Thursday, May 16, 2013

Chinese playing Global Monopoly in U.S.

China is the largest holder of residential mortgage-backed securities issued by U.S. government- sponsored enterprises, and Chinese nationals are the largest buyers of U.S. homes. And now, China has rapidly vaulted into the top ranks of foreign investors in commercial real estate  ASIA SOCIETY Report

Is America becoming a stay-put society?

ONE disturbing trend of recent decades is the decline in Americans' geographic mobility. We pride ourselves on being a get-up-and-go people. In particular, we see ourselves as willing to move for opportunity. If there aren't jobs here, we'll go there. Our "flexibility" is reputedly a large economic advantage, especially compared to Europe's, where people tend to stay put. It's a flattering self-portrait now marred by the reality of more Americans also staying put.
The dramatic drop in geographic mobility is usually taken as yet more evidence that the US economy has become less dynamic and flexible. Examples abound. Just recently, the Brookings Institution - a Washington think tank - released a report indicating a decline in entrepreneurial success. The number of firms being created is falling, and in recent years there have been more company failures (470,591 in 2011) than start-ups (409,209).
It all seems of a piece. Firms are less innovative and hardy. Workers are more rigid and immobile. The trends are unmistakable.
The Census Bureau regularly asks Americans whether they're living in the same place this year as last. In 1948, one in five Americans (20.2 per cent) reported moving in the previous year. Most (13.6 per cent) stayed in the same county, but sizable minorities went elsewhere in the state (3.3 per cent) or relocated to a different state (3.1 per cent). Nearly four decades later in 1985, the patterns were virtually identical: 20.2 per cent moved, with insignificant shifts among their destinations. (In both years, there was also a small group that migrated from abroad.)

Chinese take Manhattan
Wealthy Chinese are pouring money into real estate in New York and some other major cities around the world, including London and Sydney, as they seek safe havens for their cash and also establish a base for their children to get an education in the West 
[NEW YORK] For the first time, the Chinese have become the biggest foreign buyers of apartments in Manhattan, real estate brokers estimate, taking the mantle from the Russians - whose activity has dropped off since the unrest in Ukraine and the imposition of sanctions against Russia by the United States.
Wealthy Chinese are pouring money into real estate in New York and some other major cities around the world, including London and Sydney, as they seek safe havens for their cash and also establish a base for their children to get an education in the West.
Reuters asked five of the top real estate brokerages for their ranking of foreign buyers in New York City. The Chinese ranked first in both volume and value of sales in all their estimates. Opinions differed on just how the Russians, Europeans and South Americans stacked up next.
There are no official figures collected on the national and ethnic backgrounds of home buyers because of US fair housing laws, designed to protect against discrimination.

Chinese Investing in the U.S.

Investors from China are not as well versed in a broad spectrum of international investment opportunities as they emerge from China’s limited markets and begin to play in the global financial system. While their analytical skills and strategic vision are outstanding, their experience in bond and equity markets, not to mention private equity or western-style venture capital, is generally very minimal. But their understanding of real estate assets is almost reflexive.

Recent high-profile commercial transactions include:

  • In February, Vanke a major development company, made its first North American investment when it formed a joint venture with Tishman Speyer to build luxury condominiums in San Francisco. Another Chinese developer has agreed to provide funding for a $1.5 billion project that will transform 65 industrial acres in Oakland, CA into a waterfront neighborhood with 3,100 homes.
  • Zhang Xin, who is the chief executive of SOHO China and one of the richest women in the world, paid close to $600 million in 2011 for a 49 percent stake in the Park Avenue Plaza, a Midtown Manhattan skyscraper.
  • In 2011, the real estate arm of the HNA Group, a Chinese airline company, saved an office building at 1180 Sixth Avenue from foreclosure for $265 million. HNA also bought the boutique Cassa Hotel in Times Square.
  • Chinese investors or firms have also bought large hotels in California, including the Sheraton Universal in Universal City; the Crowne Plaza in Burlingame, near the San Francisco airport; and the Hilton Ontario in Ontario. They have also purchased a major riverfront parcel in Toledo, Ohio, and, earlier this year, an office building in Morristown, NJ.
  • Chinese real estate firm Wanda recently acquired 91.81 percent of British yacht maker Sunseeker for US$500 million, has planned to invest US$1 billion in a five-star 160-room London hotel on South Bank overlooking the Thames River, and set the record for the largest Chinese takeover of an American company when it purchased the AMC cinema chain for US$2.6 billion.
  • A recent Chinese romantic comedy, Finding Mr. Right—or Beijing Meets Seattle (北京遇上西雅图) in Chinese—is giving Seattle a significant media splash in China. Chinese investors can obtain “investor visas” from Canada and the United States that allow them to move their families to Seattle in exchange for investing in job-creating projects
  • Tiger immigrants
-- JING DAILY    2013 July 16

