Rendering of Nine Elms Square The UK was the second-largest destination for outflows from China, although also the location of the quarter’s biggest deal in the Nine Elms Square development site.

HONG KONG—Reports that Chinese outbound investment in commercial property has declined recently aren’t merely anecdotal. Cushman & Wakefield said Tuesday that outflows from the mainland had fallen 51% year-over-year to US$2.5 billion in the third quarter, the lowest total in 14 quarters.

Further, Cushman & Wakefield reports that year-to-date transaction volume through Sept. 30 was about half that of the full-year total for 2016, although it’s possible that the fourth quarter’s deals in the offing could push the 2017 tally considerably higher. Still, it’s a pullback, and restrictions on outbound investment by the Communist Party are partly to blame.

“The Chinese government ramped up efforts to control overseas real estate investment, issuing Circular 74 in August slap bang in the midst of Q3,” according to Cushman & Wakefield’s report. It represented the second regulation announced in nine months that sought to restrict outbound investment capital flows, branding overseas real estate investment as a “limited” category though not “prohibited.”

Circular 74 appeared to focus in some respects on promoting China’s wide-ranging Belt & Road Initiative and made special reference to logistics and R&D hub investment overseas, according to Cushman & Wakefield. “Though this is not thought to make reference specifically to logistics or R&D hub real estate investment, it is possible that going forward this may support the business case for Mainland Chinese overseas real estate investments that target such sectors,” the report states.

In terms of property types, development sites won out by a wide margin in Q3, recording a 58% share of Chinese outbound investment by asset category and raising the sector’s cumulative total to US$8.4 billion thus far in ‘17, a 234% Y-O-Y increase. Biggest of the development-site deals—and at US$612 million, the largest outbound investment in commercial property by a Chinese company during Q3—was the August sale of Nine Elms Square in London to CC Land Holdings and R&F Properties. In a sign of the times, the formerly high-flying Dalian Wanda Group scrapped its bid to acquire the mixed-use project.

By destination, Australia took top honors, followed by the UK and Hong Kong. Canada jumped into fourth placed, while the US declined to fifth place with just US$192 million of Chinese investment there.

“Ahead, the outlook for Mainland Chinese participation in overseas real estate markets is quite uncertain over the short term and will be heavily reliant on Central government approvals of any proposed deals,” says Francis Li, Cushman & Wakefield’s head of investment & advisory services, Greater China..”Given the immense scale of Chinese property developers—five of whom are now listed on the Global Fortune 500 list—it would seem that there is now, more than ever before, a compelling business case for a prudent re-balancing of their development portfolio with an allocation of funds to projects across global markets.”