Chinese Investors, Lenders, Quietly Penetrate Foreign Markets
Investment & Pension Funds Europe reports: In an apt summary of a recent piece Real Capital Analytics (RCA) published in it’s Global Currents publication, Investment & Pension Funds Real Estate (IPE) reviewed Chinese commercial real estate investment trends. IPE stated, “Chinese investors are targeting real estate funds as they switch their attention from domestic residential investments to strategic assets in advanced economies.” As the Chinese government tightens it’s regulations in their domestic market, Chinese investors are turning to foreign markets to place their capital. This logic also applies to China's lenders, who have begun to make their presence known overseas as well.
The original article from RCA affirmed that Chinese investors have, so far, preferred equity investments over direct property acquisitions in foreign markets, as those can sometimes be made public and insight local demur. Private Chinese investors have limited their direct acquisitions to historically safe markets close to China, such as Australia and Hong Kong, while State-controlled entities have ventured further abroad to London and the US.
Chinese investors, particularly State-controlled entities, have had a strong affinity for equity purchases when it comes to investing in commercial real estate. China Investment Corporation – the most visible Chinese sovereign wealth fund with over $300 billion at its disposal – has not been shy over the past two years in investing millions with companies such as Brookfield Asset Management, Morgan Stanley’s property groups in the US and UK, as well as General Growth Properties, a US REIT currently exiting bankruptcy. Through these equity investments, Chinese investors have avoided the anti-foreign publicity that can come from direct property acquisition, while still making solid returns off of commercial real estate in foreign markets where yields are relatively higher than those currently available their traditional Eastern markets.
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Posted by: Nina Turner