While global Chinese outbound transaction volumes increased from US$5.6 billion in 2012 to US$11.3 billion in 2013, JLL is forecasting this figure to reach US$15 billion by the end of this year.
One of the United States’ gateway cities, Los Angeles’ proximity to Asia coupled with its need for development has led to a rise of Chinese investment in the market to such an extent that Los Angeles is second top with US$780 million in Chinese investment in 2014.
‘Chinese investors are finding themselves increasingly comfortable in LA, which is a testament to the market’s strong fundamentals, opportunities to obtain secure returns and transparency,’ said Michael Zietsman, managing director of JLL’s Capital Markets in the US.
‘The level of confidence is evident through the wide spectrum of product and projects they are targeting,’ he added.
While Chinese buyers and developers are deploying capital in many international markets, the stability of LA, the opportunity for long term capital growth and the relative affordability make the city a particularly attractive destination, the report says.
Downtown LA is enjoying the majority of Chinese investment activity, where buyers entered the market through hotel acquisitions and have progressed to building large scale, mixed-use developments.
Notably, two Chinese groups, Greenland and China Oceanwide Real Estate, are in the process of developing two high profile, multifamily and hotel mixed use projects by 2017, at a combined investment total of US$1.5 billion.
‘Chinese developers have been the trailblazers into gateway cities all over the world and LA is no exception. Many of these groups are experts in residential and mixed use projects and they are exporting this knowledge to the world’s biggest cities,’ said Alistair Meadows, head of JLL’s International Capital Group based in Singapore.
‘They are not all identical; some prefer joint ventures with local partners while others want 100% control,’ he added.
The impact of Chinese investment is already having significant consequences for the city’s skyline, its real estate values, and its construction pipeline. JLL anticipates Chinese investments will contribute to this rapid growth and continue to increase for at least the next three years.
