China’s Messy Property Market Shows Promise for Foreign Investors

China’s property market is in trouble, and it is experiencing a significant collapse, which could impact the world’s second-largest economy. About a quarter of the GDP of the People’s Republic of China comes from the real estate sector and is currently undergoing a funding crisis so massive that development has stopped in its tracks (prompting a slew of buyers from dozens of cities to outright refuse to pay their mortgages). The existing home market is currently experiencing the steepest price decreases in almost a decade, and a crackdown on developers with heavy reliance on debt has only made matters worse. But while the Chinese government is still untangling the quagmire of its residential sector, U.S. investment into Chinese commercial properties underscores a bright spot in an otherwise bleak market.

American investment into the Chinese real estate market might be surprising to hear, considering the tense political relationship that’s been on the decline for some time now. A longstanding bitter trade war and a wayward Chinese surveillance balloon that was caught drifting over Montana last week have only made the situation worse. At least in the news, American and Chinese governments are under immense strain. But from an investment standpoint, it’s a different story entirely. 

Commercial validity

Of course, the financial crisis that has engulfed the property market has not spared the commercial sector. Residential investors scrambled to sell off real estate assets in order to maintain some semblance of liquidity in the wake of Evergrande’s fallout, and while assets were offloaded in the

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