Chi­nese in­vestors like prop­er­ties

China Daily (Canada) - - FRONT PAGE - By NIU YUE in New York

Chi­nese in­vestors’ ap­petite for over­seas com­mer­cial real es­tate is un­re­lent­ing, and the United States is the top des­ti­na­tion for that in­vest­ment, ac­cord­ing to a re­cent sur­vey by CBRE, a Los An­ge­les-based com­mer­cial real es­tate firm.

The sur­vey found that China’s ex­pen­di­ture on US com­mer­cial real es­tate in the first half of 2015 was $3.68 bil­lion, dou­bling last year’s fig­ure.

In the past two and a half years, about $2.98 bil­lion has been in­vested in US ho­tels, the re­search showed.

China ac­counted for more than one quar­ter of to­tal out­bound com­mer­cial real es­tate in­vest­ment from Asia dur­ing 2013 and 2014, the sur­vey said. About 20 per­cent of that went into US prop­er­ties.

A re­port by JLL, a real es­tate agency, said that China spent $5 bil­lion on over­seas ho­tel pur­chases in the first eight months of 2015.

In Oc­to­ber 2014, Beijing-based An­bang, a life, health and property in­sur­ance com­pany, pur­chased New York’s land­mark Wal­dorf As­to­ria ho­tel for $1.95 bil­lion.

This past Oc­to­ber, three Chi­nese com­pa­nies com­peted for the Star­wood Ho­tel, a US ho­tel chain.

Shang­hai-based Jin Jiang In­ter­na­tional Group Co Ltd, a Chi­nese state-owned ho­tel chain, made sev­eral pur­chases of over­seas hos­pi­tal­ity com­pa­nies.

A re­port on China out­bound tourism de­vel­op­ment in 2015 found that at least 107 mil­lion Chi­nese cit­i­zens trav­eled over­seas in 2014, dou­bling out­bound Chi­nese trav­el­ers in 2009.

Ex­perts said the in­creas­ing num­ber of Chi­nese out­bound visi­tors con­trib­uted to the in­vest­ment spree.

Li Fei, a pro­fes­sor of eco­nomics in Ts­inghua Univer­sity, said most Chi­nese in­vestors and fi­nan­cial groups are look­ing to get a share of the ev­er­in­creas­ing pur­chas­ing power of Chi­nese visi­tors from abroad.

“Many Chi­nese visi­tors are trav­el­ing, and that makes over­seas ho­tels de­sir­able and worth in­vest­ing in,” Li said.

A re­port by the Fung Busi­ness In­tel­li­gence Cen­ter and China Lux­ury Ad­vi­sors, Chi­nese visi­tors’ over­seas consumption value will ex­ceed $420 bil­lion by 2020.

An­other re­port by JLL in­di­cated that Chi­nese in­vestors in the ho­tel in­dus­try are pur­su­ing a more di­ver­si­fied port­fo­lio rather than solely re­ly­ing on do­mes­tic Chi­nese ho­tels.

Ac­cord­ing to the re­port, re­turn on in­vest­ment in the Asia-Pa­cific ho­tel in­dus­try has con­tin­ued to tighten in the past 15 years, fall­ing from 9 per­cent in 2011 to 6.25 per­cent in 2015.

The short-term mar­ket sen­ti­ment in Beijing, Shang­hai and Hong Kong also has dimmed, making coun­tries such as Aus­tralia and the US at­trac­tive for for­eign cap­i­tal.

“Most of the hot spots are San Francisco, New York in the US, Van­cou­ver in Canada, Paris in France, Seoul in South Korea and Bangkok in Thai­land”, said Zhang Zhuyun, the man­ager of Guangzhou Dong­fang Ho­tel Group.

The EB-5 visa pro­gram also plays a role. The US pro­gram grants green cards to in­vestors of $500,000 to $1 mil­lion (de­pend­ing on the lo­ca­tion) who cre­ate or main­tain jobs.

Dict­son Fu, a fi­nan­cial ad­viser for Mor­gan Stan­ley, said EB-5 fu­eled in­vestor pref­er­ence for over­seas ho­tels be­cause it also can pro­vide work­ing op­por­tu­ni­ties for the in­vestors.

Fu said the US au­thor­i­ties have pro­hib­ited some Chi­nese ac­qui­si­tions for “na­tional se­cu­rity rea­sons”.

Re­stricted ar­eas for Chi­nese in­vestors mainly were semi­con­duc­tors, telecom­mu­ni­ca­tions and trans­porta­tion in­fra­struc­ture, Fu said. “There­fore, buy­ing the hos­pi­tal­ity in­dus­try like ho­tels faces less na­tional scru­tiny than the highly po­lit­i­cal, risky ac­qui­si­tions,” he said.

Long Yi­fan in New York con­trib­uted to this story.

HONG XIAO / FOR CHINA DAILY

The Wal­dorf As­to­ria New York ho­tel in Man­hat­tan was pur­chased by China’s An­bang In­sur­ance Group for $1.95 bil­lion in Oc­to­ber 2014.

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