Chinese Reversing Big U.S. Real Estate Buying Spree

Chinese real-estate investors, facing pressure from Beijing, are reversing a yearslong buying spree in the U.S. where they often paid record prices for marquee properties like New York’s Waldorf Astoria hotel. Chinese insurers, conglomerates, and other investors have turned net sellers of U.S. commercial real estate for the first time in a decade. They have spent tens of billions of dollars to acquire hotels, office buildings, and vast swaths of empty land to build residential towers. But Chinese investors sold $1.29 billion worth of U.S. commercial real estate in the second quarter, while purchasing only $126.2 million of property, according to data firm Real Capital Analytics. This marked the first time that these investors were net sellers for a quarter since 2008. The more than $1 billion in net sales reflects how much the Chinese government’s attitude toward investing overseas has changed in recent months. Chinese investors began scooping up U.S. real estate a few years ago after Beijing officials loosened restrictions on foreign investment. They quickly made their mark in U.S. cities like Los Angeles, San Francisco, and Chicago with high-profile acquisitions—including the $1.95 billion purchase of the Waldorf Astoria, the highest price ever paid for a U.S. hotel. Now, the Chinese government has changed course again, cracking down on certain types of outbound investment that include real estate in part to help stabilize the currency. Chinese companies like HNA Group and Greenland Holding Group are unloading prize properties to repay debt and to comply with regulatory and market pressures from home, analysts said. “I was shocked,” said Jim Costello, senior vice president at Real Capital Analytics. “They really curtailed their buying and stepped up sales.” Analysts say that increasing tensions over trade and national security between China and the U.S. also have contributed to the pullback.