SAN FRANCISCO—Whether they’re high net worth individuals or large-scale institutions, investors from China and other overseas markets see US real estate as a long-term play, Marcus & Millichap‘s Hessam Nadji said last week. Appearing on CNBC’s CNBC World, the GlobeSt.com Thought Leader said these buyers “really want the real estate. They’re not too concerned about immediate returns, short-term returns. They have a very long-term horizon.”
Chief strategy officer at MMI, Nadji pointed out that although Chinese investors have been associated recently with trophy acquisitions such as the Waldorf-Astoria Hotel in Manhattan, the investor profile of overseas players is bifurcated. There are “very large funds” as well as institutional-quality investors from China and other countries, he said. “But then you also have families and high net worth individuals that are buying real estate throughout the United States, especially in gateway markets.”
The appeal of US commercial property to Chinese buyers is pretty easily explained. “Whether it’s office buildings, apartment properties or shopping centers, all the sectors that we track are showing strong demand,” Nadji said. “At the same time, new supply of commercial real estate is more expensive and more difficult to add, so we’re not seeing overbuilding” in any of these sectors. “And on top of that, our interest rates are very low. So all of these combined create a very attractive yield profile for commercial real estate and a much more certain environment than the alternative investments.”
Nadji also answers inquiries on similarities and differences between present-day Chinese investors and Japanese investors in the 1980s and 90s. For the full video, click here. For all coverage of Marcus & Millichap on GlobeSt.com, including columns and insights from Hessam Nadji, click here.