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Posts Tagged ‘Chinese investors’

NYT v. WSJ Smogdown: Status of Chinese Investment in U.S. Real Estate

December 1, 2015 | 11:39 am | nytlogo | Favorites |

lianyungangchinaSmogYahoo
[Source: Yahoo News]

Last weekend I read two terrific articles on Chinese real estate investment in the U.S. but they seemed seemed to conflict – check out the headlines:

New York Times Chinese Cash Floods U.S. Real Estate Market

Wall Street Journal Chinese Pull Back From U.S. Property Investments The subtitle says it all – The nation’s economic and stock-market slump puts buyers on the sidelines

Are the Chinese flooding the U.S. market now or are they pulling back? Which is it? Or is it both?

In my recent trip to Shanghai, I spoke to and interviewed many, many real estate investors at The Real Deal Forum. I got the impression that investment has pulled back a bit in 2015 but expectations were high that investment would expand again, although not to the level of the past 5 years. Of course I was doing this in a biased environment – at in investor conference. I was consistently told that government efforts to prop up the stock market spooked much of the smart money out of the market since the actions were taken to calm everyday investors.

The New York Times piece seemed prompted by a P.R. pitch from the Chinese developer for their Dallas suburb project enticed with a suburban angle. It was a refreshing angle since Chinese real estate investment in the U.S. has been an urban narrative and specifically focused on the high end. The article illustrated just how massive the investment patterns have been. To date the narrative has been focused on super luxury condos in expensive metropolitan areas, while the suburbs got limited attention.

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The WSJ article is more orientated towards the past few weeks while the NYT article is a longer term view. Both publications place emphasis on NAR’s Profile of International Home Buying Activity whose results emphasized the Chinese investment surge of the previous year. The survey results only reflect the market through last March, so it is 9 months behind the current market. The Chinese investment numbers are staggering, and they are probably understated. Since the NAR report is simply a survey of it’s members and NAR has limited exposure to New York City, especially Manhattan – a hotbed of Chinese real estate investment activity.

NAR2015internationalCHINESEwsj

Incidentally, do the above 2 charts look similar? They both relied on the NAR report.

The NYT piece set the table on the entire multi-year phenomenon using a ton of cool charts while the WSJ attempted to illustrate the change in recent weeks Both outlets were forced to rely on a lot of anecdotal to make their case. Both articles are consistent with my views as each provided a different context.

The NYT piece provided the long term historical view and the WSJ was a short term snapshot.

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[Video] China’s investors and the safe haven of American real estate

August 31, 2015 | 4:10 pm | yahoo!financelogo | TV, Videos |

Here’s a summary of potential future actions by Chinese investors with the recent spate of volatility in the financial markets.

According to Jonathan Miller, president of appraisal firm Miller Samuel, the tumult in China may lead to even more money finding its way into American residential and commercial real estate. “There are not a lot of investment vehicles in China,” said Miller. “You have the [Chinese] housing market, which is a pretty significant bubble. You have thousands of ghost cities that have been constructed. On top of that, you have a pretty volatile stock market situation. So there is some speculation that there actually will be outflow as a result of this and maybe that will end up in the U.S.” Costello concurs with Miller, noting that China’s insurance companies have been allowed by their regulators to invest in foreign real estate only since 2012. “Unless and until they have to cover losses at home, they’re not going to sell these properties,” said Costello. “They’re going to hold them for the long term.”

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Safety First: Explaining Flood of Asian Investors Into Western Real Estate

March 15, 2014 | 12:50 pm | kflogo |

This is a good interview with Alistair Elliott, senior partner and chairman at Knight Frank by Josh Noble of FT about the buying binge of Asian investors in many major global cities like London, Vancouver, Sydney and New York City…”mature financial cities.”

Institutional investors come first, then developers and then private investors. The phenomenon is at it’s very early stages.

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