Capital from China. It has to go somewhere — and plenty of it comes to the shores of the US. While it’s true that the average yuan making its way across the Pacific to the US ends up invested in US treasuries, an increasing portion of that capital flow is finding its way into commercial property.
Memorable deals marrying Chinese buyers and landmark US commercial properties include last year’s purchase of a 40% interest in General Motors’ midtown Manhattan office tower by Beijing real estate tycoon Zhang Xin for $1.4 billion. Also symbolic was Fosun International putting up $725 million for One Chase Manhattan Plaza.
But offices aren’t the only hot commodity in the eyes of Chinese real estate investors. Retail, too is attracting its share of suitors from across the Pacific.
Chinese equity partners getting into California’s malls is the premise of a recent Globe St. piece by the estimable Carrie Rossenfeld. In it, she interviews CJ Osbrink, a property marketer who has been busy getting pro formas out to an increasing number of interested investors from China lately:
GlobeSt.com: What impact are foreign buyers having on the retail investment market in Southern California?
Osbrink: Southern California has seen a huge pickup in foreign investor activity recently, and it is creating a much more competitive marketing process for well-located deals. For example, we just worked on a deal, the River at Rancho Mirage, that was sold to a local advisor with a mainland Chinese equity partner. This is the second property our team has sold to a foreign equity buyer in the last few months. They are very active and showing up on every one of our deals. A large driver of this activity is the increase of ultra-high-net-worth individuals looking to place their capital into more tangible investments, as well as improving macroeconomic and retail fundamentals in the US.
GlobeSt.com: What types of retail properties are foreign buyers most interested in, particularly in Orange County?
Osbrink: In Orange County, as in other parts of Southern California, they are looking for anything trophy oriented. These are pride-of-ownership assets that show very well and have a trophy appeal to them—something they can put on a brochure and show their investors, whether here or overseas. There is also very strong interest in generational, safe investments that they will hold for the long-term.
Read the entire Globe St. article here.