Asia’s rich now are buying small office buildings, retail shops and branded
Asia’s rich now are buying small office buildings, retail shops and branded hotels in Europe and North America, searching for stable returns and diversifying away from home markets they view as increasingly risky and volatile.
In the first six months of this year, Asian private investors poured $1.9 billion into U.S. commercial properties, according to data from Real Capital Analytics. That total already dwarfs the $551.4 million worth of U.S. commercial real estate purchased by Asian private investors in 2012.
Trophy assets still draw attention, including such deals as Chinese developer Zhang Xin’s acquisition of a minority stake in the General Motors Building in New York in June. But real-estate insiders around the world say they are seeing a surge of interest by less-wealthy Asians for deals worth less than $30 million, which are typically the domain of local, private investors.
Real Capital added that its figures are likely underreporting the trend, since the firm doesn’t track transactions below the $2.5 million mark. Moreover, the firm can’t account for investments foreign investors made through a local partner and through third-party entities such as an unlisted real-estate-investment trust. As well, the firm admitted it doesn’t capture all the flows into the U.S. via the popular EB-5 investor-immigration program, which grants five-year visas to those who invest as little as $500,000 in a business—most often, real-estate projects—that create jobs for U.S. workers.
Many wealthy Asians, lots of whom made their fortunes in real estate in their home countries, are flush with cash and looking to diversify out of their native lands. They are attracted to the long, stable rents of more-mature Western markets, which often offer better returns than the ultrahot real-estate markets of Hong Kong and Singapore, the main destinations for offshore Asian investment.
London is an especially popular destination for Asian money, and the city has also seen a new type of investor: smaller in net worth, though still eager to buy.