The China Trend that Won’t Fade
It’s one of the most exciting trends I’ve ever seen. After watching China inject record levels of cash into New York City in 2014, another $50 billion could be poured into the region from China, notes Cushman & Wakefield’s Chairman of New York Investment Sales, as quoted by The Street.
And there’s still plenty of room for upside.
With the value being offered, China’s investors are just beginning to invest in U.S. commercial real estate, as China slows and investment regulations change, as I’ve noted.
Over the last two years, I’ve watched Fosun International buy the 60-story One Chase Manhattan for $725 million. Beijing real estate mogul Zhang Xin took part in the $1.4 billion purchase of the General Motors office tower.
For $1.95 billion, Hilton Worldwide turned over the keys of the 1,232-room hotel to Beijing-based Anbang Insurance Group. That’s one of the highest prices ever paid for a hotel, highlighting the explosive international demand for hotels and other Class-A trophy properties across the United States.
Greenland Holdings Group took a 70% stake in a $5 billion Atlantic Yards project, and acquired a 25,600 sq. meter site in Los Angeles from the California State Teachers’ System with plans to build a hotel, offices, and high-end homes. The company is looking to invest another $5 billion to $8 billion abroad this year.
Silicon Valley commercial real estate firm, Kidder Matthews was partnering with Tsinghua Real Estate CEO Chamber of Commerce “to act as a bridge for Chinese investment which wants to come to the Bay Area,” says SFGate.com.
Dongdu International (DDI) bought the David Stott Building for $4.2 million and the Detroit Free Press building for $9.4 million with plans of turning it into a $50 million retail and residential complex shortly after Detroit’s July 18, 2013 bankruptcy filing.
China investors bought the New York Cassa Hotel, whose owners were in bankruptcy court in 2012.
China isn’t the only one with strong interest in U.S. real estate, though.
Canada has quickly become the top foreign investor. Canada’s developers, investors and banks alike all want a piece of the value – and high yield -- commercial estate offers in America.
“Canadians invested $9.85 billion in U.S. commercial properties in 2014,” according to Real Capital Analytics, as reported by Real Estate Weekly. “No other country invested more, with China a far second at just under $6.6 billion.”
That spending trend isn’t likely to reverse.
In fact, according to the latest annual survey from the Association of Foreign Investors in Real Estate’s (AFIRE), foreign investors have plans to spend even more. “The survey, completed in the fourth quarter, found that 90 percent of respondents planned to maintain the same level of investment in U.S. properties that they had in 2014, or increase it,” according to Real Estate Weekly.
“Foreign investors continue to view the U.S. as outranking other Western countries for stability, while also offering the best opportunities for capital appreciation. This puts United States, in terms of attractiveness, ahead of European economies on the upswing, such as Spain, and emerging economies, including China and Brazil.”
That tells me one very simple thing. Bet on further growth and upside in commercial estate.
Take full advantage, or miss what could be the buy opportunity of a lifetime.