China’s benchmark stock index, the Shanghai Composite, fell 5.9 percent yesterday and has tumbled 30 percent over the past three weeks. The ChiNext index of small-cap stocks has plummeted over 40 percent.
If you happen to be developer in San Francisco with a significant number of Chinese buyers who have made nominal deposits but haven’t yet closed escrow, you might be a little concerned, at least behind closed doors. The same goes for projects with commitments from Chinese funds.
At the same time, embracing the popular misinterpretation of ‘crisis’ to mean both danger and opportunity in the Chinese language, one could also argue that a flight to quality from Chinese equities to Bay Area real estate could actually accelerate the pace of foreign investment in local real estate.