Chinese investment in US real estate will grow “dramatically” in the next few years as Chinese investors continue to bring capital to a more stable property market, according to commercial real estate company CBRE Group.
“By New York standards, by US standards, these are huge wealthy, capitalized companies, and they’re all looking for footprint in the US. So we think with the continued regulatory cooling off with the markets in China, we’re going to see more and more of that capital come into the US,” William Shanahan, vice-chairman of investment properties at CBRE, told China Daily in an interview on Tuesday.
Los Angeles-based CBRE is one of the largest commercial real estate services companies in the world, with more than 300 offices globally. The company had $223.2 billion in transactions in 2013, according to its website
Shanahan said that the announcement this week that Chinese insurance company Anbang Insurance Group was acquiring New York’s Waldorf Astoria hotel is the latest in what commentators would say is a string of “trophy” purchases by the Chinese. But her said that’s not the most accurate description of Chinese investor activity in the US.
“That is the common domestic thought, that they’re all trophy seekers. That’s probably not a good moniker. I think what they’re looking for is property that will hold value in up or down markets, properties that will hold their value over time,” Shanahan said.
“Those tend to be trophy properties. It tends to be properties like [the General Motors building], it tends to be a One Chase Manhattan Plaza, or the Waldorf. That property will always be one of the most valuable hotels in New York, if not the most valuable.”
Shanahan said that investors are smart to buy “irreplaceable” assets that will always retail their value in markets good or bad.
“Those assets will attract buyers or sellers, so I think if you look around to find the iconic assets in New York, that’s probably going to be what they’re going to be looking for,” he said.
Chinese investors are moderating their yield expectations on their investments since yields in markets like those of New York and London tend to be thin, he said, but the investments are more stable. Yields are higher in Asian markets like Hong Kong, but the real estate environment is more volatile.
“With London and New York, yes, it goes up and down with the world cycles, but it just doesn’t peak up or peak down and they’re a little more steady markets. So the yields are thinner because the risk is less,” he said.
By AMY HE October 9, 2014 in China Daily