director of the International Business Department
for the Beijing Jia Hua Four Seasons International
Exhibition Co., which zeroes in on real estate
investment abroad.
INVESTMENT FUNDS HEADING OUT OF CHINA
Last year, China’s total overseas investment into
commercial real estate reached a record high of $38.3
billion, up 49 percent from 2015, according to data
from Real Capital Analytics.
“A big part of it is the natural evolution of these
companies,” said Jim Costello, senior vice president at
Real Capital Analytics. “When Deng (former Chinese
leader Deng Xiaoping in 1992) said it was good to be
wealthy again, people went out and built up many
parts of China. Then their kids went to business
school. From there, they started local companies that
turned into corporations. It was all a function of the
next generations.”
The massive Chinese imprint comes from wealth
creation in China and the desire or need to invest
in quality, stable markets abroad, said Jonathan
Karp, executive director of the Asia Society Southern
California. “The Chinese economy has created
behemoth construction, real-estate development
companies, insurance companies and, in some cases,
conglomerates that comprise these industries,” he
said. “These are the companies leading the charge
into commercial real estate in the U.S. They have
money to invest as well as ambitions to grow and
modernize. The U.S. economy is growing, and the real
estate market is one of the most stable – since the
financial crisis.”
There is a prestige factor involved too, Karp continued.
“The better a Chinese company does in U.S. real
estate, the more respected it is at home by investors
and customers,” he said. “Chinese individuals have
been significant investors, too, both in commercial
real-estate financing, through the EB-5 visa program,
and in fueling home purchases. The motivation for the
home purchases is clear: a beachhead for educational
opportunities for their children, an investment
property, a potential refuge.”
America was the top overseas destination for Chinese
investors, with $18.3 billion, which is four times higher
than in 2015, according to the Real Capital Analytics
report. Popular investment assets were office property
with $17.3 billion and hotels with $10.3 billion.
A stark shift from 1972, when President Richard Nixon’s
visit to China opened the way to the communist
country. Forty-five years later, the Middle Kingdom
wears a crown as the second biggest economy after
the United States, according to the World Bank. China
is a relative newcomer to the U.S. real estate market,
joining a long list of global investors that have been
active in the market for decades, according to the Asia
Society’s report Breaking Ground: Chinese Investment
in U.S. Real Estate.
WWW.THECHINAINVESTOR.COM
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