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Chinese buyers shopping for U.S. commercial real estate

Real estate in San Francisco and Los Angeles has attracted foreign investment into California. Chinese buyers have been especially active, spending in excess of $300 billion throughout the country.

The president of one commercial real estate firm explained that investors see significant opportunities in the U.S. market. He said that a slowing economy in China has motivated rising capital movement into the United States. An appreciating U.S. dollar fuels the investments as well because the potential yield from commercial properties appears to be competitive.

Investors are increasingly choosing commercial real estate because it could protect portfolios long term. Their beliefs that job growth and inflation will go up have added to this strategy. Since the election of Donald Trump, the dollar has reached an eight-year high compared to the yuan. With capital continuing to move out of China, the dollar's strength has attracted global attention. In addition to the two California cities, other areas of the United States that have seen or that are expected to see foreign investment activity in this particular sector include New York City, Chicago and the District of Columbia.

Commercial real estate transactions involving foreign purchasers need to be handled with a great deal of care. In addition to the usual need to review all of the various closing documents with care and to conduct the requisite due diligence, there are often cultural and language differences that can prove to be an impediment if they are not handled with discretion. Sellers may thus want to have the assistance of an attorney who has experience with these types of matters in order to avoid litigation or other problems if the deal collapses.

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