The Real Deal New York

Chinese annual investment in CRE swells to record $10B

More than one-fifth of this money goes to U.S.: CBRE

July 22, 2015 11:30AM
By Tess Hofmann and E.B. Solomont

From left: The Waldorf-Astoria and 717 Fifth Avenue (inset: Chinese flag)

From left: The Waldorf-Astoria and 717 Fifth Avenue (inset: Chinese flag)

Over the past four years, outbound commercial real estate investment from China has increased 72 percent to $10 billion in 2014, with cities in the United States, United Kingdom and Australia reaping the most benefits, according to a new report by CBRE.

More than one-fifth of these investments in 2013 and 2014 went to the United States, the report found, with a focus on office and hotel properties as well as development sites in gateway cities. Premium office and hotel assets in New York and California accounted for approximately half of the total.

Chinese insurer Anbang Insurance Group surprised the real estate world earlier this year when it purchased the Waldorf Astoria for $2 billion. The insurer also purchased the office portion of 717 Fifth Avenue for $415 million. Meanwhile, Bank of China bought 7 Bryant Park for $600 million and will take up 40 percent of the tower.

“Chinese investors are only beginning to tap into the vast set of opportunities available to them in the U.S. As competition in gateway cities continues to increase, Chinese investors will need to include other large metropolitan areas, such as Atlanta, Boston, Dallas, Denver and Seattle in the hunt for better investment opportunities,” said Brian McAuliffe, executive managing director of the Americas for CBRE’s capital markets division.

“Institutional investors are also beginning to take note of the attractive returns offered by industrial and logistics properties. As Chinese investors widen their search to new markets, they will also need to develop a more sophisticated understanding of local dynamics.”

The report found that over the past two years, Chinese investors willing to look abroad have expanded from sovereign wealth funds and tier-one insurance companies to mid-tier insurers and corporate investors. Chinese firms in particular have been targeting fabulously wealthy individual investors, the report said.

In July, The Real Deal reported that Witkoff, Fisher Brothers and Howard Lorber closed on $229 million in financing for the luxury condo project at 111 Murray Street from Taiping Asset Management, a subsidiary of Chinese Insurance International Holdings.