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A group of major players in the real estate industry, including Blackstone Inc., Related Cos., Starwood Capital and Lennar Corp. are pushing forward an effort to repeal or significantly amend a law enacted by Florida Governor Ron DeSantis that bans certain types of Chinese real estate investment in the state.
According to Bloomberg’s sources, lobbyists are putting pressure on Florida’s lawmakers to pass new legislation in 2024 that will reduce the current restrictions on Chinese investors.
The law, which was signed by DeSantis in May, restricts real estate purchases by citizens of China, Russia, Iran, North Korea, Cuba, Venezuela and Syria to purchases under two acres and outside of a certain range of military installations or other “critical infrastructure facilities.”
The crackdown on foreign, and especially Chinese, investments in the state has become a core part of DeSantis’ presidential campaign. A major impetus for The Foreign Countries of Concern law, according to DeSantis, is to prevent Chinese communists from spying on U.S. military bases by purchasing property close to those bases.
In addition to the restrictions on where Chinese citizens can buy property, the law also bans the use of most Chinese capital as a means of funding for commercial real estate projects in Florida, which could put a damper on the plans of major commercial firms developing in the state.
“The law is far-reaching, very, very confusing, and the unintended consequences would be very, very detrimental,” John Fish, chairman of lobbying group the Real Estate Roundtable, which represents the interests of investors like Citigroup Inc., Blackstone, Related, Starwood and Wells Fargo & Co.
Indeed, the law has spurred delays of two development projects by Lennar, Bloomberg reported, because of the restrictions on Chinese investment.
However, there also seems to be hope that lobbying efforts are making headway, Bloomberg said. For instance, the Florida Commerce Department proposed rules in September that would allow investors from any of DeSantis’ laid out “countries of concern” to take as much as a 25 percent stake in the funds that own a property, as long as those investors do not have operating control. Still, those changes have yet to be formally adopted and it is unclear when they might be.
The law is especially a blow for Ken Griffin’s Citadel, which has a large number of employees from China, and Jorge Perez’s Related Group, which has drawn on investments from China and Venezuela in order to develop, for decades.
Griffin only recently moved his business from Illinois to Florida after becoming fed up with business conditions in Chicago, only to encounter new roadblocks to his business in the Sunshine State. Fortunately, in Griffin’s case, lobbyists for Citadel were able to get lawmakers to narrow restrictions slightly for Chinese citizens with work permits.
For Perez’s part, he told Bloomberg he was “totally against” the restrictions on foreign investment.
“It’s not like I’m getting foreigners that are going to control what I build or not,” Perez said. “These are limited partners.”
“It’s really making something out of nothing,” the Related Group CEO said. “Investment should flow freely.”
Of course, Florida is not the only state to push forward bans against foreign real estate investment, although its law may be the most restrictive.
Earlier this year, Texas also attempted to pass a bill restricting Chinese citizens from owning “real property,” or agricultural land, or land with mines, quarries or standing timber. That bill died in the legislature after protests and lobbying.
Montana passed a bill with similar restrictions as Florida in the spring, banning the sale or lease of agricultural land, critical infrastructure and properties near military bases to “foreign adversaries,” including those from China, Cuba, Iran, North Korea, Russia and Venezuela. Meanwhile, a bill in Alabama also seeks to curb Chinese real estate investment in the state.
Even Canada made effective, as of January 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which places a ban on non-Canadians purchasing residential property within Census Metropolitan Areas, with some exceptions. That law was created in response to animosity towards Chinese investors, who are largely perceived as contributing to skyrocketing prices in places like Vancouver.
