March 2017   Volume 43, Number 3      


U.S. Real Estate Sales Could Be Affected by China’s Capital Controls

Chinese buyers have become a formidable force in the U.S. residential and commercial real estate markets. However, stricter capital controls from China may threaten or change the marketplace.

In November 2016, China’s State Council, the country’s most powerful government body, notified all government departments that they must sign off on all foreign acquisitions over $10 billion or $1 billion if it is outside of the acquirer’s “core” business.

Government departments must also halt foreign real estate purchases by state-owned enterprises if they exceed $1 billion. Although these rules are not new, analysts expect that the Chinese State Council will enforce these rules more strictly. The increased oversight results from China’s effort to clamp down on the outflow of capital from the country, which hit an all-time high in October 2016.

“The Chinese government may crack down on some types of deals, but not all. Submitting paperwork to Beijing for special clearance before proceeding is not new to Chinese enterprises doing massive investment overseas. The new policy is aimed to regulate rather than to stop international investment,” said Xinyi McKinny, senior managing director of China direct investment at Cushman & Wakefield.

Analysts are expecting that large commercial buyers will be mostly unaffected by the changes because the majority of these transactions are under $1 billion. However, privately held companies, smaller companies and wealthy buyers are likely to see the impacts.

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In this issue:

How Trump’s Tax Plan Will Impact Real Estate

Average Real Estate Commissions Decline to Low 5 Percent Range

Consumer Sentiment Declines in January but Remains Near 13-Year High

Foreign Real Estate Investors Still Confident About U.S. Real Estate

Mortgage Applications Decline 12 Percent to End 2016

New Report Names CEO of Zillow as Most Powerful Person in Residential Real Estate

Rising Home Values Haven’t Shaken Consumers’ Memories of the Financial Crisis

U.S. Real Estate Sales Could Be Affected by China’s Capital Controls

Trump Administration Suspends Mortgage Premium Rate Cut

Keep an Eye Out for At-Risk Senior Clients


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