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March 26, 2014

'Working with professionals' ideal way for Chinese real estate investors in US

People's Daily Online

Han Shasha

San Francisco, March 24 (People's Daily Online) - "Work with professionals" was the advice offered to Chinese investors by many real estate investment specialists at a forum on Monday.

The forum, with the theme of "strategy for commercial real estate investment in the US for Chinese enterprises" was held Monday in San Francisco, which attracted more than two hundred participants, including Chinese investors, U.S. real estate developers and specialists from consulting firms, law firms as well as banks.

"The biggest risk of investing in the United States is that you don't understand the country. You are doomed to fail if you bring a full pocket of money with an ignorance of laws and regulations there," said Xia Xiang, Economic and Commercial Counselor from Chinese Consulate in San Francisco at the forum.

"In order to give the Chinese investors a clear picture of the real estate market, to give a guideline of the regulation, rules and laws, to send messages to potential Chinese investors in the United States, my office and Chinese Enterprise Association jointly organized the forum," he said.

As the second-biggest overseas buyers of U.S. residential real estate, Chinese investors now are building up portfolios of U.S. commercial property as they look for new avenues of diversification. "Total project value of Chinese investment in U.S. real estate market over the last 18 months has reached 12 billion," said Skip Whitney, executive vice president and partner at a real estate company in San Francisco, "Chinese investors' activities in commercial real estate investment are very noticeable." In New York, Chinese real estate tycoon Zhang Xin led an investment group's $1.4bn purchase of the General Motors office tower in 2013. Fosun International Ltd's purchased the landmark building One Chase Manhattan Plaza for $725 mn from JP Morgan Chase.

However, many challenges facing those Chinese "Tuhao" are also obvious. Besides the culture difference and language barrier, "Chinese investors want to do what they do in China, and it can't always be done the same way here," Whitney said. Some big Chinese investors get stuck in legal disputes with local brokers due to inappropriate activities. Some smaller investors could pay twice and even higher the price of the properties they purchase because they are more willing to find some private brokers instead of big professional companies. One specialist said that some brokers intentionally quote a high price when they find that the buyer is from China.

"Some Chinese investors would like to take suggestions from their friends in the United States and then make rush decisions, but finally find that the investment is not worthy," said Richard Yang, a broker at a local realty company.

He said that real estate companies watch the market closely, collect and publish the data regularly, so they are clear about the investment situation. "Friends and family are not necessarily the best way to approach investment strategy," he suggested.

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