NEW YORK CITY—Every so often, there's news of a Chinese developer or investor jumping into a local commercial real estate project or two. But, coupled with reports of a declining economy China—with some experts even suggesting this trend could catapult all of the country, if not the world, into a recession—such buy in can seem fleeting.
It's not. There may be slight dips in some of China's industries but that trend is a blip on the radar screen, and it's dovetailing with increased wealth and greater reasons to invest abroad, a panel of experts said this week at this year's East Meets West—Manhattan Luxury Real Estate Connect" conference, sponsored by the Manhattan chapter of the Asian Real Estate Association of America.
"I've been watching the growth of China for 30 years and listening to how it isn't real," said Henry Tang, co-founder and managing director, Clarett Internationaland a Wall Street invesetment banker for 35 years.
"There's a high doubt factor in the Western press but China's economy is alive and well and it will continue to grow," he says. "We're seeing unheard of developers from China; it's only the tip of the iceberg."
Added Sun Yu, head of network research, China confidential, Financial Times, "There is a slowdown in fixed assets. But if you look at consumption, retail sales have been holding up well and the economy is showing strength in many areas. There's a bright future in the coming years."
Also, he continued, "A slowdown doesn't mean decline in income growth. There are emerging industries creating wealth—such as the creators of small to midsized product, and those companies are creating a new crop of millionaires. Newly created wealth is growing at a fast clip and people are seeking a safe place to park their assets in order to diversify. For the Chinese, that's New York City."
Yu declared, "The middle class will become a formidable force in the coming years. It is interested in overseas markets such as the United States. You will see more people buying property and then leasing it out."
David Friedman, co-founder and president, Wealth-X, noted, "Luxury brands investors are pivoting away from China to 'new markets' such as the United States.
Certain US domestic conditions also are enticing Chinese investors, asserted Christine Zhang, member, corporate banking team Bank of China. "The low interest rates being offered in the United States are definitely a factor because in China, they're talking about raising rates."
To reach investors, some unconventional methods are required, the panelists noted. Said Yu, "Education matters most. Even though they want to invest in the United States, Chinese buyers don't have enough information. Your job is to show them how the US system works."
"To do business with Chinese investors, you have to understand the culture," advised Savio Chan, CEO, US China Partners. You don't need to learn to speak Chinese or even Mandarin but understand that when something looks bigger or better, they buy it.
Also, he added, "Young people are the best portal to enter the luxury China/US market because they have the buying power. So network with Chinese students. You'd be surprised at how far that can go in building trust with their families. And find ways to bring them in as partners, not just as limited investors. There is a lot of willingness to work together."
Noted Tang, "There are 250,000 to 300,000 Chinse nationals, who are graduate students, in the United States, and in 10 years it'll be millions. Those are the people who are going to impact real estate decisions in the future."
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
