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. Opinion: Chinese demand for overseas property will rebound – with or without a trade war 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. “This year we hardly saw any deals or investments over US$100 million, and especially none in New York in the amount of US$200 million to US$300 million,” Ji said. Chinese property investors increasingly ‘savvy’ about US market New York, traditionally the top US investment destination for mainland Chinese property buyers, attracted US$2.7 billion in property investment from China during 2017, down from US$7 billion in 2016. Meanwhile, according to Real Capital Analytics and Cushman & Wakefield, mainland Chinese investments in the US totalled US$81 million in the second quarter, representing a 93 per cent drop for the first six months compared to a year earlier. “There is a lot going on with US politics at the moment that would dampen the appetite of Chinese investors in US property. One of the top concerns for individuals and companies investing overseas is sovereign risk, in particular the ability to get their money out of that country, as well as legislation that is consistent,” according to property specialist REA Group. Mainland Chinese investors began to curb their investments in overseas property when Beijing imposed curbs on capital outflows in 2017 as a way to stymie the yuan's depreciation. US developers feel pinch as visa-seeking Chinese pull back on investments Michele Cheng, a director and partner at realty Ashton Hawks, said the tighter US investment rules proposed by the Senate were targeted at technology and likely to have limited impact on the property market. Ashton Hawks has listed several luxury New York flats on its website. Cheng said the measure proposed by US lawmakers is focused on property located near sensitive US government facilities. “So I don't think it will have a great impact [on the] overall property market,” Cheng said. In spite of the hurdles, analysts believe that Chinese investors will continue to find the US property market attractive. “Chinese investors tend to look for stability,” Ji said. The US also remains an attractive destination for families seeking to educate their children abroad or to help diversify currency risk. “For instance, they could have children studying or going to study in the country or they [want to invest in place where there is] a low-risk currency,” Cheng said. Beijing is likely to retain its capital controls on outbound property investment until 2020, according to experts. “Given Chinese domestic corporate refinancing risks are likely to remain elevated through 2020, the Chinese government is likely to continue to attempt to keep capital inside the country to control borrowing costs – this is likely to have a more significant impact on aggregate Chinese outbound investment,” Ellison said.