CHICAGO—Chinese investors began pouring a lot of money into overseas commercial real estate during 2013, purchasing properties worth $7.6 billion, an increase of nearly 125% over the previous year, according to data just released by Chicago-based Jones Lang LaSalle. In 2012 and 2011, Chinese investors spent $3.3 billion and $2.9 billion, respectively.
The New York and London markets attracted the most capital. Chinese investors spent about $2.9 billion on New York property in 2013, up from about $200 million in 2012, and a little more than $2.1 billion on London real estate. As reported in GlobeSt.com late last year, Chinese interest in US real estate has grown, with a lot of interest also shown in Los Angeles and San Francisco. Chicago, however, has not attracted much of this investment since Chinese investors have not yet gotten familiar with the city.
“The initial catalyst for this dramatic rise in outbound investment has been the introduction of the 'Go Global' policy by the Chinese government,” says Alistair Meadows, director and head of JLL's International Capital Group in Asia Pacific. “This relaxation of government policy has enabled and encouraged outbound investment across all sectors of the economy. As a consequence insurance groups, developers, and ultra-high net worth individuals, have increasing sought to diversify their real estate portfolios internationally in the last 12-18 months. This is a long term structural shift where Chinese capital will become a permanent and growing feature of the global real estate markets.”
The other top cities for Chinese investors were Singapore at $953 million, Sydney, Australia with $423 million and Manchester in the UK with $245 million. The US total in 2013 was $3.1 billion, up from $264 million in 2012. The UK increased from $1.3 billion in 2012 to $2.3 billion last year. Singapore did not see any investment from China in 2012.
“Although individual large transactions can account for a large proportion of investment in a city, for example the GM Building and One Chase Manhattan Plaza in New York, or the Grand Orchard Hotel in Singapore,” says David Green-Morgan, a research director at JLL, “we are seeing a definite increase in interest in overseas markets from Chinese investors.”
“Most mainstream Chinese companies haven't started investing abroad yet; the groups that we're seeing in the U.S. are the most entrepreneurial,” adds Rob Hielscher, managing director, JLL's International Capital Group. “This is just the tip of the iceberg.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
