Real es­tate in­vestors may switch fo­cus: panel

China Daily (Canada) - - FRONT PAGE - By JACK FREIFELDER in New York jack­freifelder@

Chi­nese in­vestors in US com­mer­cial prop­erty may switch their fo­cus this year from buy­ing newly con­structed build­ings to ac­quir­ing devel­op­ment projects, ac­cord­ing to real es­tate ex­ec­u­tives.

“This is the year where we may start to see in­vestors who are com­ing from China look at pos­si­bly pur­chas­ing apart­ment houses that are mostly fair mar­ket,” said Darcy Sta­com, a vice-chair­man with the CBRE Group, a US-based com­mer­cial real es­tate bro­ker­age. “Those can be re­de­vel­oped and put im­me­di­ately into their dis­tri­bu­tion pipe­line.’’

Sta­com made her com­ments on Tues­day dur­ing a panel dis­cus­sion about new ap­proaches in real es­tate in­vest­ment be­tween China and the United States. It was held at the Bloomberg LP head­quar­ters in Man­hat­tan and was part of the China Gen­eral Cham­ber of Com­merce’s (CGCC) 2015 Fi­nance & Real Es­tate Fo­rum.

Erhfei Liu, co-founder of Cin­dat Cap­i­tal Man­age­ment Ltd, a Hong Kong- based global real es­tate in­vest­ment plat­form, Marty Burger, CEO of Sil­ver­stein Prop­er­ties Inc and Wil­liam Dong, pres­i­dent of Shang­hai Cura In­vest­ment Co, took part in the panel dis­cus­sion. com­pany is look­ing for op­por­tu­ni­ties abroad. “For our com­pany, be­ing here in the US cer­tainly says some­thing,” Dong said. “We’ve been ac­tive in China, but now we are look­ing out­side of the home mar­ket. That’s the big­gest new idea for 2015 and on­ward.’’

In 2014, Chi­nese in­vestors made nearly a quar­ter of all in­ter­na­tional com­mer­cial real es­tate ac­qui­si­tions in New York, ac­cord­ing to data from CBRE. Other popular cities for Chi­nese real es­tate in­vest­ment in­cluded San Fran­cisco, Los An­ge­les, Chicago and Bos­ton.

Liu of Cin­dat Cap­i­tal Man­age­ment said real es­tate in New York City is pre­ferred over sec­ond- and third-tier cities in the US be­cause of the sta­bil­ity and liq­uid­ity of the mar­ket.

“The de­ci­sion-mak­ing process is tough, but the trust fac­tor be­tween US and Chi­nese firms has changed in the last 20, 15, even 10 years,” Liu said. “You have in­sti­tu­tional and you have re­tail money, you have high net-worth in­di­vid­u­als, mid­dle class peo­ple, even EB-5 in­vestors, so we are stand­ing in front of a ti­dal wave of Chi­nese money flow­ing out of China and to other parts of the world.”

Last year Cin­dat and Chicago-based Zeller Re­alty Group teamed up to buy a 65-story of­fice build­ing in Amer­ica’s third-largest city for $304 mil­lion.

Burger said there’s still a “learn­ing process” for Chi­nese real es­tate in­vestors. “In­vestors have to get ed­u­cated,” he said. “Some have had to change their in­vest­ments pa­ram­e­ters. But th­ese guys are get­ting smart; and we’re see­ing that evo­lu­tion over the last four or five years.”

Burger, who said he has made 24 trips to China in the last four years, said an­other is­sue to con­sider is the di­vi­sion of the de­ci­sion-mak­ing process within Chi­nese firms mak­ing real es­tate plays in the US.

Sta­com said: “It takes two to three years to reach a com­fort level. That’s go­ing to be the big­gest chal­lenge to Chi­nese in­vest­ment in New York and the US this year.”

“The ed­u­ca­tion par­ity has oc­curred,” she said. “Some money is fol­low­ing tech­nol­ogy, so they’ll look at Seat­tle and Austin, or other mar­kets like that where in­vestors un­der­stand there’s job growth.”

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