Chinese Investors Plow Money Into U.S. Property

Commercial property sales have slowed in the U.S. this year, but according to Wall Street Journal, Chinese investors are continuing to plow money into the market.

So far in 2016, Chinese companies have purchased or are buying 47 U.S. properties worth $9.3 billion, according to deal tracker Real Capital Analytics. That makes them the most active foreign buyers in the U.S., with more than double Canada’s $4.2 billion worth of deals.

By contrast, for all of last year Chinese investors did 71 U.S. deals worth $6 billion.

Chinese investment abroad has soared as the Chinese economy has slumped over the past year. Investors are looking abroad to protect their wealth against the volatility at home, analysts said.

“They’re parking more capital in the safe locations in the West,” said Jim Costello, senior vice president with Real Capital.

In the most recent high-profile transaction, China Life Insurance Group Co. last week provided an unspecified piece of the equity toward the purchase of the Manhattan office tower at 1285 Sixth Ave. in New York, according to people familiar with the matter. A venture led by developer Scott Rechler including China Life paid $1.65 billion for the 1.8 million-square-foot building, whose tenants include UBS Group AG and the law firm Paul, Weiss, Rifkind, Wharton & Garrison.

Mr. Rechler said his firm, RXR Realty LLC, attracted participation from institutional investors because it was able to convince UBS, which occupies about half of the building’s space, to renew its commitment through 2032. Other investors were wary of buying the building as long as UBS’s status was uncertain, especially with signs cropping up of a market slowdown.

“That chilled other investors,” Mr. Rechler said.

The Chinese are streaming into the U.S. even as overall deal activity slows. In the four months of 2016, all investors purchased $135.9 billion worth of commercial property, compared with $171.4 billion during the same period last year, Real Capital said.