BOC's Bryant Park deal continues trophy acquisitions
Updated: 2014-12-10 10:07
By AMY HE in New York and ZHU WENQIAN in Beijing(China Daily USA)
Bank of China's purchase of a midtown Manhattan skyscraper continues a trend of Chinese acquiring trophy properties in the city, said US real estate experts.
"There's no doubt that it is a really, really high-quality asset. It's consistent with what you'd expect from a company like Bank of China," said Scott Latham, vice-chairman of New York capital markets at Jones Lang LaSalle, an investment company specializing in real estate.
"They are an extremely well-respected company. As these large, highly-visible companies from mainland China are coming into the US and buying deals, it raises the visibility of what's going on in the overseas investment arena for other Chinese companies, and I think ultimately it is leading to much more comfort on the part of those Chinese companies that aspire to invest outside of their own geographies," he said.
Hong Kong-based Bank of China Group Investment Ltd, an affiliate of state-owned lender Bank of China Ltd, signed an agreement to acquire office space at 7 Bryant Park, sources said on Tuesday.
"Given the emerging size of the Chinese banking sector and how much capital Bank of China has, it's a natural evolution for them to diversify their holdings, and other asset classes around the world. We're seeing that in other countries as well. It's not surprising that China is doing this," said Daniel Quan, professor of real estate and finance at Cornell University's School of Hotel Administration.
The 30-story tower in midtown Manhattan is scheduled to be ready for occupancy early next year, and will become the newest embellishment to the skyline. The building is under construction along Sixth Avenue between West 39th and West 40th streets at, just south of the Bank of America Tower at One Bryant Park. Bryant Park is right behind the New York Public Library, which faces Fifth Avenue.
Bank of China Group Investment Ltd is set to take over the property rights upon its completion.
"The company has visited and researched many properties in New York City, and 7 Bryant Park excels with its location and construction quality, which is in line with our investment standards," said Wei Da, managing director of the asset management division at Bank of China Group Investment Ltd.
Jones Lang LaSalle's Latham told China Daily that Bank of China had been looking to expand their occupancy in New York City, with the bank being "the most active" in the marketplace of all Chinese lenders. It already occupies some small buildings on Madison Avenue and had inquired with neighbors about acquiring more space.
"Because they were unable to assemble a large enough envelope of space to occupy, they shifted gears and started to think about potentially occupying space in other parts of the city," said Latham. "I think this situation is the best of all worlds because Bank of China was interested in investing in the US. And they combine an investment now with the ability to occupy brand new space in a very, very well-located trophy building, overlooking Bryant Park."
Chinese outbound investment in commercial property has grown rapidly in recent years, and reached $33.7 billion in the period from 2008 to June 2014, growing more than 200-fold during that time, according to a report by Cushman & Wakefield, the global private commercial real estate services firm.
In October, China's Anbang Insurance Group Co bought the landmark Waldorf Astoria hotel in Manhattan from Hilton Worldwide Holdings Inc. Last year, Ping An Insurance Group Co, China's second-largest insurer, acquired the Lloyd's of London building from a Commerz Real AG-managed fund.
In 2014, the United States became the top destination for investment from the Chinese mainland, followed by Hong Kong, Singapore, Australia and Malaysia, the report said.
Lu Ming, research head of Cushman & Wakefield, said part of the reason for Chinese enterprises' preference for US commercial property targets is that they are optimistic about the US economy.
"Every individual company has its own specific consideration. But the shared reason is the prospect of asset value appreciation and the appreciation of the dollar. Holding dollar-denominated assets can also help diversify the asset portfolios," Lu said, adding that owning a landmark building in a gateway city also helps boost the company's profile.
"We are just seeing the very early stage of Chinese companies buying out overseas properties. In the future, we will see more diversified buyers, including smaller companies," he said.
Zheng Yangpeng and Jiang Xueqing contributed to this story.
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