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Chinese Firms Sold More Than $1B In U.S. Real Estate In Q3

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Chinese investors sold off in excess of $1B in U.S. commercial real estate during the third quarter, continuing the divestiture trend spurred in large part by pressure from the Chinese government.

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The exact Chinese Q3 sales total was $1.05B, the Wall Street Journal reports, citing Real Capital Analytics data. During the same quarter, Chinese investors bought $231M worth of U.S. properties, meaning that the Chinese were net sellers to the tune of $774M.

As recently as the first quarter of this year, Chinese investors were still major net buyers of U.S. assets, but that changed in the second quarter, when assets sold outpaced assets acquired for the first time since 2008.

The previous appetite for U.S. properties among Chinese investors tended toward trophy assets in gateway markets, much as a similar wave of Japanese investment did in the late 1980s (that investment later divested in a similar rush).

One recent example of a Chinese investor looking to sell is HNA Real Estate Holdings, which changed its name to HNA Airport Development and said it was planning to sell more properties. The company now has 82 assets on the market.

Also, Anbang Insurance Group Co., which until recently was a major investor in U.S. commercial real estate, is planning to sell a portfolio of as many as 15 luxury hotels that it acquired about two years ago from Blackstone Group for $5.5B. 

While Chinese investors are putting distance between themselves and the U.S. market, Canadian investors are eager to buy.

Canadian property acquisitions in the U.S. have reached a record level due to a cluster of large entity-level deals, according to Real Capital Analytics' latest US Cross-Border Investment Compendium report

As of the end of Q3, Canadian investors were responsible for 41% of all cross-border volume in the U.S. in 2018, more than the next four biggest country sources combined, the report said.

Prominent Canadian investors active in U.S. property markets include Brookfield Asset Management, the Canada Pension Plan Investment Board and the Ontario Municipal Employees Retirement System.

For its part, China is now the fourth-largest investor in U.S. CRE, with France second and Singapore third.