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Los Angeles poised to receive significant amount of $15B in Chinese investment by the end of 2014
LOS ANGELES, Aug. 27, 2014 – The City of Angels may soon be known as the city of commercial real estate investment, especially for Chinese buyers and developers. In 2012, Chinese outbound transaction volumes totaled $5.6 billion and catapulted to $11.3 billion in 2013. JLL’s latest research anticipates Chinese outbound investment globally will reach $15 billion this year, with the majority headed to primary markets. Los Angeles’ proximity to Asia, need for development and status as one the United States’ gateways have led to a Chinese investment uptick in the market – and the proof is in the numbers. L.A. sits second among U.S. markets, with $780 million in Chinese investment.
“Chinese investors are finding themselves increasingly comfortable in L.A., which is a testament to the market’s strong fundamentals, opportunities to obtain secure returns and transparency,” said Michael Zietsman, Managing Director of JLL’s Capital Markets. “The level of confidence is evident through the wide spectrum of product and projects they are targeting.”
Although Chinese buyers and developers are deploying capital in many international markets, the stability of L.A., the opportunity for long-term capital growth and the relative affordability make L.A. particularly attractive.
In particular, Downtown L.A. is the of Chinese investment activity. Buyers began their foray into the market through hotel acquisitions and are now building large scale, mixed-use developments. In fact, Downtown L.A’s construction boom of 3.2 million square-feet of hotel product and 2.9 square-feet of multifamily properties to be delivered by 2017 features two high-profile multifamily and hotel mixed-use projects from Chinese groups: Metropolis and Figueroa Central. Combined, the two projects reach $1.5 billion in total development.
The offshore development phenomenon is relatively new, notes Jeff Adkison, Managing Director of JLL’s Capital Markets. “Many of the groups interested in L.A., especially Downtown, are new to U.S. development projects, but they are targeting outstanding locations and placing capital toward the development of many mixed-use properties.”
Adds John Strauss, Managing Director of JLL’s Hotels & Hospitality Group, “Last year, hotel transaction volume from Chinese investors showed a dramatic increase. Currently, there is, by my estimate, in excess of $1 billion of motivated Chinese capital seeking high-quality California hotel investment opportunities. Economic recovery, strengthening syndicator relationships and long-term growth prospects, especially for hotel assets point to the sign that this trend will continue.” How exactly are Chinese investors tackling Tinseltown? The majority of activity is still structured through partnerships and joint-ventures, a trend likely to continue as those options mitigate risk, provide access to local market expertise and better navigation of legal protocols and government regulations.
The impact of Chinese investment is already having significant consequences for the city’s skyline, its real estate values, and its construction pipeline. JLL anticipates Chinese investments will contribute to this rapid growth and continue to increase for at least the next three years.
JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2013 alone, JLL Capital Markets completed $99 billion in investment sale and debt and equity transactions globally. The firm’s Capital Markets team comprises more than 1,300 specialists, operating all over the globe.
For more news, videos and research resources on JLL, please visit the firm’s U.S. media center Web page: http://bit.ly/18P2tkv.
About JLLJLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
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