Chinese Investors Double U.S. Real Estate Investments
Analysts have been downbeat on commercial real estate for quite some time. But it makes little sense.
As long as foreign investments remain intact, given historically low interest rates in a high-yielding environment, there’s little reason to be concerned with slowing growth.
Look at Chinese investors, for example. In the first five months of the year, they’ve spent $17 billion on real estate outside of China. More than half of that, or 62.5%, has been invested in U.S. properties alone. In all, they invested $10.6 billion in U.S. property, more than double the $4.37 billion they spent in the U.S. for all of last year.
Some of the hottest investment locations have been in California. Greenland Holding Group, for example, is working on a $1 billion Metropolis, considered one of the largest mixed-use developments on the west coast.
Hotel portfolios are looking interesting as well.
In February, Hersha Hospitality sold 70% majority interest in seven Manhattan hotels to Cindat Capital Management for $571.4 million. In March, The Blackstone Group sold Strategic Hotels & Resorts to Anbang Insurance for about $6.5 billion.
According to Forbes, in addition to offices and hotels, Chinese investors are pushing into life and science research parks as well.. In San Francisco, Greenland Holding is buying a 42-acre property to develop a $1 billion 2.25 million square foot office and research center.
They still love New York, too. Xinyuan Real Estate paid $66 million for a development site in Flushing, New York with plans to build a 269-unit condominium.
Again, arguments for slowing growth make little sense.
Chinese investors are very likely to continue investing heavily in U.S. real estate, as we’ve long argued. I’m willing to bet it won’t be a short-lived trend.