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Chinese investing in U.S. commercial real estate

Chinese investors are expressing increased interest in the U.S. commercial real estate market following the election of Donald Trump, according to real estate experts. The incoming president's policies are expected to be pro-growth, which is sparking demand for dollar-dominated assets in Maryland and across the U.S.

Experts say the U.S. commercial real estate market is a standout on the global market, as it is not overbuilt and offers well-balanced loan-to-equity ratios. That translates into much lower risk for investors than in previous stages of the real estate market recovery. There are also concerns that the dollar will appreciate, which is prompting some investors to allocate their capital into the U.S. market. Other contributing factors are the slowing Chinese economy and a competitive commercial real estate yield profile. Expectations are that inflation and job growth in the U.S. will increase, making American commercial real estate a better long-term hedge.

Following Trump's win, the dollar jumped against the yuan. Concerns over capital outflows from China have also strengthened the U.S. dollar. American cities drawing the most interest from foreign investors include Manhattan, Los Angeles, Chicago, San Francisco and Washington, D.C.

While conditions seem favorable for investing in the U.S. commercial real estate market, many complex legal issues must be considered throughout the purchase process. For instance, financing, local zoning laws, taxes, survey problems or permit issues could potentially trip up a transaction before it is completed. To ensure a commercial property deal goes as smoothly as possible, it may be prudent for commercial real estate investors to consult with a real estate attorney.

Source: CNBC, "Chinese money moving to US commercial property," Huileng Tan, Dec. 22, 2016

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