Chinese investors take bite of Big Apple
Updated: 2015-03-04 11:14
By Paul Welitzkin in New York(China Daily USA)
From left: Daniel Rosen of the Rhodium Group, Erik Horvat of Fosun International Ltd, William M. Shanahan of CBRE Inc, Tram N. Nguyen, Stroock partner, Richard Siu of F&T Group, former New York State Attorney General and Stroock partner Robert Abrams, and Stroock partner Ross F. Moskowitz discussed Asians investing in New York City on Tuesday in New York. Provided to China Daily
New York City will remain a top destination for Chinese investment because of an abundance of prime opportunities and investor comfort with the Big Apple, a panel of investment observers said on Tuesday.
Noting an increase in high-profile Chinese investments in New York recently including the famed Waldorf-Astoria Hotel, Daniel Rosen, a partner at consultancy Rhodium Group, said the city is poised to attract even more investment from the mainland.
"About 99 percent of Chinese investment is still at home in China. We are tracking about $15 billion in Chinese investment in the US right now. That is about to grow much higher," said Rosen.
He made his comments during a seminar on Asians investing in New York City, especially by Chinese. Joining him in the discussion were Erik Horvat, managing director of Chinese conglomerate Fosun International Ltd, William M. Shanahan, vice-chairman of capital markets group at commercial real estate concern CBRE Inc and Richard Siu, chief financial officer at F&T Group, a Chinese investment firm in the US. It was hosted by the law firm of Stroock & Stroock & Lavan LLP.
Rosen said one reason why Chinese investments in the city will grow substantially is that Chinese are tired of small returns from US Treasury bonds. In December of 2014, China held about $1.25 trillion in T-bills.
Chinese have decided to get out of T-bills that pay about 1 percent and move into a portfolio that includes property, he said.
CBRE's Shanahan said New York City is a first stop for most off-shore investors, including the Chinese. "New York City is a market that is known for its transparency and one that you can get information on quickly," said Horvat, a former director of World Trade Center redevelopment at the Port Authority of New York and New Jersey.
F&T's Siu said his company has been investing in New York for decades, and he said there is an ease of investing in New York real estate.
"F&T came here 30 years ago and we are now the largest landowner in Flushing, which has become very popular with the Chinese," he said of the Queens community. "People like investing there because it feels comfortable. We can walk the streets (in Flushing) and it feels like a Chinese city."
Siu said F&T is starting to consider investments in other areas of New York. "We are looking at all of the boroughs as it is a challenge to find good investments opportunities now," he said in acknowledging the sometimes pricey status of New York properties.
Horvat said Fosun is looking to invest outside of New York because of better value.
Panel members agreed that London is the top competitor to the US for Chinese money.
"It's amazing how the US tracks the London market usually by about three to six months," said Shanahan, noting that London office rents started to increase about six months ago and "we are now starting to see the same happen here."
Rosen said the Chinese have also been investing in Vancouver and Sydney real estate.
Panel members said currency exchange rates and the future of interest rates in the US could pose a problem for outside investors this year. "The consensus is that interest rates in the US will go up this up," said Siu.