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Chinese Companies Rushing To Buy Manhattan Commercial Property

Posted by: : Paul EbelingPosted on: March 3, 2015 Chinese Companies Rushing To Buy Manhattan Commercial Property

Chinese Companies Rushing To Buy Manhattan Commercial Property


Chinese investors’ have growing appetite for high-profile US commercial properties has been highlighted, as China’s Anbang Insurance Group Co., the buyer of luxury hotel Waldorf Astoria, has agreed to buy 21 floors of an office building on Fifth Avenue in Manhattan, New York City, recently.

The coveted building is located at 717 Fifth Avenue on East 56th Street.

Anbang will buy it from Blackstone Group (NYSE:BX), the leading US private equity firm. The cost would be between US$400 to  500-M. It is said that Anbang would only buy the office portion, which starts from floor 5 to 26. The 1st 4 floors of retail sapce are not included.

This Chinese insurer has made headlines with the acquisition of Waldorf Astoria, the landmark hotel on Park Avenue last October. Under the agreement, Anbang purchased the iconic luxury hotel for US$1.95-B from Hilton Worldwide Holdings (NYSE:HLT).

Anbang Insurance Group Co. is a China’s comprehensive group in insurance business. According to corporate sources, Anbang has been developing stably and reached a total asset of CNY 800-B (about US$130-B).

Other Chinese companies are also caught in the rush to buy into Manhattan commercial real estate, which is regarded as a “safe heaven.”

In June 2013, the family of Zhang Xin, CEO of Chinese real estate developer Soho, together with a Brazilian partner bought a 40% stake in General Motors Building for about US$700-M. Shanghai-based Fosun International Ltd. bought the One Chase Manhattan Plaza, the landmark building of lower Manhattan in December 2013 from JP Morgan Chase & Co. (NYSE:JPM) for US$ 725-M.

Also, the Bank of China (OTCMKT:BACHY) reached a deal in December to buy a Manhattan office tower for about US$600-M.

Chinese companies believe that they can  achieve stable returns from the US commercial real estate.

“Given the strong performance in the past, the group intends to realize long-term stable investment return by investing in high quality real properties in North America. Going forward it will increase the share of overseas assets in asset allocation, taking Europe and North America as priority areas,” Anbang said after its Waldorf acquisition.

The recovering of US  economy has boosted the rents and transactions of office buildings, especially in big cities like New York. And foreign buyers are going after top-of-the-line properties in Manhattan.

The New York City property investment sales market saw 442 deals close last year, shattering the previous record of 346 deals in Y 2007. Y 2014 was also the 2nd most active year in terms of USD volume, with US$39.8-B in business volume, 2nd  only to the US$48.5-B struck in Y 2007, according to a report of Jones Lang LaSalle (NYSE:JLL), a real estate consulting company.

Looking forward, “foreign capital is likely to continue to aggressively pursue opportunities, seeking long-term capital appreciation in what is viewed as the world’s largest and most stable market. The dollar is also rising against major currencies. Dividends and future sale prices will be exchanged in appreciated dollars to foreign investors. With many local private market and private equity funds also actively looking for new properties, there will be no shortage of demand for Manhattan office buildings, ” Commercial Real Estate service company Colliers International said in a recent report.

For many Chinese companies, overseas investment is also a kind of asset allocation diversification. Anbang said it has developed a well-structured global strategy to seize the opportunities brought by economic globalization and deliver services to customers around the world following their steps of “Going Global. ”

Stay tuned…


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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