Somebody loves investing in U.S. commercial real estate!
Last month China became the largest foreign investor in U.S. real estate – and that’s “all” real estate from commercial to residential. The dollars are big – the projects are big – bigger question: what will be the long term social & economic impact on the U.S. real estate market?
What is it that drives the Chinese investment boom? Chinese investments in U.S. real estate was all but nonexistent 15 years ago, now the total is nearly $50 billion and could reach $200 billion in short order according to a new study tracking the accelerating trend.
The United States is the country of choice for China buyers. Canada in next at No. 2 and Australia at No. 3. Similar moves into U.S. real estate happened with the Japanese back in the 1980’s. Now it’s China’s turn.
Chinese investors see the U.S. as a bargain following the worst U.S. foreclosure crisis since the Great Depression. In fact, some cities and towns across the country are cheaper than properties in Shanghai and Hong Kong even today, years after our semi-soft recovery still limps forward.
Home prices in the U.S., coupled with economic uncertainties in China, and tight regulations designed to curb a fresh housing bubble in China, are driving record Chinese investments into the U.S. residential and commercial real estate markets.
Will the Billions of dollars from China hurt our real estate market? Could a China inspired bubble develop and alter the trajectory of our own bubble recovery, still struggling to find its footing? Will the luxury real estate market become further detached from U.S. influence and ownership?
CNBC has a great article digging into the implications of this new wave of power flowing onto our shores and shoring up segments of our real estate market.
All told, Chinese real estate investors are likely to dish out an estimated 1.1 trillion yuan, or $178 billion, buying up properties and investing in BIG long term development projects.
Here is a quick summary of 3 big deals that are setting the standard for the future in both development style and size of investment, giving the U.S. born investors a high mark to compete against.
The Boston Glove looks into the $500 million investment into the Pier-4 luxury development on the waterfront. 9-story tower and 1-acre park planned for where the iconic American restaurant once thrived.
The take-away: Real estate on American soil has always been firmly planted in the perception of stability. As long as foreign investors see our markets as desirable and a winning long-term gamble, we win with new infrastructure and much needed developments,
We often forget how safe and stable our climate is here at home, and this new surge of foreign dollars should remind us that “waiting” to buy is not the best bet. Buy “now” and wait is our best advice!
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