Oct 21, 2013

    Record buy as Chinese snap up US property

    JPMORGAN Chase's deal to sell 1 Chase Manhattan Plaza to Fosun International would be the largest purchase of a New York building by a Chinese buyer, showing Asian investors' growing appetite for real estate in the United States.

    Shanghai-based Fosun, run by billionaire Guo Guangchang, agreed to buy the 60-storey Lower Manhattan tower for US$725 million (S$900 million), according to a statement filed with Hong Kong's stock exchange.

    Chinese buyers are expanding US property investments, seeking yield and a safe haven as the Chinese government maintains curbs on domestic purchases.

    This year, a group that included billionaire Zhang Xin, co-founder of Soho China, took a stake in Midtown Manhattan's General Motors Building. Greenland Holding Group, a Shanghai-based, state-owned developer, agreed this month to buy a 70 per cent share of Atlantic Yards, a residential and commercial project in Brooklyn.

    "The wave continues with this purchase," said Mr Dan Fasulo, managing director of property-research firm Real Capital Analytics. "We've seen a series of trophy transactions in key cities around the United States by the Chinese - in New York, San Francisco, Los Angeles - as well as smaller acquisitions in other markets around the country."

    The Fosun purchase is the biggest involving an entire building in New York by a Chinese buyer, according to Real Capital.

    Major deals by Asian investors include the joint purchase last year of San Francisco's 101 California Street by the Hong Kong Monetary Authority and GIC, Singapore's sovereign wealth fund, for US$910 million, the firm's data showed.

    China leads all foreign countries in New York property investment this year, with US$1.37 billion of acquisitions, not including Chase Manhattan Plaza, according to Real Capital. Next is Canada with US$1.19 billion.

    "There's a lot of excess capital in China that needs a way out at the moment," said Mr Simon Lo, Hong Kong-based executive director at property broker Colliers International. "Also, by investing in markets like New York, they believe they can gain from the recovery of the US economy and real-estate market."

    The landmark 1 Chase Manhattan Plaza was once the headquarters of Chase Manhattan Bank. The 204,000 sq m skyscraper was completed in 1961.

    Fosun chairman Guo's fortune has jumped 54 per cent to US$4 billion this year, according to the Bloomberg Billionaires Index.

    His conglomerate is involved in pharmaceuticals, real estate, steel-making, retailing, iron-ore and gold mining, and financial services.