The article talks about the purchase of the Waldorf-Astoria hotel, a very famous and world renowned hotel being purchase by a Chinese insurance company. Obama was supposed to stay in the hotel during his visit to New York for a UN meeting, but changed to another hotel citing security concerns.
How Chinese Investors Found a Safe Haven at the Waldorf-Astoria
NEW YORK (TheStreet) -- Macroeconomic turmoil is once again putting the U.S. real estate market in the spotlight, but this time it's part of the solution, not the problem.
American real estate is becoming a refuge for Chinese investors, particularly insurance companies that may amass $3.32 trillion in premiums by 2020, who are seeking reliable returns as the world's second-largest economy slows and its stock markets decline, according to both advisers and industry executives.
Developers, financial institutions and high net-worth individuals are seeking "safe investments in income-producing commercial and residential investments rather than luxurious real estate purchases for personal use," said international real estate attorney Edward Mermelstein, who has spent 20 years advising clients on such transactions.
It's a strategy not unlike the one players use to get ahead in Hasbro's (HAS - Get Report) Monopoly, buying real estate and adding revenue-generating houses and hotels.
Especially since August, when China's devaluation of its currency combined with an 8% drop on the Shanghai Stock Exchange to drag down equity prices worldwide, Mermelstein has seen a "positive and consistent interest" by Chinese investors. "There's an argument that this is a flight to safety," he said. "This is very much a flight to safety."
That flight builds on already increasing interest in European and U.S. assets from Chinese investors, whose purchases outside their country grew 11% to an estimated $120 billion in 2014, according to global accounting firm KPMG. High-value real estate deals in that period included the $1.95 billion purchase of New York's Waldorf Astoria hotel by insurance provider Anbang.
"Chinese real estate developers are eager to capture potentially higher and more stable returns overseas," KPMG noted in its "China Outlook 2015" report. "The overseas real estate market has also generated interest from Chinese companies in other industries, particularly insurance companies."
Chinese insurers have been allowed to invest as much as 15% of their assets in overseas real estate since 2012, though as of last October, they had invested only about 1%, KPMG said. Individuals are poised to gain more flexibility, too, with China's cabinet releasing a plan earlier this year that would allow people with at least $160,000 (1 million yuan) of financial assets and businesses to directly invest in real estate, stocks, and bonds in foreign markets, the Wall Street Journal has reported. The option would be limited to designated free-trade zones.
"What's going on in China has not dissuaded them one bit from continuing to look at and pursue the transactions they're working on," said Bob Knakal, Cushman & Wakefield's chairman of New York investment sales, who's working on several transactions with Chinese investors, including a $300 million project in Manhattan. "We have seen more investors coming into the market that want to deploy capital here."
The Chinese government doesn't want too much capital to flow out of the country, however.
"The government has trade-offs," said Tailan Chi, an international business professor at the University of Kansas. "First, they want to open up the capital markets gradually, so they can say the Chinese currency is largely determined by the market. Secondly, they want to prevent very large inflows or outflows of capital that would push the value of the Chinese currency up or down too quickly."
Source: TheStreet.com, Valerie Young
http://www.thestreet.com/story/13280655/1/china-boosts-spending-on-u-s-real-estate-amid-turmoil-at-home.html
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