Analysis

Chinese investment in US real estate

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The current Chinese inflow can potentially reshape foreign property ownership in the United States. Read this Closer Look to learn what this means for the US commercial real estate players.

Chinese investors have been riding the US commercial real estate (CRE) wave, perhaps motivated by the gradual shift in the Chinese government’s policy to promote outbound investments and their preference for investing in real estate that provides comparatively modest and stable returns. From January 2005 to March 2014, Chinese investors made direct acquisitions of $8.5 billion in US CRE. Of this, $5.8 billion has been invested in the 15-month period, January 2013 through March 2014. Consequently, China has emerged as the second-largest foreign investor, after Canada, with an eight percent share of the total cross-border investments in US CRE.

What does this mean for the US CRE sector? Traditionally, Canada and Australia have been the top international investors in US CRE. However, with the recent inflow of Chinese capital, the US property ownership profile is likely to change. According to Dan Cashdan, senior marketing director, HFF Securities, “there is an unusual flow of funds and this flood of capital can help reshape foreign ownership in the future. Such reshaping of flow of funds happens once in every 15 years.”

View this Closer Look to read about Chinese investment strategy in the US and ways US real estate players can benefit from the trend.

The Deloitte Center for Financial Services Closer Look series provides quick insights on deep dive issues.

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