Tag Archives: Wealthy Chinese

Chinese investors turn to US commercial realty

Chinese businessman - China Elite FocusChinese investors, the second-biggest overseas buyers of US residential real estate, are building up portfolios of US commercial property as they look for new avenues of diversification. Chinese entities announced more than $5.89 billion in projects in January-October, nearly six times the $996 million for all of 2011 and 2012 combined, data from New York-based consultancy Rhodium Group show.
“There is a lot of upside,” said Thilo Hanemann, Rhodium’s research director. “We are at the beginning of a structural increase of Chinese investment in US commercial real estate.”
Greenland Holding Group Co completed a deal that will give the Shanghai-based developer a 70 per cent stake in Forest City Enterprises Inc’s Atlantic Yards, a 22-acre commercial and residential project in Brooklyn, New York. The deal, which is expected to require $4.8 billion worth of investment over eight years, is the largest property transaction by a Chinese company in the US.
China’s push into US property is underpinned by declining investment returns at home, a growing desire by wealthy individuals and developers to diversify their holdings overseas, and property companies looking to capitalize on offshore migration.
“Some investors want to diversify their assets, and some are looking for different growth opportunities,” said Julien Zhang, international director in Beijing for property consultancy Jones Lang Lasalle, which is advising three Chinese conglomerates on property deals. “Others want to learn how to enter mature and developed markets.”
A rebound in US real estate pricing, tight inventory in major cities, and continued low interest rates also are attracting Chinese buyers, said Gary Locke, the US ambassador to China. Locke was speaking at a forum in Beijing sponsored by the US Embassy to promote Chinese investment in US property. Chinese investment in the US has surged to $18.5 billion over the last two years, more than the combined total of the previous 11 years, Locke said.

“Chinese investors are now looking to purchase entire luxury shopping malls in Los Angeles, Las Vegas and New York City”, said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine. “As the new generation of affluent Chinese consumers prefer to buy luxury goods overseas, Chinese investors know that it’s now better to invest in luxury retail in the U.S. rather than in China, where foreign brands have opened too many deserted outlets” Gervois added.
Chinese nationals bought more than $8.1 billion worth of real estate in the year ended March 31, representing 12 per cent of the estimated $68.2 billion of domestic property purchased by overseas nationals and second only to Canadians, according to a survey by the National Association of Realtors.
“Real estate is finally becoming a global industry and you will see capital flows on a cross-border basis, just like every other investment class,” said Rob Speyer, co-chief executive of Tishman Speyer Properties LP, which partnered in February with China Vanke Co Ltd to build a $620 million apartment project in San Francisco.
Speyer, whose company is also developing commercial, residential and retail projects in the Chinese cities of Shanghai, Chengdu and Tianjin, said he courted Vanke’s Chairman Wang Shi for more than two years, and inked their deal only 45 days after first introducing the project to him.
Not everyone is convinced that Chinese investment in the US property market will continue uninterrupted. Other options for expansion include Europe, Australia and Singapore, which account for about two-thirds of offshore Chinese real estate investment, according to Jones Lang Lasalle.
Zhang Xin, chief executive of Soho China Ltd, who paid $700 million through her family trust to buy a stake in the General Motors Building in Manhattan, said that while the US regulatory and legal environment remained attractive, valuations were getting expensive. “I would not feel as comfortable today putting in money as I did a few years ago,” Zhang said.

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New York City luxury retailers are waiting for more wealthy Chinese shoppers

Over five days in January, a group of visitors to New York was treated to a private concert with the pianist Lang Lang at the Montblanc store, cocktails and a fashion show attended by the designers Oscar de la Renta and Diane Von Furstenberg, and a tour of Estée Lauder’s original office. They were not celebrities. They were not government officials. They were Chinese tourists with a lot of money.
Though luxury brands started opening stores in Beijing and Shanghai years ago, Chinese shoppers still spend more on luxury products abroad than they do at home, according to the consulting firm Frost & Sullivan. Price is the major reason: Because of China’s taxes, luxury products are about a third cheaper in the United States and elsewhere.
European luxury stores have been catering to Chinese tourists for years. Now high-end retailers in the United States are pulling out their Mandarin phrase books and trying to convince Chinese visitors that Americans can do luxury, too.
“What started as a trickle has now become a flow,” said the vice president of the antiques store Macklowe Gallery, Ben Macklowe, who recently sold a Tiffany lamp that cost in the low six figures to a Shanghai visitor. “There’s been prosperity across so much of Asia that you’re starting to see it much more in the profile of the tourist on Madison Avenue.”
A record number of Chinese visited the United States last year — nearly 1.1 million — and the country accounts for one of the top-growing tourist groups here, according to the Commerce Department. The number of visitors is expected to almost double by 2014, according to the U.S. Travel Association. Chinese visitors spend about $6,000 each on every visit here, versus the $4,000 that visitors from other countries spend on average, the association says, and their top activity is shopping.
Although some tourists spend money on Disney trinkets and at the outlet malls they have traditionally frequented, luxury brand purchases are surging in part because American stores carry a broader range of products than their counterparts in China, said Julia Zhu, consulting director for Frost & Sullivan.
Tiffany, which made almost a quarter of its United States revenue last year from foreign tourists, has added Mandarin-speaking sales staff to its major stores, as has Burberry, where more than half of sales at its flagship stores are to tourists. Representatives from Tourneau’s Manhattan office recently accompanied New York City officials on a visit to China to encourage more tourism in the city.
The very popular Chinese social media network “Niuyue Mag” (纽约志), used by the young and affluent Chinese tourists preparing their trip to New York City had also a role in promoting the Big Apple as a major luxury shopping destination. According to Sandra Ming, analyst at China Elite Focus, “the impact of Niuyue Mag has been tremendous as it’s for now the only one media available in China exclusively about the planning of a shopping trip in New York City”
At its United States stores, Montblanc sells Year of the Dragon pens and has staff members who speak Mandarin and Cantonese. It is also printing Chinese-language brochures about its products and selling wallets sized for Chinese currency.
Despite having more than 100 stores in China, Montblanc is going after Chinese shoppers on vacation abroad. “Yes, we are in the major cities, but when you travel, you’re in the mood to enjoy and experience the moment,” said Jan-Patrick Schmitz, chief executive of Montblanc North America. “We certainly will do more and more marketing toward them.”
Retailers in the United States lag behind other countries. Part of that is because of visa issues; it is easier for Chinese residents to get visas to Europe. High-end American retailers like Saks Fifth Avenue and Bloomingdale’s are urging the government to speed up the process here. President Obama said in January that he planned to increase visa-processing capacity from emerging markets like China and Brazil by 40 percent this year.
The American stores also have to overcome an idea that luxury can come only from the old world.
“The European brands, they see prestige, history, heritage,” said Sunny Wong, group managing director of Trinity, a company that owns and operates high-end European retail brands in China. American brands, by contrast, are seen as “contemporary, lifestyle” rather than pure luxury, he said.

