Chinese investors targeting mid-tier US real estate

Developers like China Vanke look to avoid the volatile luxury market

New York /
Dec.December 27, 2016 02:59 PM

Chinese institutional investors, facing highly leveraged markets at home, are shifting their focus from the volatile luxury sector to the more stable middle market in the U.S.

Lower priced residential properties and rentals, student housing, senior-living centers and skilled nursing homes are all becoming more attractive to Chinese investors, the Wall Street Journal reported. In recent years, Chinese investors have taken on high-risk luxury developments in Manhattan. The U.S. arm of Shanghai Municipal Investment, for example, has made significant investments in the city in past year.

It partnered with Ceruzzi Properties to buy a development site at 520 Fifth Avenue,  and also bought a $300 million equity stake in Gary Barnett’s Central Park Tower development.

Chinese development giant China Vanke has also poured money into the city’s residential market. It has partnered with Slate Property Group  and Adam America Real Estate on three development deals, including the controversial Rivington House condominium conversion. It also holds a stake in RFR Realty’s condo tower at 100 East 53rd Street.

But, according to the Journal, Chinese buyers are now thinking more strategically about the U.S. market, and that means shying away from the high-end property market.

Out of Vanke’s 14 U.S. projects, 10 are focused on the middle-tier condominium market, some of which have rental units. The firm said it prefers to focus on developing homes for consumers whose demand is “necessity driven.”

“These simple and enduring principles have helped us focus away from the luxury market and investor-centric projects that carry higher potential risk,” Kai-yan Lee, managing director of Vanke Holdings USA, told the newspaper.

The company lost $10 billion in market value this month, as investors sold off shares amid fears that government intervention could complicate the company’s takeover.

China is set to introduce new rules to curb capital flight. The State Council of the People’s Republic of China is expected to announce stricter controls over foreign investments exceeding $10 billion, and more than $1 billion for state-owned firms. [WSJ]Miriam Hall


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Donald Trump and Allen Weisselberg with Trump Tower
Ex-Trump CFO Allen Weisselberg pleads guilty, will testify against firm
Ex-Trump CFO Allen Weisselberg pleads guilty, will testify against firm
Florida Showcase speaker spotlight: Black Lion’s Robert Rivani
Florida Showcase speaker spotlight: Black Lion’s Robert Rivani
Florida Showcase speaker spotlight: Black Lion’s Robert Rivani
Edison Properties' Jon Dario and 620 12th Avenue (Edison Properties, Google Maps)
Verizon leases 144K sf from Edison Properties in Hell’s Kitchen
Verizon leases 144K sf from Edison Properties in Hell’s Kitchen
Newmark's Elizabeth Berthelette and 45-18 Court Square (Newmark, Perkins + Will)
Life sciences market notches record despite cooling velocity
Life sciences market notches record despite cooling velocity
33 Howard Street, Dolls Kill's Bobby Farahi (Loopnet, Getty, Sequoia)
Dolls Kill rises in NYC with Soho flagship
Dolls Kill rises in NYC with Soho flagship
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...