Chinese investors zeroing in on LA
Chinese investors in Los Angeles have a positive outlook for business next year, and about 90 percent of business owners polled are looking forward to expanding their businesses in 2015, according to a report released by China Trust Bank USA (CTBC) in Shanghai Tuesday.
The report is based on a survey of 460 Los Angeles business owners whose companies ranged in size from small enterprises to those with billion-dollar revenue.
About 60 percent of polled business owners said they believe their profits in 2015 will increase over 2014, and 90 percent said they were looking to expand their business.
Banking in Los Angeles has benefited from double-digit growth in Chinese investment in the California market, including commercial and residential real estate and commercial banking, said Noor Menai, president and CEO of the bank.
Menai said the bank witnessed a 60 percent growth in trade finance loans in 2014 year-to-date, financing international trade transactions predominately in the Pacific Rim, mostly in China and other Asian markets.
Increasing investors coming to Los Angeles from China also beefed-up demand for home loans, said Menai.
Among CTBC’s Chinese clients, many have applied to a global residential mortgage program, which caters to foreign borrowers or new immigrants who are still establishing a credit history in the US.
“A total of 89 percent of these borrowers that reside outside of the US are from China and Hong Kong,” the report said. “Residential borrowers from China’s mainland realized a 37 percent growth in 2014 year-to-date.”
Market insiders said Chinese investors have been playing a more significant role in Los Angeles real estate.
Between 2007 and 2013, the percentage of Chinese investment in the Los Angeles metro area averaged only 9.6 percent, according to Lewis Horne, president of the Greater Los Angeles-Orange County Region for CBRE Inc, a commercial real estate company headquartered in Los Angeles.
“Year-to-date in 2014 it has been 16 percent, which equates to a significant rise in total investment value — from an average of $106 million per year in the past six years by 2013 to $748 million in 2014,” Horne said.
Chinese investors have not only been investing more heavily but also investing more widely in the past decade, said Horne.
“In the 2000s, we saw Chinese were only investing where Chinese work and live and in some valueadded areas such as housing and hotels. Now they are entering core areas and more types, such as office buildings, industrial property and commercial,” says Horne.
Mary Leslie, president of the Los Angeles Business Council, said Chinese investors are eyeing various investment opportunities in the city.
Entertainment, pharmaceuticals, clean energy, retail and manufacturing are all appealing to Chinese investors, said Leslie.
“In terms of wind energy, solar energy and a series of clean energy technologies Chinese investors are leading,” said Leslie.
The port in Shanghai FTZ saw a boom in foreign trade this year.