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Is the health of commercial real estate in jeopardy?

On Behalf of | Aug 11, 2017 | Commercial Real Estate

Chinese companies have been eager to buy commercial real estate in major cities in the United States and Europe for some time now. This has lead to a commercial real estate boom in the United States that has benefited many real estate investors and owners of commercial real estate property. However, some analysts worry that the Chinese investors could be having a harder time participating in the commercial real estate market — due to new Chinese regulations.

The Chinese commercial real estate buying trend been growing since 2013. Over the last two years, Chinese investors have purchased $17 billion worth of commercial real estate in the United States alone, according to Morgan Stanley.

During the second quarter, Chinese companies made half of the commercial real estate purchases in Manhattan. In 2016 in central London, Chinese companies made 25 percent of the commercial real estate properties. Chinese companies made 12 to 25 percent of the commercial real estate transactions in China.

However, Chinese business conglomerates and companies seem to be having a more difficult time buying real estate overseas. Chinese authorities have created new regulations designed to slow down capital outflows into foreign real estate. The regulations are also intended to prevent overly leveraged business conglomerates, and overly leveraged banks in China. The regulations place increased pressure on the banks to deleverage, and now the banks are putting the same pressure onto overly leveraged conglomerates.

Could this affect the commercial real estate markets in Texas? Any global shifts that negatively affect commercial real estate around the world could potentially affect the state of Texas in general and the city of San Antonio specifically. If have questions about your potential commercial real estate transactions and rising and falling real estate prices, a real estate attorney can help.

Source: Seeking Alpha, “This Hits The Wheezing Commercial Real Estate Bubble At Worst Possible Time,” Aug. 09, 2017