Chinese Investing America
From a Bloomberg article published on June 25, 2015, China’s savers have $21 trillion dollars and are set to change the world.
We already know that China has in the past invested heavily in U.S. bonds and are the single largest foreign investor in U.S. bonds and 2nd overall behind the Federal Reserve.
So if China’s investors have $21 trillion dollars to invest what and how will they be investing and how will it affect us?
Bloomberg goes on to refer to China’s shift of inventing abroad as “Historic Proportions” and says “There are already signs of that potential. Chinese buyers topped Canadians to rank as the biggest foreign purchasers of U.S. homes by sales and dollar volume in the year through March, accounting for more than a quarter of all international spending.”
So where are they inventing in real estate? Well the top countries for China to invest in are the United States, followed by Canada and Australia. In general China is investing in all of the states, but if we drill down to a list of the top 10 locations we defer to a Wall Street Journal article published on October 22, 2014 the top 10 cities are listed below.
The following list is based on Chinese institutional real=estate investments from the years 2008-2014.
1) New York 6.7 billion dollars
2) California 1.6 billion dollars
3) Illinois 362 million dollars
4) Texas 305 million
5) Maryland 150 million
6) New Jersey 140 million
7) Arizona 133 million
8) Florida 95 million
9) Washington 44 million
10) Delaware 42 million
Keep in mind totaling up the top 10 states is less than 1% of a trillion dollars so this investment so far is a tiny drop in the bucket of investment that could be coming in the future.
From the same Wall Street Journal article “Chinese investors are distributing their investments across the whole country, not only focusing on selecting assets in prime locations…but also paying more attention to cities with lower prices and greater potential,” said James Shepherd, Cushman & Wakefield’s head of research for Greater China.
So if the Chinese investor thinks that the U.S. real estate market is a good investment, then maybe we should too.