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Analysing the flow of Chinese capital in the United States

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Prominent markets in the US such as New York, Los Angeles and San Francisco have invited significant interest from Chinese investors of late.

According to Colliers International, real estate investment from the Asian country amounted to US$2.25 billion In January and February 2015 alone.

President of Capital Markets & Investment Services for Colliers International in the Americas Brian Ward says that forecasts of the Chinese economy slowing down are true  - growth in the first quarter of 2015 has been the slowest since 2009.  

The current value of Chinese real estate projects that remained unfinished in 2014 is 75 per cent of GDP. In the US this ratio is 10-15 percent of GDP.

The rise of the US dollar has also adversely affected the Chinese Yuan in relation to other currencies, particularly the Euro (20 percent rise in value) and the Yen (50 percent appreciation). This has made Chinese goods and services less competitive in the global market

Adding pressure to the Chinese GDP is investors' increased reliance on leveraging. 

A major reason for improved feasibility of the US property market is the economy which is progressing fairly well. 

According to Mr Ward, the bottom line is that "there is too much capital chasing few investment opportunities". Overseas capital is also making its way outside traditional markets and moving towards Boston, Seattle, Chicago, Denver and Houston.

The real estate expert added that Chinese interest in the US will continue to grow this year. Office assets, which have always been popular, will continue to remain attractive.

Asian investors will find the family real-estate sector particularly appealing. Activity may pick up in the industrial properties market due to the stable risk and return metrics of the segment. 

Date Published: 26 May 2015
Category: General News

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