When Donald Trump was elected 45th president of the United States, a number of real estate investors drew a huge sigh of trepidation along with the many other protestors of one of the country’s most divisive and controversial elections.
While most U.S. real estate investors believed all personal preferences aside, having a real estate billionaire in the White House would be pretty good for business, those who work within the lucrative sector of the market catering specifically to wealthy Chinese investors had reason to be concerned. Throughout much of his campaign, the president had loudly voiced plans to impose high tariffs on Chinese imports and act aggressively to bring manufacturing currently taking place in China back to the United States.
China’s government and many of its political and business leaders countered what many in both countries perceived to be “attacks” by Trump by issuing ordinances against large-scale investing in U.S. real estate and levying unusually high fines on infractions in China associated with U.S. goods (for example, in an anti-dumping case aimed at a U.S. chemical used in livestock feed in January 2016).
Fortunately for those real estate investors, although the turbulence surrounding the Trump administration and China may just be the beginning, wealthy Chinese individuals and companies are more interested than ever in putting their funds in U.S. real estate and even appear to believe President Trump will be a positive factor for their investments.
Eddie Wilson, president of Affinity Enterprise Group (AEG), recently visited the physical location of the Chinese division of Affinity Investments in Shanghai and reported that in reality, Chinese investors are more interested than ever in investing in U.S. real estate. Wilson said those investors believe the current U.S. president will bolster the U.S. economy in unprecedented ways, which they expect to be very good for their returns on investment.
“They feel like his economic prowess will far surpass that of our former government leadership,” Wilson observed. Contrary to the negative sentiments about the Trump administration that he had expected, Wilson said, “these investors are looking forward to new opportunities in our real estate market.”
Wilson cited one corporate CEO in the Chinese insurance industry specifically who told him, “In the end, we hold a lot of debt for the U.S. and our economy is only going to be as strong as the U.S. economy. We’re expecting Donald Trump to take the U.S. economy to a completely different level, which is very exciting for us and makes us want to invest as deeply as we can.” That CEO represents about $80 million in investment money targeted at the U.S. for 2017 alone, Wilson said.
Wilson also noted the types of investments in which Chinese investors are interested are expanding and evolving as they become more deeply involved in the U.S. housing market. Typically, these investors have been cash buyers seeking to own assets in their entirety, which is one reason they have dominated and driven the ultra-high-end sectors in gateway cities like New York City and Los Angeles. Now, however, they are beginning to consider diversification, said Wilson.
“I heard the questions, ‘How do we diversify in the U.S.?’ and ‘How can I diversify my risk by buying into a fund that may be managing 200 or 300 properties versus buying 10 of them myself?’ repeatedly,” he noted.
Wilson added investor interest in the EB-5 Immigrant Investor Program (EB5 visas) has diminished substantially in the last 12 months. But he emphasized that there is not necessarily a diminished interest in entering the United States. Rather, it could be that most investors who were going to utilize the program have already done so.
With Chinese real estate investors more interested than ever in U.S. real estate on increasingly diverse levels of the industry, Wilson believes that the time is right for U.S. real estate investment industry leaders to approach AEG’s Chinese network directly. “There’s a massive amount of capital available to the sophisticated real estate investor looking for it outside of the U.S. today. If the right credible real estate investment opportunity is presented, Chinese buyers and investors move quickly. They buy [the right investments] immediately,” he said.
AEG will host an event on-site at its Shanghai location later this year in order to introduce such American investors to Chinese investors, Wilson added, noting that anyone interested in attending the event should reach out to AEG directly.
“I’ll give you an example of how quickly these investors move,” Wilson said. “On my trip, there was a developer with me who had about eight properties available in Los Angeles for about $600,000 each. He was selling them on-site at our location for the full asking price, and investors were snapping them up.”