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Asian Investors Set to Change U.S. Urban Landscapes

Posted May 1st 2015

Vertical campuses will transform U.S. cities, according to many presenters at the Asian Real Estate Association of America’s 2015 Global & Luxury Summit, April 19-21, in Chicago. The confluence of wealthy Asian investors and millennial preferences for living where they can walk to work, to schools and libraries, shopping centers, and entertainment is setting the stage for these revitalizations of downtowns.

“International investment in U.S. commercial real estate is poised for massive acceleration, especially from wealthy Asians,” says CCIM President Mark Macek, CCIM. “The AREAA Summit was an eye opener for considering how commercial real estate professionals can take advantage of the development of vertical campuses and work in conjunction with global investors to change our cities. These investors want to collaborate and find professionals who they can trust and who have the knowledge and connections to get the deals done.”

While many Asians have gained wealth during the past two decades, the Chinese have made the biggest strides, according to the Hurun Report. To place their rapid acquisition of wealth in perspective, China has 458 billionaires now or nearly 25 percent of the global billionaires, which is only exceeded by the United States. Of those billionaires, 25 percent made their wealth in real estate, and most are comfortable making real estate investments overseas. And the United States is the overwhelming first choice for international property investment at 60 percent compared to the next most popular choices of Canada at 22 percent and Europe at 7 percent.

“Urbanization is the biggest trend with a new kind of downtown living that creates urban campuses where residents can walk or ride their bikes to business and cultural activities,” says Elizabeth Harrington, North American publisher at large for the Hurun Report and one of the AREAA Summit presenters. “Where the children of the wealthy Chinese land, their investments will follow.”

About 80 percent of the wealthiest Chinese want to send their children overseas to school. The United States is the No. 1 destination, with children starting in either middle or high school to prepare them for applying to U.S. universities, according to the Hurun Report.

“The best way to work with Chinese investors is to build a relationship and become a trusted friend to them,” says Harrington, who was one of the first Westerners to work in China beginning 30 years ago. “They are looking for investment growth, a safe haven for their funds, and a U.S. education for their children.”

The anticipated explosion in U.S. commercial real estate is beginning. A Chinese real estate investment company, the Greenland Group, has invested in two major projects—Metropolis in Los Angeles and Pacific Place in Brooklyn, N.Y. Another Chinese powerhouse investor, the Wanda Group, has announced its first major development in Chicago and a large commercial real estate investment in Beverly Hills, Calif.

“Property is global. The question is where next?” says Ryan Gonsalves, HSBC—Hong Kong, one of the presenters at the AREAA Summit. The CCIM Institute is helping its members find the answers to that key question because not all in commercial real estate is a level playing field.

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