China looking into investing foreign reserves in US property
Investment safety will be top priority as it seeks to tap the market recover

[BEIJING] China is studying the possibility of investing a portion of its US$3.4 trillion in foreign exchange reserves in US real estate, said two people with direct knowledge of the situation.
The State Administration of Foreign Exchange began the study after seeing signs of a recovery in the US property market, said the people, who asked not to be identified as they weren't authorised to speak publicly about the matter.
China may acquire properties, invest in real estate funds or buy stakes in property companies, they said. The safety of the investments will be the top priority, said the people, who didn't elaborate on a timetable or other details.
China has set up an operation in New York to make alternative investments in the US, an effort by the country's foreign exchange reserves manager to diversify away from US government debt, the Wall Street Journal reported last week, citing people it didn't identify.


US Bank Tower: It has 72 floors of office space, six levels of underground parking and covers an area of about 1.4m sq ft, with an occupancy rate of 56.3%.

[SINGAPORE] It pays to keep your chin up even after two failed takeover attempts, especially for Overseas Union Enterprise (OUE). Now, the property group will be able to look upwards at the tallest building in California that it will soon own.

The property group announced yesterday that it will buy the 1,018-foot- high US Bank Tower in downtown Los Angeles for US$367.5 million. The tower is the 10th tallest building in the United States, almost three-quarters the height of the Empire State Building in New York. It has 72 floors of office space, six levels of underground parking and covers an area of about 1.4 million square feet.

As part of the deal, OUE is also buying the accompanying Maguire Gardens and a car park facility.

Of the US$367.5 million price tag, OUE has put down US$7.5 million in cash with the signing of the agreement. The rest will be payable in cash between mid-June and early July when the deal closes, the group said.

SingHaiyi buys for Vietnam Town project in San Jose US$33.05m
SINGHAIYI Group Ltd said on Monday that it has successfully acquired the full equity stake of Vietnam Town (VT), a partially completed commercial condominium development project in San Jose, California, US, for US$33.05 million.
The acquisition price includes US$29.8 million to repay an outstanding secured debt, and the balance US$3.25 million for the freehold project, comprising several parcels of land sitting on a total site size of 853,502 square feet.
Of the 256 planned condominium units - each about 1,000 square feet - 115 have been built, of which 64 have been sold.
Launched in 2005, the project went into difficulties in 2009 and was subsequently placed under receivership when its developer lost funding for the project.

  • The Wall Street Journal
A venture of Crown Acquisitions and Highgate has reached a deal to buy a 27-story office and retail tower near Central Park in Manhattan for $1.3 billion, the most paid for a Manhattan commercial property in more than two years.
The venture is buying the glass and steel building at 650 Madison Avenue from Carlyle Groupa global asset manager. Crown, founded by Stanley Chera, is a developer primarily of retail property in New York, Miami and other parts of North America. Highgate is an investment firm that has purchased more than $7 billion in real estate assets.
The deal is the latest sign of strong investor appetite for Manhattan trophy property, which has sent prices soaring. Carlyle is selling the property for over $2,100 a square foot, one of the highest prices ever paid for a Manhattan commercial tower.
Carlyle purchased the property in April 2008 just before the commercial real estate market took a nose dive as a result of the economic downturn. But values lately have returned to record levels for top properties in the hottest markets such as New York and San Francisco.
Since purchasing the property, Carlyle signed leases for more than 400,000 square feet, increasing the building's value.
At this point, it is tricky to calculate how much Carlyle made off the sale to Crown and Highgate, although the deal was profitable. Carlyle purchased the building for $680 million in 2008, according to a person familiar with the matter. But Carlyle also would have had to invest additional capital to lease so much space.
The tower at 650 Madison, between 59th and 60th streets, is the corporate headquarters for Polo Ralph Lauren Corp., which leases 275,000 square feet. The property's retail tenants include Crate & Barrel and luxury designer Tod's.
Originally developed in the late 1950s, the building was redeveloped and expanded in 1987 to its current 600,000 square feet.
The Carlyle Group had $176 billion worth of assets under management as of March 31. 


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