Investing in a real estate market in another country can be challenging. However, with the strength of the U.S. economy, the devaluation of the yuan and a relatively low interest rate in the United States, Chinese investment in the U.S. real estate market has been growing despite China's economic slowdown and increased foreign exchange controls.
Typically, we see foreign investors focus on the traditional gateway cities such as New York, Los Angeles, Vancouver and San Francisco. While these markets offer numerous opportunities to invest, they may also display characteristics that discourage foreign investment decisions. Such challenges include high costs and additional taxation and in some cases demand that exceeds supply. The combined effect of these factors is lower yields and potential limitations to medium term capital appreciation.
Hotel investment in the United States is a growing trend. During 2016, over $10 billion was invested into the U.S. hotel industry, a sharp increase over the $2.5 billion invested in 2015. Chinese investors accounted for about 90 percent of overseas capital invested in U.S. hotels.
In an age of a global economy and money virtually transferred around the earth in seconds, international real estate is as important for investors as foreign equities, bonds and commodities. Residential property can be a home, permanent or part-time. It can be rented for income for a time, then become the owner's home. It can be rented and then sold. The possibilities are endless.
When Donald Trump was campaigning to succeed Barack Obama as president of the United States, he promised a more aggressive approach to trade. His administration would take bold action to revitalize domestic manufacturing industries and create new jobs tied to the production of domestic goods. He singled out what he described as unfair trade practices by China, arguing for strategies to restrict imports of manufactured goods into the United States. He announced plans to increase tariffs dramatically and impose other restrictions on Chinese trade and investment in the U.S.
Since worldwide real estate is a local business, not only does the culture of the country but the location and its people play an important role when finding the right commercial real estate partner.
Interest in the U.S. real estate market has increased in recent months, in large part due to the election of a real estate mogul as President of the United States. While interest continues to grow, understanding the driving forces affecting the U.S. real estate market, knowing what data to rely on and acting on potential investment opportunities can be a daunting task for home buyers and investors alike.
China's international property investment has reached all-time highs. From 2010 - 2015, China invested about $350 billion into U.S. real estate. For many, the stable American market means security for investors, a place of opportunity for their families, quality of life and a fair legal system.