China and US ‘to top cross-border property investment’
By 2016, Chinese cross-border real estate funds flowing in to the United States will be the highest in the world, beating the current US$1.3 billion from Singapore to the UK, say private equity experts
Within the next two years, the world’s leading cross-border property market will be between China and the United States, experts predict.
As interest from Chinese investors continues to build, the US property market is set to become the world’s top recipient of cross-border real estate funds from a single country, private equity investors believe.
According to 70% of investors polled on at the annual Private Equity Real Estate conference, PERE Summit: Asia 2014, held in Hong Kong, which ended yesterday (Thursday) the United States will become the world leading recipient of real estate funds from China sometime before 2016, the Wall Steet Journal blog has reported.
In the last two years, the biggest cross-border property investment has been from Singapore, which put US$1.3billion into the UK market. Chinese investment into the US is currently in fifth place, but PERE Summit delegates say it is set to rise to the top.
Hing Yin Lee, Senior Executive Director of the real estate investment department at Ping An Trust, says, “Liquidity is really abundant in China, there’s a lot of hidden liquidity in institutions that they need to deploy capital. Cap rates have been compressed to very low levels they need to look for yield and opportunity.”
Among leading targets for High Net Worth Investors, commercial investors and developers are the gateway cities of New York, Los Angeles and San Francisco, say sector experts.
Chinese investment in overseas property is set to at least double in 2014, according to the Asia Forecast 2014, published by Colliers International.
“Given that Asia is currently in a very different property cycle than the US and Europe, its investors will become more active in outbound investment, focusing on key gateway cities, such as London, New York and Chicago.
“Chinese investors, in particular, are expected to look for overseas real estate opportunities with better yields and the strategic benefits of portfolio diversification.”
Other countries are also desperate to pick up Chinese foreign property investment and are forming new partnerships.
RE/MAX Australia New Zealand says it wants to make sure its properties are effectively marketed to the Chinese and it has just signed a deal with leading Chinese-language overseas property portal, Juwai.com.
Michael Davoren, managing director of RE/MAX Australia and New Zealand says, “Our agents have asked for this. Our vendors have asked for this. Everyone wants to make sure their properties are marketed in China.”
According to Juwai.com data, Australia and New Zealand are favourite destinations for Chinese homebuyers, thanks to their relative proximity to China, good education opportunities, protected natural environment and stable real estate markets and economy.
While Chinese buyers favour Auckland as the top destination in New Zealand, places like Kerikeri, Dunedin, Taupo and Northland are also popular hot spots.
*OPP has just appointed Sophia Liu, who has extensive business development, sales and marketing experience, as its new Commercial Director in China. She aims to expand the OPP business in the region, including developing OPPLive China and OPP China magazine (see http://www.opp-connect.com/28/02/2014/opp-appoints-new-commercial-director-in-china/).
OPP has also recently opened an office in Singapore, headed by Managing Director, Harlow Russell and Commercial Director, Cedric De Souza.
For the full WSJ blog story, go to: http://on.wsj.com/1jFMcUF
By Adrian Bishop, Editor, OPP Connect