Chinese outbound capital flows into global commercial real estate markets have exceeded US$10 billion in a year for the first time ever in 2014.  Over the past four years annual China-sourced outbound flows to commercial real estate experienced a compound annual growth rate (CAGR) of approximately 72 per cent to reach over US$10 billion 1  for the year 2014. China accounted for over one quarter of total outbound commercial real estate investment from Asia during 2013 and 2014.

 

The past two years have seen a dramatic rise in outbound capital flows into real estate from Chinese institutional, corporate and High Net Worth Individual (HNWI) investors.  What began with China’s sovereign wealth funds (SWFs) and tier-one insurers purchasing high-profile trophy assets abroad has now spread to acquisitions by mid-tier insurers and corporate investors. Chinese real estate developers have also been active, expanding into overseas markets in a bid to meet increasing demand from mainland HNWIs for residential assets in key destinations.

 

Chinese investors, no longer content paying top price for U.S. trophy properties, are increasingly getting in on the ground floor of development projects they hope will become the next Rockefeller Center or Chrysler Building.

Nowhere is there more foreign-fueled development than in New York, where Chinese investor Greenland is funding much of a $5 billion apartment development in Brooklyn, a Singapore investor is backing a 1,050-foot tower next to the Museum of Modern Art and across the Hudson River, a Chinese developer is planning the tallest building in New Jersey.