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How China’s Formalized Overseas Investment Restrictions Affect CRE
Last month, China’s State Council released new guidelines to regulate China’s overseas investments. Cushman & Wakefield’s Xinyi McKinny, Senior Managing Director, China Direct Investment, shared insights about what the guidance means and how it may impact U.S. CRE.
She notes, only the qualified investors would be able to invest overseas. Due diligence will be enhanced in order to reduce investment risk, as well as promote more balanced asset allocations.
R&D facilities and incubator space will receive additional capital allocation, while the logistics sector will receive more attention and scrutiny. That means investing in logistics portfolios and developing new facilities will be more active. That could lead to acquisitions of businesses where the core business is not real estate, but where its balance sheet holds a significant portfolio of owned logistics properties.
It is expected that China’s major real estate developers will remain active in residential development projects in stable international markets, with a shifted focus on development and asset management, as well as building track records.
Investment in stabilized office sector and hotels is expected to slow down.
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