Towering over downtown Seattle at 967 feet sits the Columbia Center. It’s the tallest building in Seattle and the 2nd tallest on the West Coast.
On August 7, 2015 (just a few days before China’s big economic dive) the building sold for $711 million to Gaw Capital Partners (an investment group based out of China). However that’s just one example of Chinese investment in U.S. real estate (and recently there has been a whole lot).
What has been going on?
For nearly two months, China has been all over the news with the devaluation of their currency (the ¥uan), reminding us (and the rest of the world) just how global our economy really is.
Chinese investment has become increasingly significant. Specifically in U.S. real estate. Yes, there are other countries (i.e. Canada & the U.K.) who may invest more by volume, but they aren’t in economic crisis. We at Seattle Funding Group have certainly experienced a much higher volume these last couple of years with international investors. And because we work with a number of individuals and groups, we are definitely intrigued/monitoring the condition overseas closely.
Got it. So what happens next?
Well, it’s hard to tell. There are probably two main directions Chinese investment activity could take:
- It slows down—People are worried, not in a position to, or uncomfortable dishing out more cash on things (like expensive assets in foreign countries).
- It speeds up—People would rather get their money out of China and into something more stable/earning them a return (such as U.S. real estate), with cost not being the top priority.
Investors and investment groups from China like to secure assets in the U.S. (particularly in cities like Seattle, San Francisco, and Los Angeles). A lot of the time they even overpay for piece of real estate here, at least according to some. U.S. citizens typically don’t have the same unique benefit in doing this, simply because of their location. But on the flip side, reality, no one has endless capital to invest and not everyone (perhaps more importantly) can keep a completely level head all the time.
This is why the near future of Chinese foreign investment is so uncertain. It will definitely be interesting to see how it progresses over the next few months…
–Stay tuned for part two of this post where Ron Lorentsen (one of our underwriters for over 15 years) shares his experience working with international buyers: Tips and tricks during the legal process, things to keep in mind as a lender, and how private lenders like SFG are a great tool to use!–