Over the past few years, Chinese investors have poured $600 million into the Hudson Yards project. But due to the recent downturn in the Chinese economy, this river of capital may soon dry up.
On Wednesday, Related Companies CEO Jeff Blau said the State Administration of Foreign Exchange – China’s equivalent of the Federal Reserve – is “thinking about limiting currency controls and outbound capital flows to address some of the current concerns. I think it’s a hint of what’s about to come.”
According to Bisnow.com, Blau told an Urban Land Institute forum that “we should be looking at other places for capital over the next couple of years.”
“Related received bids from all over the world to recapitalize the first Hudson Yards tower by Tuesday,” The Real Deal reported, “but Blau said Chinese investors were notably absent.”
Economic woes in China will affect more than just the Hudson Yards development. In 2015 alone, Chinese investors contributed $5.4 billion to Manhattan commercial real estate deals.
Much of this money was raised through controversial EB-5 visas, which grant green cards to foreign “job creators.” More than 1,200 wealthy Chinese investors have taken advantage of the program.
Although the rate of Chinese investment might slow down, some financiers are still confident that they can raise capital from other sources. “I still think we have plenty of people that can fill the void,” Darcy Stacom, vice-chairman of CBRE Group, the world’s largest real estate investment manager, told the forum.
Stacom cited Canadian, Middle Eastern, and pension fund interests as possible alternative sources of funding.