Marc Renard, executive vice chairman, Capital Markets Group, Cushman & Wakefield, speaking at the ULI Fall Meeting.

For any participant in the U.S. real estate market, failing to understand and interact with capital from the Asia Pacific region is not a viable strategy, Marc Renard of global firm Cushman & Wakefield said during a forum at the 2017 ULI Fall Meeting in Los Angeles.

Those who need proof, Renard told the forum audience, should simply walk out of the Los Angeles Convention Center and look up. There are 50 active development projects in downtown L.A., six of which are large-scale mixed-use projects exceeding $1 billion each. All six are funded by capital from Asia, he said, and they represent just one component of a much larger national trend.

The most iconic deals on the west and east coasts in recent years were all backed by Asia Pacific capital, Renard said, including the $2.2 billion 245 Park Avenue project in New York City, a 45-story, 1.8 million-square-foot (167,000 sq m) office tower. “What’s happening in Los Angeles is happening in every gateway city in the United States,” said Renard, who serves as executive vice chairman for Cushman & Wakefield’s Capital Markets Group.

Asian countries make up six of the top ten nations investing in U.S. real estate, with China leading the way with 19.5 percent of the total spend—though Renard said that will likely decline by 15 percent this year due to new Chinese government restrictions on overseas direct investment by Chinese firms.

Other major real estate players include Singapore, which has seen a 69 percent increase in U.S. capital investment, and Japan, which has increased its total investment by a massive 91 percent. Ko Iwahori, deputy general manager for Investment Management Businesses at Mitsubishi Estate Co., said that huge jump in capital spending is driven by Japanese investor concern over that country’s population decline. Investors are looking to overseas markets that have healthy economies and steady population growth.

The discussion was part of ULI’s Trans-Pacific Real Estate Forum, held during the Fall Meeting, which brought together industry leaders and other experts with deep experience in Asian markets to discuss a wide range of topics related to global real estate.

Renard said his firm is involved in a Beverly Hills property that has been on the market for four weeks and which has already drawn interest from investors in 13 Asia Pacific nations, including some of the wealthiest individuals in each country. “The demand for quality real estate in the U.S. from Asia Pacific investors is as strong as we’ve ever seen it,” he said. “In my opinion, what we have seen is just the beginning of what will be multiple levels of capital into the U.S.”

When the market is broken down by individual companies, Renard said that nine of the top 20 firms investing in U.S. real estate are from the Asia Pacific region. Those firms last year invested in some 900 properties across 35 states with a focus on key gateway markets like New York City; San Francisco; Washington, D.C.; and Boston. But he said that Asian investors have recently begun pushing into stronger secondary markets like Atlanta and Phoenix. “We expect that trend to continue as they search for incremental yield,” he said. John Wong, founding chairman of the Asian Real Estate Association of America, agreed, saying the Detroit and Dallas/Fort Worth regions have started to attract the attention of investors based in Asia.

Even though funds from Asia continue to pour into the U.S. market, the Chinese government’s strict controls on overseas direct investment have created uncertainty in the sector. Some small adjustments could be on the horizon, said Bill Zhou, managing partner at Elite International Investment Fund. He said the restrictions were driven in part by concerns over China’s dwindling reserves of foreign currency, but those reserves have grown for seven straight months, which he said could make some measure of policy change possible.

He noted that China’s National People’s Congress recently appointed a series of top government officials who will help guide government policy for the next several years. Zhou said that as the power dynamics of those new officials are settled over the next few months, the policy on the flow of capital overseas will start to come into focus. “We’ll have a much clearer picture of how the capital policy will be shaped,” he said. “I don’t think that it will change swiftly; I don’t expect that the door will be wide open. I think it’s going to be a gradual change.”