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Chinese investors hungry to get into US commercial real estate market

By Paul Welitzkin | China Daily | Updated: 2017-06-08 07:12
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It's not just that house in a leafy US subdivision that interests Chinese investors-they may also be intrigued by a storefront in a shopping center, according to new report.

China was the top country of origin in both the buying and selling of US commercial real estate last year, according to the 2017 Commercial Real Estate International Business Trends report, which was released on Tuesday by the National Association of Realtors.

The top countries of origin for buyers were China (17 percent), Mexico (14 percent) and the United Kingdom and Venezuela (both at 7 percent), while sellers were typically from China (17 percent) or Brazil, Canada, France and Mexico (all at 10 percent).

George Ratiu, NAR's director of quantitative and commercial research and the author of the report, said the United States offers a stable environment of employment growth, strengthening real estate markets and high returns.

"For many global investors-including Chinese buyers-US real estate markets offer portfolio diversification, along with safety of capital and solid yields," Ratiu told China Daily.

"While top-tier cities like New York, San Francisco and Los Angeles have been attracting investment for a long time, with a shortage of inventory in those markets, many investors have found favorable conditions in mid-tier and small-cap markets."

Ratiu said the past couple of years have offered a few headwinds to international buyers.

"One of them stemmed from the strengthening dollar, which has made US properties more expensive," he said.

"For Chinese investors, domestic capital restrictions have added another headwind to purchases of cross-border assets. Both of these are likely to impact purchases of real estate this year."

In an expanding economy like the US, demand for commercial space increases, which helps to attract Chinese and other foreign buyers, he said.

"US commercial properties are well diversified both across geography as well as the price spectrum. Moreover, given the various property types, investors gain exposure to various segments of the US economy-industrial trade and logistics, retail consumption and multi-family housing.

"In light of the current global low yield environment, US commercial real estate offers both accessible shelter and comparatively stronger returns," he said.

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