Chinese companies were paying record-breaking sums for Manhattan trophy buildings not too long ago. They have since retreated from the city’s property scene, largely due to issues within their own country.
The Chinese government imposed strict controls to limit overseas property deals amid concerns about a slowdown in the country’s own economy, according to the Financial Times.
This has affected not only the New York market but also cities like London and Vancouver. A recent Cushman & Wakefield report found that the properties they had put up for sale were worth about $12 billion overall.
But the trend is most pronounced in New York, where developers of luxury towers are dealing with more vacant units because they can no longer count on aggressive Chinese buyers. This is a marked contrast to 2015, when Chinese buyers poured $5.4 billion into New York properties, a number that then jumped to $8.8 billion in 2016.
But Beijing started tightening controls on overseas investments in late 2016, and when Xi Jinping was reelected to another five year term in 2017, the government promised to rein in lending that has helped companies like Anbang make several splashy overseas purchases.
By 2018, Chinese investment in New York had dropped to $336 million, and the country now falls behind the Canadians, the Germans and the Dutch in terms of foreign investors in the city.
Firms are also looking to sell their overseas properties to acquire cash as the Chinese government cracks down on shadow banking and outbound investments.