September 29, 2015
Part 2 of 5 – Emerging China
One can’t discuss the global economy without mentioning China’s impact. The commercial real estate industry is no different, as China’s investment in the United States is significant. With recent economic uncertainty in the world’s largest country, what will happen next? At Connect Media, we have put together a special report on Chinese real estate investment that will run throughout the week. In the second installment of our five-part series this week, Connect takes a looked at Chinese California investment in commercial real estate. You can read part one, which looks at China’s global CRE endeavors, here.
There has been a host of investments made by the Chinese across the Southern California region, starting in the early 1990’s, primarily involving commercial office buildings, mainly in Downtown Los Angeles, and shopping centers. By 2010, Chinese investors began branching out into hotel and office-building assets.
Additionally, as Chinese families came to live in the United States, purchasing a home was considered both smart and safe. Today, the National Association of Realtors reports that Chinese Nationals are the biggest foreign buyers of U.S. housing, having purchased $28.6 billion worth of residential real estate in 2014. While that’s not chump change, it is a smaller slice of the $105.1 billion that Juwai.com reports Chinese Americans spent on U.S. real estate in 2014. Obviously, the U.S. has found favor with the Chinese.
Jerry Wang, head of Charles Dunn’s International Division, has assisted numerous Chinese investors acquire commercial real estate in Los Angeles, Pasadena and other Southern California cities. “The majority of the investments turned out very well,” Wang told Connect Media. “Generally, these investments had minimum to no mortgage, which resulted in a much higher positive cash flow compared to domestic investors.”
Let’s look at a few of Chinese California investment ventures in the southern part of the state to better understand their scope.
Representative Chinese Projects in Southern California
The list of current Chinese investments is spread from Downtown Los Angeles, the Westside and even behind the Orange Curtain in Anaheim.
• Greenland USA – which has committed more than $6 billion combined into 28 acres of development in New York City and L.A. – is investing more than $1 billion to bring Metropolis to life. The property will feature three residential towers, a boutique hotel and a curated retail center planned for completion in phases starting in late 2016 through 2018. It promises to serve as a key link in an emerging “Avenue of the Angels,” a pedestrian-friendly walkway between downtown’s financial district and the entertainment district.
• Oceanwide Properties – also another big investor in New York – acquired a 4.6-acre site across from Staples Center in 2013 and is moving forward on Oceanwide Plaza, a $1-billion development slated to include three high-rise residential towers encompassing 900 condominiums, 200 hotel rooms and nearly 170,000 square feet of retail space. It is Oceanwide’s first investment outside of China. New York investments followed the company’s L.A. purchase.
• Developer Shenzhen Hazens Real Estate Group Co. acquired the Luxe Hotel and two adjoining sites downtown in 2014 and is working on plans for a $700-million complex that would include a hotel, condos and retail space. Reports say a 250-room W Hotel will be incorporated into the mix for this development, forecast to open in 2019.
• One of the first Chinese companies to arrive in Los Angeles in a big way was Shenzhen New World Group, which acquired the Marriott Hotel at 333 S. Figueroa St. in 2010. The 469-room hotel is being rebranded under the independent W.H. Grand flag.
• On the Westside, the Wanda Group, China’s largest developer of commercial properties, is moving forward on One Beverly Hills, a $1.2-billion condominium and 134-room hotel development that has a 2019 opening in the works.
• In Orange County, Chinese developer LT Global Investment Inc., a U.S. subsidiary of Beijing’s LT Commercial Real Estate, is planning LTG Platinum Center, a nearly $500-million residential, hotel and retail complex next to Angel Stadium in Anaheim. Slated to be completed in 2020, the 14-acre site would include a 28-story condo tower, a 26-story hotel, a theater, outdoor dining and an indoor surfing park.