American retailers are racing to prove Mr. Wong wrong.

Source: http://chinesetourists.wordpress.com

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Chinese want to buy more Private Jets in the U.S.

The demand for long-range private jets is increasing in China, as wealthy Chinese individuals are looking for aircrafts able to go directly to New York City or Las Vegas from any airport in China. According to Pierre Gervois, CEO of China Elite Focus, the leading PR agency focused on HNWI Chinese consumers “The new generation of Chinese wealthy individuals considers the acquisition of a private aircraft as the ultimate symbol of success. For instance, we know that very private VIP clubs such as the Shanghai Travelers’ Club have already organized trips to the United States with the specific purpose of buying pre-owned private jets in the U.S.”

As many Chinese private jet future owners consider that buying a pre-owned or a new aircraft in the U.S. is the best way to ensure the best quality and perfect maintenance, there is a major opportunity for the U.S. business jets industry, or foreign aircraft manufacturers operating from the U.S. and targeting new Chinese customers, such as Dassault Falcon.

Dassault Falcon will set up a new operation in Shanghai to help support its rapidly growing Chinese fleet. The new entity, to be known as Dassault Falcon Aircraft Services – China, will be established by the end of the second quarter of 2012 in partnership with Shanghai Hawker Pacific and will be located within the Shanghai Hawker Pacific complex at Shanghai’s Hongqiao International Airport.

Dassault Falcon Aircraft Services – China will play a key role in ensuring first-class support for the Falcon fleet that is expected to triple by the end of 2012. The unit will be staffed by a team of technicians with an average experience of more than 10 years with Falcon business jets specially trained on Falcon 7X, Falcon 2000LX and Falcon 900LX models. Line maintenance, AOG support, troubleshooting and component replacement will be among the services offered.

Dassault Falcon Aircraft Services – China will bring extensive, hands-on Falcon maintenance to the world-class Shanghai Hawker Pacific’s facilities that support local and transient Falcon aircraft, while providing an opportunity to transfer technical maintenance know-how to Chinese engineers in this developing market.

“This facility in Shanghai is an essential part of our strategy to support our growing market share in China,” said John Rosanvallon, President and CEO of Dassault Falcon. “Our customers will appreciate the instant increase in the level of Falcon maintenance experience that this program will offer, as well as the dedication that only Dassault as the aircraft manufacturer can provide.”

The Shanghai Hawker Pacific complex features a 4,000 sq m facility for maintenance, repair and overhaul (MRO), in addition to its fixe based operations (FBO) capabilities. It was the first third-party MRO facility in mainland China and is a joint partnership with the Shanghai Airports Authority.

The Civil Aviation Administration of China (CAAC) recently granted a Part 145 repair certificate for the facility as well as a Part 145 approval for the Falcon 7X. Approvals for the Falcon 900LX and Falcon 2000LX models are expected within six months.

“Dassault Falcon and Shanghai Hawker Pacific have a shared vision of providing the best customer service experience in China,” said John Riggir, Vice President-Asia for Hawker Pacific. “We have the facilities, dedication and infrastructure to meet our customers’ needs today and into the future. The Dassault team will bring a more advanced business aircraft MRO experience to complement and rapidly grow the capabilities of Shanghai Hawker Pacific as China absorbs this fleet of new Falcons.”

In addition to this new facility in Shanghai, Falcon customers can access repair facilities operated by Hawker Pacific in Singapore and Sydney, Australia and Jet Aviation in Hong Kong.

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