Chinese Capital Exiting US Real Estate Market...33 Trillion KRW Decrease Over 3 Years

[Asia Economy New York=Special Correspondent Joselgina] According to the Wall Street Journal (WSJ) on the 20th (local time), Chinese capital, which had actively purchased premium hotels, office towers, and other commercial real estate in the U.S., has been rapidly withdrawing over the past few years.

According to market analysis firm MSCI Real Assets, the scale of U.S. commercial real estate held by Chinese capital has decreased by a total of $23.6 billion (approximately 32.9 trillion KRW) since 2019. Considering that Chinese capital had net purchased about $52 billion (approximately 72.5 trillion KRW) worth of U.S. commercial real estate from 2013 to 2018, this marks a dramatic turnaround.

Previously, Chinese capital had acquired large amounts of hotels, offices, and development areas centered around Manhattan, U.S. A representative example is Anbang Insurance's purchase of the luxury New York hotel Waldorf Astoria in 2015 for $1.95 billion. This was the largest amount ever paid for a single hotel in the U.S. Doug Harmon, chairman of Cushman & Wakefield, a U.S. commercial real estate brokerage firm, said, "They (Chinese capital) seemed to have unlimited money and a strong desire for special 'trophy assets.'"

However, this atmosphere changed starting in 2018. Joel Rosstein, chairman of the major law firm Greenberg Traurig, explained, "Chinese investment in U.S. real estate began to decline about four years ago, around the time Chinese regulators started blocking overseas corporate transfers."

Some Chinese companies that had been aggressively expanding their businesses faced financial difficulties. The worsening political relationship between the U.S. and China also hindered Chinese capital's investments. Additionally, recent interest rate hikes, reduced business travel after the pandemic, and weak demand for office space due to the expansion of remote work have all dampened investment sentiment toward commercial real estate.

Hainan Airlines (HNA) Group, a large private Chinese company currently undergoing bankruptcy restructuring, recently sold a large building on Park Avenue in Manhattan for $1.8 billion. When it was purchased in 2017 for $2.2 billion, it was considered one of the most expensive transactions for office buildings in the U.S., WSJ reported. Since falling into financial difficulties in 2018, HNA has sold or lost most of its real estate holdings in the U.S.

WSJ pointed out that the recent struggles of Chinese investors are similar to the wave of Japanese investment that shook the U.S. real estate market in the late 1980s and early 1990s. In the past, Japanese capital purchased high-end office real estate, including New York's Rockefeller Center, at high prices but later suffered severe losses.

Harmon said, "Chinese investment in U.S. commercial real estate is now rare," but added that investments from Korean, German, and Singaporean companies continue.

This content was produced with the assistance of AI translation services.