The Real Deal New York

Chinese firms have spent $9.3B on US real estate in 2016

They’re the most active foreign contingent by far, more than doubling Canadians

May 25, 2016 11:56AM

1285 Sixth Avenue (inset: Yang Mingsheng Chairman of China Life Insurance Group and Scott Rechler)

1285 Sixth Avenue (inset: Yang Mingsheng of China Life Insurance Group and Scott Rechler)

The U.S. commercial property market may be showing signs of slowdown, but that’s not stopping Chinese investors.

Firms based in the country spent a hefty $9.3 billion on a total of 47 American commercial real estate properties so far this year, more than doubling the second largest national contingent, Canadians, who spent about $4.2 billion.

The Chinese investors’ total already far exceeds last year’s tally of $6 billion spent on U.S. commercial properties, the Wall Street Journal reported, citing Real Capital Analytics data. (A report from the Asia Society, however, pegged Chinese investment in U.S. commercial real estate in 2015 at $8.5 billion, a record.)

China Life Insurance Group was recently revealed as an equity partner with Scott Rechler’s RXR Realty on the developer’s $1.65 billion purchase of 1285 Sixth Avenue.

Chinese buyers are said to be motivated by a desire to move capital out of their country in the face of economic and currency volatility there. The Chinese government has also loosened rules over the past years on the movement of capital out of the country.

Still, the numbers could have been much higher. Another Chinese insurer, Anbang Group, bid a staggering $14 billion for Starwood Hotels & Resorts earlier this year, but pulled out at the last minute, facing uncertainty about its financing and about Chinese regulators’ stance on the deal.

Though Chinese investors have been buying heaps of property, some experts at a panel earlier this month said they often know less than they should about their American investments. The Asia Society report, created by Rosen Consulting Group, projected that Chinese investors will dump $58 billion into the U.S. commercial property market between 2016 and 2020. That report also warned of a potential slowdown over the next 18 to 24 months as the Chinese government wrestles with its slumping economy. [WSJ]Ariel Stulberg

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