US bans on Chinese property investment unlikely to withstand legal challenges, law expert says

Even if they survive protests, bans proposed in states including Texas and Florida are likely to be ruled unconstitutional, international law expert says

In the last 10 years, Chinese investors have bought US$188.6 billion worth of property in the US – more than a fifth of total foreign investment

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Liu Yang holds a sign in opposition to Texas Senate Bill 147 during a rally on January 29, 2023, in Dallas, Texas. The original bill proposed outlawing real estate/property ownership by people from China, Iran, North Korea and Russia. Photo: The Dallas Morning News/TNS

Published: 10:00am, 19 Mar 2023

Proposals to ban Chinese investment in US real estate are not likely to survive legal challenges because they aim at a specific nationality instead of a blanket ban on foreign investment, which is the norm in many countries, according to an international law professor.

Such bans have been proposed in several states in the US, including Texas, Florida and Arkansas.

For example, a bill filed in Texas sought to ban citizens from China, as well as Iran, Russia and North Korea, from acquiring properties there. The legislator who introduced the bill later backtracked after protests, saying she would revise the bill so it would only prevent investment by foreign governments.

Laws like these are nothing new, analysts said. A handful of governments have initiated measures that directly or indirectly bar foreigners from purchasing homes or real estate, typically as a way to curb soaring home prices. Canada, Switzerland, Denmark, Singapore, Cambodia and many others have initiated outright bans or some form of restriction on home buying by foreigners.

But these laws apply to all non-domiciled persons, not select groups.