As Chinese investors increase their commercial real estate investments in the U.S., the country's economic state might either go up or down. In 2015, the investors from China purchased U.S. commercial estate amounting to $8.6 billion.
Although China only ranks second to Canada in terms of US real estate investments, these Asian investors in the country increased their purchase four times compared to their 2014 investments.
Because of the recently changed tax laws in the U.S., the country has attracted more foreign investments. In December 2015, President Barack Obama waived the imposed tax on the foreign pension funds present in the 1980 Real Property Tax Act (FIRPTA). This led to the possibility of investing up to 10% of the U.S. publicly traded Real Estate Investment Trust (REIT).
CBRE's Head of Research for the Americans said, "Volatility from China is the new normal, and the sooner we get used to it the better. At the same time, a certain amount of volatility isn't all a bad thing as global instability often leads to more foreign capital flows to the safe havens, notably London and the U.S."
The economic growth of China has been an aid in the commercial and residential real estate of the U.S. since the recent recession. Therefore, if the Chinese economy stops its quick growth, there would be little capital and less money to export.
Most of China's investments in the United States are focused on the warehouse sector, especially in 2015. However, there were purchases of other properties, like Waldorf Astoria Hotel in New York City and Standard Oil Building in San Francisco, California last year.
The Chinese investments are expected to increase in 2016. Hence, the U.S. government hopes these increased investments could also lift the country's economy.
