Chi­nese splurg­ing on US real es­tate

China Daily (Canada) - - ACROSS AMERICAS - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

Chi­nese buy­ers spent more than $17 bil­lion on US com­mer­cial real es­tate be­tween 2010 and 2015, and dur­ing that same pe­riod most Chi­nese real es­tate in­vest­ment — at least $93 bil­lion — went into US homes, ac­cord­ing to a study by the Asia So­ci­ety and the Rosen Con­sult­ing Group.

“More than any for­eign in­vestor other than Canada, China stands out for the breadth, depth, and speed of its par­tic­i­pa­tion in the US real es­tate mar­ket,” ac­cord­ing to the re­port re­leased on Mon­day, Break­ing Ground: Chi­nese In­vest­ment in US Real Es­tate.

“This wave of in­vest­ment is com­ing from di­verse sources in China,” said Arthur Mar­gon, one of the au­thors of the re­port and a part­ner at Rosen Con­sult­ing Group (RGC), an in­de­pen­dent real es­tate eco­nom­ics con­sult­ing firm. “But that’s re­ally a small piece of the po­ten­tial in­vestor uni­verse.”

Among the re­port high­lights: China is the big­gest for­eign holder of mort­gage-backed se­cu­ri­ties is­sued by US gov­ern­ment-spon­sored en­ter­prises such as Fan­nie Mae and Fred­die Mac, with a to­tal of $207.9 bil­lion, an in­crease from $20 bil­lion in 2000.

“Like US Trea­suries, these bonds are im­por­tant in­vest­ments for Chi­nese gov­ern­ment fi­nances, be­cause they al­low for re­cir­cu­la­tion of dol­lars gained by the trade im­bal­ance, and for the US hous­ing mar­ket, be­cause they help en­sure liq­uid­ity and mort­gage rate sta­bil­ity,” ac­cord­ing to the re­port.

Dur­ing a dis­cus­sion about the re­port at the Asia So­ci­ety on Mon­day, Wendy Cai-Lee, ex­ec­u­tive vi­cepres­i­dent at East West Ban­corp Inc, said Chi­nese buy­ers are be­com­ing more knowl­edge­able about the US real es­tate mar­ket.

“Sev­eral years ago I had Chi­nese buy­ers ask­ing only about the re­turn from a po­ten­tial deal. Now they ask about safety and di­ver­si­fi­ca­tion re­flect­ing a greater aware­ness of the US mar­ket,” she said.

Since 2010, nearly 20,000 Chi­nese EB-5 in­vestors have gen­er­ated at least $9.5 bil­lion of cap­i­tal and may have cre­ated or sus­tained 200,000 jobs, the re­port said. The pro­gram al­lows a for­eign na­tional who in­vests at least $500,000 in projects that cre­ate a min­i­mum of 10 jobs to re­ceive a US visa and, on com­ple­tion of the project, a green card for per­ma­nent res­i­dency sta­tus. Chi­nese have been the main re­cip­i­ents of EB-5 visas.

The re­port said that in the short term “cap­i­tal con­trols” will likely slow in­di­vid­ual pur­chases of US homes and the growth rate of com­mer­cial prop­erty ac­qui­si­tions.

But it said di­rect in­vest­ment in ex­ist­ing US com­mer­cial real es­tate as­sets and res­i­den­tial pur­chases, ex­clud­ing new de­vel­op­ment projects, could to­tal at least $218 bil­lion from 2016 through 2020 and be­yond 2020, Chi­nese in­vest­ment could ac­cel­er­ate fur­ther.

The re­port used in­for­ma­tion from pub­lic records and trade groups with RCG’s data­base, based in part on gath­er­ing of data and in­ter­views with in­dus­try sources.

Dur­ing the talk, Wang re­ferred to a range of items be­tween the two coun­tries, in­clud­ing the up­com­ing an­nual China-US Strate­gic and Eco­nomic Di­a­logue and the prepa­ra­tion for the G20 lead­ers’ sum­mit in Eastern China’s Hangzhou in Septem­ber.

Both sides are ex­pected to “stay fo­cused on co­op­er­a­tion, prop­erly man­age di­ver­gences and main­tain the mo­men­tum of the healthy and sta­ble de­vel­op­ment of China-US ties”, Wang said.

The talk be­tween Wang and Kerry came just four days be­fore the in­au­gu­ra­tion of Tsai Ing­wen, chair­woman of Tai­wan’s Demo­cratic Pro­gres­sive Party, as the is­land’s new leader.

While Tsai has talked about pre­serv­ing the sta­tus quo in cross-Straits re­la­tions, she has not yet con­vinced peo­ple that DPP, which has long re­fused to en­dorse the 1992 Con­sen­sus that Tai­wan and the main­land are both parts of one China, will give up pur­su­ing the is­land’s full in­de­pen­dence from the main­land.

Zhu Weidong, deputy head of the In­sti­tute of Tai­wan Stud­ies at the Chi­nese Academy of So­cial Sciences, was quoted by the Xinhua News Agency as say­ing that negat­ing the con­sen­sus would dis­rupt the sta­tus quo of peace and sta­bil­ity promised by the in­com­ing leader.

“Ad­her­ence to the con­sen­sus is not only a mat­ter of prin­ci­ple, but also a ges­ture of good will from the main­land, be­cause the prin­ci­ple has been con­sis­tent. The main­land has asked no more from the DPP than it did from the Kuom­intang (KMT) since 2008,” Zhu said.

Re­la­tions have im­proved dra­mat­i­cally af­ter Ma Ying-jeou, the leader of Kuom­intang, as­sumed lead­er­ship of the is­land in 2008.

Bi­lat­eral trade has reached $170 bil­lion each year. And the Chi­nese main­land has be­come Tai­wan’s largest des­ti­na­tion of in­vest­ment and ex­ports.

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