The Real Deal New York

Asian investment in NYC on track for record $8B-plus: CBRE

Capital flows up 9% through first half of 2016, though some see growth slowing

October 12, 2016 03:35PM
By Rich Bockmann

200 Amsterdam Avenue and 55 Hudson Yards

200 Amsterdam Avenue and 55 Hudson Yards

Asian investment in New York City real estate is expected to set a record this year as institutional investors expose ever-higher sums of capital to the globe’s property markets.

Investors from Asia are on track to spend more than $8 billion on New York City real estate this year, up roughly 9 percent from 2015, according to CBRE.

Through the first half 2016, Asian investment in New York City clocked in at $4.02 billion compared to $3.7 billion through the first six months last year, CBRE’s research shows.

“The Asian insurance industry has enjoyed tremendous growth over the past ten years. Insurers still have relatively low allocations to real estate,” said Chris Ludeman, global president of CBRE’s TRData LogoTINY capital markets group. “These investors will continue to increase their allocations to global real estate to both diversify portfolios and boost returns amid low or negative interest rates on government bonds and volatile equity markets.”

Japanese institutional investors – which still have few real estate holdings – could emerge as new sources of capital in coming years, Ludeman added, and property companies in China and Singapore will continue to look outward to hedge against risks in their domestic markets.

Mitsui Fudosan has been particularly active, teaming up with SJP Properties last year to buy a development site at 200 Amsterdam Avenue for roughly $300 million – set to become home to the Upper West Side’s tallest building – and paying $259 million in 2014 to buy a stake in the Related Companies’ 55 Hudson Yards.

Though investment in New York is on the rise, it’s not keeping up with the global average.

Worldwide investment by Asian capital sources was $27 billion through the first half of the year, which annualized would represent nearly 15 percent growth over 2015’s total of $47 billion.

And investment growth in the United States is expected to slow.

The Asia Society in May published a report theorizing that investments in the United States would slow as the Chinese economy took an 18- to 24-month “hiatus.”