September 29, 2015 Comments Off on How Big is Chinese Real Estate Investment? Views: 686 National News

How Big is Chinese Real Estate Investment?

Part 1 of 5 – Emerging China.
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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. The first installment of the five-part series is below and talks about China’s overall commercial real estate investment scope.

Real Capital Analytics (RCA) reports that Chinese investors were involved in direct commercial real estate investments totaling $38.3 billion globally in the last 24 months. For the United States, the figure stands at $5.8 billion over the last 12 months.

Real estate economist Jim Costello of RCA told Connect Media, “That’s real money, but it is important to put these figures in context. Total activity in the U.S. came in at $499 billion in the last 12 months, so in total it’s roughly 1.2 percent. It is probably larger than that. Capital out of Hong Kong was involved in transactions totaling $2.1 billion, and out of Singapore, $8.6 billion, and some of that money likely came from Mainland China in various fund structures.” In all, Asian investment came in at $21.7 billion, making up four percent of total activity.

Admittedly, that figure isn’t much, but the concern for U.S. investors is that the Chinese have been important buyers in key markets. Costello noted that acquisition activities likely led to new record prices for hotel properties, in such places as Manhattan. Chinese buyers accounted for nearly nine percent of total direct-property purchases in the New York City borough, he said. So, the buying pool of the latter market could feel turmoil, at least in the short term, if the market reassesses as it nervously waits for another shoe to drop.

Ranking Top Market Destinations For Chinese Capital Globally Last 24 Months (In Millions)*

Market/ Total Props/ Total Volume
Manhattan/ 23/ $5,748.5
Sydney/ 81/ $5,678.0
London/ 14/ $5,617.3
Johor Bahru/ 3/ $2,076.6
Singapore/ 18/ $1,836.0
Melbourne/ 87/ $1,722.2
Tokyo/ 9/ $1,707.7
Los Angeles/ 11/ $1,124.0
New Territories/ 8/ $1,008.7
Other/ 243/ $11,763.4
Total/ 497/ $38,282.4

Ranking Top Market Destinations for Chinese Capital in U.S., Last 12 Months (In Millions)*

Market/ Total Props/ Total Volume
Manhattan/ 14/ $4,491.7
Los Angeles/ 5/ $262.2
Chicago/ 5/ $248.8
Houston/ 2/ $139.6
San Jose/ 3/ $93.7
Monterey/ 2/ $87.7
San Francisco/ 3/ $83.5
Miami/ 1/ $74.7
Seattle/ 5/ $57.4
Other/ 24/ $334.9
Total/ 64/ $5,874.2

*Source Real Capital Analytics September 2015

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