Tighter US rules on foreign investment to have knock-on effect for Chinese seeking American homes

The latest step by US lawmakers to impose additional restrictions on foreign investments in sensitive sectors could add up to a further headwind for Chinese investors who’ve cooled toward the American property market in the past year, analysts said.

The recently-passed Foreign Investment Risk Review Modernisation Act would have a direct impact on Chinese institutional investors, according to Sean Ellison, senior economist at the Royal Institution of Chartered Surveyors Asia Pacific.

“This measure may, however, have a more significant impact on Chinese institutional investors. The legislation itself largely does not target real estate, but only those near a military base or an air or maritime port,” said Ellison.

The US Congress sent the measure to President Donald Trump for signing last week. The measure is part of a US$717-billion defence policy bill aimed at shielding sensitive US industries from Chinese investment.

David Ji, head of research and consultancy for Greater China at Knight Frank, said investment by mainland Chinese in US real estate fell to US$6 billion last year from US$16 billion in 2016.