In a report published the therealdeal.com, it was stated that NYC's real estate became 2 percent more expensive between Monday night and Tuesday morning. That is because of a striking decision made by the Chinese Government to devalue its currency, the Renminbi, by 1.9 percent versus the US Dollar. It was considered as the greatest markdown since 1994. It was said that the movement was for the purpose of restricting capital outflow from China, from which New York City real estate has gained from.
therealdeal.com suggests that one must take a peek at China's macroeconomic environment inorder to understand how devaluing the Renminbi could affect New York City's real estate sector. It was reported that China's economy had slowed down over the past year that moved People's Bank of China (China's central bank) to repeatedly cut interest rates to encourage lending that would awaken a struggling economy. But cutting interest rates meant lower returns on investment and it drove Chinese investors to look abroad. In a report made by The Wall Street Journal based on a government data, China saw net capital outflows of $162 billion in the first half of the year.
This how New York benefited. It became one of the most attractive destination for Chinese investors. Ronald Sernau, co-chair of the real estate practice at the law firm Proskauer Rose, has told therealdeal.com, "There haven't been many times in my career where there's been such a noticeable influx of capital from a particular group of investors."
The Renminbi's devaluation has made U.S. real estate more expensive that could discourage investment from Chinese buyers as said by Terence Tang of Colliers International's Singapore office. He said, "Individuals and companies earning in Yuan will have to reevaluate whether 'returns on investments' [in U.S. real estate] are sufficient to cover the additional cost.
