This year is shaping up as a great time to start dabbling in real estate investment, if you aren’t already involved in it. Word has come down from the Private Equity Real Estate conference that ended last week in Hong Kong that wealthy Chinese will be shopping for property in the U.S. starting now and going at least through 2016.
Seventy percent of attendees stated in a survey that the U.S. will become the No. 1 recipient of realty funds from China. Put another way, U.S. property will be the highest target for cross-border real estate investment funds from funds from China.
Office property popular among Chinese investors
Hing Yin Lee, the chief honcho at Ping An Trust, said that China is overflowing with liquidity and needs a market to invest capital in order to increase yields.
Analysts declare that office assets are especially popular these days for the Chinese. The Chase Manhattan Plaza has been a target of Chinese real-estate investors. That area accounted for 85 percent of the $7.6 billion that the Chinese spent on commercial real estate in 2013.
Chinese investors also recently purchased a majority stake in the Barclay’s Center at Atlantic Yards in Brooklyn. The Chinese are also making large realty purchases in San Francisco and Los Angeles, according to Gaw Capital Partners.
Lee also asserted that the Chinese prefer full control of their investments and want more decision-making power than most Westerners expect.
Most millionaires own real estate
Overall, a survey by Morgan Stanley indicates that 77 percent of millionaires own real estate. This year will see real estate being treated as the best alternative-asset class to own, according to Morgan.
The Morgan data, which came from its wealth-management unit, also showed that commercial and residential properties were the top picks. One-third of millionaires surveyed said they planned to buy this year.
Data suggested that wealthy investors are fixing their eyes on realty purchases in place of sluggish fixed-income yields. Commercial property has rebounded from its post-recession doldrums in 2009 to gain 71 percent since that time.
Values shot up eight percent between January 2012 and January of this year, according to Green Sheet Advisors, Inc. Home prices in 20 select cities have also rebounded: They’ve increased 24 percent since 2012.
Units at One57 are going for $90 million
Morgan found that wealthy people are moving away from long-term strategies and diving into options such as private equity and real estate. That news will certainly cheer hard money lenders searching for real estate investors.
Wealthy investors are rapidly losing interest in expensive stocks and plodding interest rates that will probably decline over the next two years. For those reasons, real estate will become an attractive alternative for increased returns on income.
The Morgan analysis also mirrored the conclusion of the Hong Kong conference that foreign buyers will be scouting the U.S. for real estate. Manhattan high-rise condominium units at One57 are seeing $90 million contracts.
Wealthy U.S. millionaires consider the purchase of real estate by the Chinese safe because it helps to maintain the value of their property investments.