from making a real estate purchase, there may be less of an impact in more competitive property markets such as the Bay Area. The fact that wealthy buyers have always managed to find ways around investing money abroad is unlikely to change.

With these newest restrictions, the Chinese government formalized rules that have been in place for the past couple of years and which are intended to curtail what the government terms as being irrational acquisitions. These are investments into a wide range of industries that include real estate and hotels. The government have completely banned investments into businesses that are contrary to national security, as well as into military technology, adult entertainment and gambling. Investments that help promote cooperation with other countries and which can help to further China’s technical standards are encouraged and include oil and mining exploration, research and development and agriculture and fishing.

The article points out that when real estate investment trusts and investment into lodging and commercial property are included, then overall investment in real estate has accelerated even though investment into real estate and other assets by individuals and companies from China has declined 40% since last year.

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.
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