
China’s Anbang insurance is already facing resentment over plans to gut the historic Waldorf Astoria hotel
It’s no secret that Chinese investment capital has been the driver of huge growth in several major global cities. But, as history tells us, what that prominence means is that the backlash may be about to start.
Name a country, and any influx of foreign capital that gains any appreciable notice generates resentment. Whether it’s the United States, Japan, Australia, Germany or even China, fear of the “other” and anger at rising prices that may price-out locals inevitably rears its head, with a largely verbal backlash a common result of any heavy investment.
Around the world, a wave of Chinese investment backlash has already started. The Financial Times reported in May that the governments of Australia and Singapore were imposing restrictions on overseas buyers after local residents complained of being priced out. Similarly, grumbling has been heard in Vancouver, and certainly high-profile China investment in New York and London have been noticed.
Asia Society Sees Potential for Pushback

Arthur Margon of the Rosen Group speaking at an Asia Society event
Bruce Pickering, Vice President of Global Programs at the Asia Society, which recently published a report with the Rosen Consulting Group on Chinese real estate investment, acknowledged that there is “certainly potential for backlash. In other markets that have been a magnet for Chinese investment like Australia and Canada, there’s been a very vocal opposition against Chinese investment. The argument is that this investment is contributing to a bubble-like market that is pricing out many local residents.”
However, reality is more complicated, Pickering says. “The increase in housing prices is real in many U.S. cities, but Chinese investment is not what’s driving that trend.”
The Asia Society/Rosen report notes that Chinese citizens in the United States have spent a cumulative $17.1 billion on commercial real estate and $93 billion on homes over the past five years. The report projects that direct investment from Chinese sources in existing commercial and residential real estate could top $218 billion between this year and 2020. Much of that growth will come from new capital inside China, such as insurance companies, that have not yet flexed their financial muscles.
The report also indicates that the flood of real estate investment in cities with large Chinese populations has reached enormous levels. San Francisco housing prices have increased nearly 50 percent since 2010, which has fueled some local resentment .
Such concerns may be misplaced. Arthur Margon of the Rosen Group told the Financial Times that Chinese real estate investment has been “important in funding development while the U.S. banking system has been recovering from the Great Recession,” using a popular term for the economic downswing that started in 2008 in the United States.
Chinese Investors Attracted to Safe Havens

Bruce Pickering of the Asia Society
For residential investors from China, gateway markets that are easy to reach via direct flights from China and already have a sizeable Chinese and Chinese-American community are most welcoming.
However, “On the commercial side, it can be harder to do business in secondary and tertiary markets where there can be implicit preferences for local developers and local funders,” Pickering says. He added that the process of permits, zoning and community review also varies widely from city to city. Places like New York, Boston and San Francisco have very strict zoning rules, while other cities like Houston do not have explicit zoning rules.
Not everyone agrees that backlash is happening or is inevitable. Monica Venegas, Principal of Venegas International Group, a realtor in Miami, Florida, said she is “very confident that there will not be any backlash to capital from China” in her home base.
Miami, which has absorbed waves of new immigrant capital from Cuba, Brazil, Russia, Argentina and elsewhere, has formed a China Task Force to lure Chinese investment and smoothly accommodate existing plans.
But Venegas also acknowledges that Miami’s experience with different demographics makes it “quite different” than other cities in the U.S., having experienced different waves of larger institutional foreign investment.
“The city has welcomed over and over all this investment and immigration, it takes pride on its openness and sees it as an opportunity,” Venegas says. “Right now, we are beginning to see some Chinese and Middle Eastern investment in the city, and everybody is excited about it. That diversity is the heart of Miami – we are all immigrants.”
China’s Internal Factors Could Outweigh External Resistance
Ultimately, while backlash to commerce is never good, it may not be the main factor that slows Chinese foreign investment.
“China’s economic turbulence may lead to tighter formal and informal capital controls,” says the Asia Society’s Pickering. “In the short-term, over the next five years, we predict that will cause sales of single-family homes in the U.S. to slowdown. Chinese purchases of U.S. homes and condos in 2015 reached $28.6 billion. We expect that number to decrease over the next five years. In the longer term, however, the drivers for growing Chinese residential investment are still in place. We predict that Chinese acquisitions of residential real estate in the U.S. will reach $50 billion in 2025 alone.
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