Chinese investors scoop up distressed properties

From left: 70 West 45th St. and Detroit's 600 West Fort St., two distressed properties plucked by Chinese investors
From left: 70 West 45th St. and Detroit's 600 West Fort St., two distressed properties plucked by Chinese investors

The 2012 purchase of New York’s Cassa Hotel, whose owners were in bankruptcy proceedings, is but one example of Chinese investors snapping up commercial properties in distress — a trend that is picking up steam.

This activity, experts say, is a reflection of a growing willingness to take on risk, as well as Chinese investors’ plan to hold parcels for many years until flailing values recover.

A push also comes directly from Beijing, where the government has encouraged Chinese companies to diversify and spend foreign capital reserves. Thus far in 2013, Chinese property deals have hit $1.7 billion in the U.S., up from $1.1 billion in 2011, according to data from Real Capital Analytics cited by the Wall Street Journal.

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Particularly curious is a trend of Chinese investors plucking properties with complex costs and complications tangled through renovations, brokers, local politics and U.S. laws that tend to deter most foreign investors. They are driven, experts say, by a sense of value in nabbing an architecturally significant building at a deep discount.

“People from China look at the price in which you can buy these buildings and think that’s the cost of one apartment in Shanghai,” Goodwin Gaw, founder of Hong Kong-based real estate private equity manager Gaw Capital Partners, told the Journal. [WSJ]Julie Strickland