San Francisco, New York and Los Angeles Top Targets for Asian Investors
October 30, 2014, Beijing – Asian investors are on track to spend more on U.S. multifamily assets in 2014 than at any other point in history, according to the latest research from CBRE.
U.S. multifamily has seen a significant increase in investment volumes by Asian buyers so far in 2014, with US$522 million of transactions completed from January through August. This figure has already surpassed the full year total for 2012 (US$356 million) by a considerable margin and is close to bettering the 2013 total (US$537 million).
The jump in buying activity by Asian investors, particularly from Japan and China, is the most significant shift in terms of buyer nationality in 2014. Asian investors are now responsible for 18% of cross-regional multifamily investment in the U.S.—an increase of 8%—as purchases by European and Middle Eastern countries decline slightly. Canada continues to be the overall leader in foreign multifamily investment into the U.S.
Since January 2013, Asian buyers have targeted a range of multifamily assets in U.S. locations, with San Francisco attracting the most investment at more than US$326 million, followed by Los Angeles at US$252 million and New York at US$175 million. Asian investors have been focused on single assets with just one of the 27 multifamily acquisitions in this time period a portfolio, compared to investors from the rest of the world who made at least 20% of their acquisitions in portfolio assets.
Marc Giuffrida, Executive Director, CBRE Global Capital Markets, commented, “residential is a well understood asset class in Asia and we are seeing strong interest in U.S. markets from China, Japan, and Hong Kong. The relative performance and availability of multifamily assets in the U.S. compared to home markets is extremely attractive to investors. This can be seen in the diversity and depth of the capital looking to allocate into multifamily. Asian capital may not be making the biggest trades at this time, but there is solid interest, particularly in the lower lot sizes where private wealth can play.”
Peter Donovan, Senior Managing Director, Multifamily, CBRE, added, “Asian investors are attracted to markets where fellow nationals are likely to live, and to U.S. metropolitan areas that closely mirror the investment conditions found in major Asian cities such as Beijing or Hong Kong. This makes densely populated urban centers such as San Francisco, Los Angeles and New York obvious choices. Investors are also considering multifamily opportunities in markets such as Seattle, Salt Lake City, Jacksonville, and South Florida where the strategy is generally to target areas surrounding universities or other enclaves that attract a disproportionate number of Chinese nationals, whom developers believe can be enticed as potential tenants or investment buyers of condo units.”
Cross-border buyers overall have targeted a range of multifamily assets in U.S. locations since January 2013, with the majority of cross-border multifamily investment to date in 2014 being made in primary and secondary metros. This is in contrast to 2013 when secondary and tertiary metro acquisitions dominated the first eight months of the year. Cross-border investors have preferred purchasing newly built core/core-plus product in 2014, compared to a significantly greater focus on slightly older core-plus/value-add product in 2013.
“According to the report, Chinese Capital Tapping into Overseas Real Estate Markets, released in 2013 by CBRE Research, real estate investing particularly in residential property, has always been regarded as a key gateway to fortune as well as a conventional investment channel for Chinese individual investors. For High-Net-Worth Individuals, tapping into the overseas real estate market is not a choice made only after considering factors like immigration, children’s education, wealth preservation and appreciation, but also as a result of the declining real estate market and limited investment channels in China in recent years. Given the growing ‘outward’ trend, together with the increasing number of Chinese High-Net-Worth Individuals, Chinese property developers and institutional investors have increased the scale of investment in overseas real estate markets to meet demand. As a highly developed western country and a traditional destination for higher education and immigration, the U.S. is preferred by the individual overseas investment, encouraged by its multi-unit apartment complexes which fit Chinese lifestyle habits along with easier transaction procedures. Therefore, it is not difficult to explain why investment in US properties has continued to increase for many years.” Said Frank Chen , Executive Director, Head of CBRE Research, China.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
