Investments in U.S. commercial properties by overseas entities declined throughout 2017, driven by a sharp pullback from Chinese investors, Real Capital Analytics said.
Cross-border deal volume fell by 23% year over year in 2017, compared to a decline of only 3% in deals involving domestic capital sources, the data firm said. China, the No. 1 source of cross-border capital investment in U.S. commercial real estate in 2016, dropped to third place in 2017 as deal volume in transactions with Chinese buyers fell 64% year over year.
China's government has moved to rein in overseas asset purchases by Chinese companies, including Anbang Insurance Group Co. Ltd.
Canadian investors took over the top spot for international buyers in the U.S in the first half of 2017 and held that position for the full year, increasing their deal volume 22% from 2016 to 2017. Investors from Singapore took second place, with deal volume increasing 189% year over year in 2017.
Overall, cross-border activity represented 11% of the U.S. commercial property market in 2017, down from 14% in 2016 and 18% in 2015, Real Capital Analytics said.
The Chinese pullback sent investment from Asian buyers down 37% year over year in 2017. Middle Eastern and European investors also slowed their pace, with year-over-year deal volume declines of 70% and 9% respectively. Among European buyers, capital sources in Germany, Switzerland and the U.K. posted the largest deal-volume declines, while investors in the Netherlands and Norway posted strong growth.
In the central business district office sector, in which cross-border investors have accounted for roughly one-third of purchases in recent years, the volume of overseas investment fell 27% year over year in 2017. In hotels, in which cross-border investors accounted for 14% of the market in 2017, deal volume involving overseas buyers fell 69% year over year.
