Chinese Property Investment Hits $30 Billion In 2015 With New York As A Major Aim For Investors

It is very notable how Chinese buyers continuously invest in major western real estate markets. According to Knight Frank’s most recent research, the volume of transactions rose to $30 billion in 2015, which is double the levels of 2014. Paul Hart, the Executive Director of Greater China at the property consultancy firm states that “the key gateway” locations of Manhattan, London, and the Australian cities of Sydney and Melbourne all account for more than 40% of last year’s transactions.

According to the report, there is an increase of developers and insurance companies participating in major deals amongst Chinese buyers. Of the top twenty investors that made offshore investments in 2015, fourteen were developers and six were insurance companies.

Knight Frank stated that Chinese insurance giants made amazing transactions by the purchase of six out of the top ten deals worldwide. These include Anbang Insurance’s high-profile acquisitions of the prestigious and iconic hotel “Waldorf Astoria” for $1.95 billion and Heron Tower in London for $1.172 billion. Taiping Life Insurance bought a luxury apartment building at 111 Murray Street for $820 million. In the spirit of the Chinese Lunar New Year on February 6, 2016, the Empire State Building was lit up in red and gold.

Hart went further to describe this investment spree as the beginning of levels of investment by insurance companies and that these entities will become a dominant force for many years ahead. He also added that it is a positive thing for the Chinese consumers as it allows diversity of risks and freedom of choice in investment.

Since 2012, China permitted domestic insurers to invest in real estate for the first time and offered much more support in the following years, encouraging domestic employers to deploy more capital overseas.

According to the report, it is expected that Chinese property investment abroad will keep getting stronger in 2016 as a result of the economic problems in China which are pushing companies to diversify and invest offshore.

New York is on record as the No.1 destination for Chinese investment. The bulk of Chinese capital, at $5.78 billion, was spent in Manhattan - a five-fold increase from the previous year - and major Chinese institutions have dominated transactions in the Big Apple. In addition, there were moves made by small/mid-scale companies and developers to areas outside of Manhattan.

Knight Frank’s David Li, Director and Head of Research and Consultancy, and Paul Hart, Executive Director of Greater China, at a press conference on February 17, 2016 made it clear that these smaller companies are not finding favorable deals in Manhattan. So they are moving to the hubs outside of Manhattan where they achieve quick and easy access to properties at lower price points and favorable returns.

From the perspective of specialists/experts in the industry, the effect of “tier-ing” has been observed only in the US market, stating that the US is a solid ground for smaller Chinese investors to build a profitable offshore exposure and investment.

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