The New Kids on the Block: Chinese Investors

Chinese investors pumped more than $3 billion into New York real estate last year, nearly 43 percent more than 2013. This only seems to be the tip of the iceberg as foreign investors dominate Manhattan’s condo and townhouse market – accounting for  30 to 40 percent of institutional and individual buyers. Chinese investors are particularly interesting due to their propensity for “central city/urban” real estate, the increasingly powerful yuan, and the overall slowing of Chinese economy. The combination of factors has created the perfect incentive for Chinese investors to expand their assets.

The most apparent factor may come from China’s recent regulatory changes, notably looser restrictions on how much Chinese companies can invest abroad. These new rules have driven Chinese investors towards the American real-estate market, predominantly targeting New York, Los Angeles and Washington, D.C, pouring a total of $33.7 billion into U.S. real estate. Ronald Sernau, co-chair of the real estate practice at law firm Proskauer Rose, stated, “There haven’t been many times in my career where there’s been such a noticeable influx of capital from a particular group of investors.”

Chinese investors are looking to diversify their overseas investments, and by acquiring a variety of properties, this allows them to adequately do so. Still, the bulk of investors are more focused on Manhattan and Brooklyn.

Chinese investors are buying with a sense of urgency. Investors are extremely inexperienced in the local market, and still trying to comprehend key financial lingo. Yet investors are still increasingly interested in buying land even as prices in Manhattan have rose to sky-high records.  This is primarily due to China’s extreme land regulations; land is government property, so “buying” land translates into long-term leases. For the first time Chinese investors and developers are getting a chance to own and control property, making price of little importance. With the Chinese elite comes a new price tag, making a new class of investors ready to sink their teeth into the Big Apple. And with the right brokerage, international investors can dominate this new financial market.