Chinese Investment in Local Real Estate Plummets 50 Percent in 2019

A report by research firm Real Capital Analytics found that investment in Southern California, including the Greater San Fernando and Santa Clarita valleys, has dropped by more than 50 percent. According to the report, Chinese investments in Southern California have dropped from nearly $266 million in 2018 to $113 million in 2019. Also, on a year-over-year basis during the third quarter, investments dropped by 57 percent between 2018 and 2019. The report was based on independent reports of properties and portfolios of $2.5 million or greater. Elsewhere, in the Inland Empire, where Chinese investors have been drawn to the county’s booming industrial market, investments were down by half as well. In San Francisco, Chinese investment has very nearly completely disappeared. Nationwide, Chinese investments in commercial real estate dived 76 percent, according to the report. The dismal statistics contrasts with the peak of $1.8 billion the Chinese invested into California invested three years ago, the report stated. Investors from China had an outsized presence in the United States commercial real estate market from 2014 to 2017, which included many high-profile acquisitions. By early 2018, Santa Clarita and parts of the Valley had attracted significant Chinese investment action. Uhon Inc., the Pasadena-based American arm of China-based developer Shenzhen Yuhong Investment Group Limited Co. owns Monterra Ridge, a 232-unit apartment community on 22 acres in Canyon Country, while Pasadena-based Gemdale USA — a subsidiary of Shenzhen-based Gemdale Group — closed a deal in early 2018 to buy the Madison apartments at Westfield Valencia Town Center for $45.9 million from L.A.-based Decron Properties. The deal included three mid-rise buildings at 24555 Town Center Drive. In Reseda, Uhon Inc. has a $90 million multifamily project under construction, called the Watermark Apartments, in a joint venture with Tarzana’s Gelt Inc. However, 2019 has become less rosy for projects involving Chinese dynamics. According to Real Capital Analytics, in the 12 months leading up to the third quarter of 2019, capital from the tiny nation of Bahrain exceeded Chinese investment in the U.S.