Chinese CRE Investment in U.S. Jumps

China moved up three spots from last year to become the second-largest source of outbound property investment after the United States, reported DTZ/Cushman & Wakefield.

Chinese investors pumped $17 billion into cross-border real estate over the first five months of 2016 compared to $19 billion from U.S. investors, DTZ/Cushman & Wakefield’s China Outbound Investment CapitalWatch report said. Last year China ranked fifth behind the U.S., Canada, Hong Kong and Singapore. 

DTZ/Cushman & Wakefield Managing Director of Research for Greater China James Shepherd said the wave of Chinese investment to the U.S. outpaced last year’s total by 143 percent due to dollar appreciation and a recovering U.S. economy.

“Chinese investors’ presence in cross-border real estate is forecast to achieve 50 percent growth this year,” Shepherd said. “With the expectation that the dollar will continue to strengthen and the U.S. economy will maintain steady growth, the prospect of even stronger Chinese interest in the U.S. market in the remainder of 2016 is viable.”

The report said 62 percent of Chinese outbound property investment–$10.6 billion–went to the U.S. during 2016’s first five months. This represented a marked contrast from previous periods when Chinese investors tended to spread capital among the U.S., Hong Kong and Australia. 

Office remains the most popular asset class for Chinese investors, accounting for 50 percent of total outbound Chinese capital from January through May. Hotel transactions followed closely behind, accounting for 42 percent of all Chinese outbound transactions and reaching $7.1 billion over the first five months of the year, already 28 percent more than recorded all of last year.

DTZ/Cushman & Wakefield Head of Outbound Investment Justina Fan said supportive U.S. visa policy made it easier for potential Chinese investors and tourists to travel to the U.S., “bearing fruit in the form of a flood of Chinese buyers of U.S. hotel properties over the last several years.”

By locality, New York City was again the hottest overseas target for Chinese property investors. DTZ/Cushman & Wakefield estimated the city received $3.5 billion of capital during the first five months of the year.