Chinese investors are increasingly targeting California real estate and other assets – and California law firms can and should be focused on this trend to win new business.
As Barbra Murray, Contributing Editor of Commercial Property Executive reported last year: “The Los Angeles real estate investment community is abuzz with news of Oceanwide Real Estate Group’s pending acquisition of Fig Central, a 4.6-acre…development site located downtown, just across from Staples Center and the multi-billion-dollar L.A. Live entertainment destination.
The Beijing, China-based company, acting through its Tohigh Construction Investment subsidiary, [purchased]the shovel-ready property from The Moinian Group. Law firm Allen Matkins (@allenmatkins) served as legal counsel to Moinian on the transaction, while Nixon Peabody L.L.P. (@NixonPeabodyLLP) advised Oceanwide on the deal that marks the real estate company’s entrée into the U.S. Nixon Peabody, which…also serve[s] as development counsel going forward, note[d] in a statement that Fig Central will be developed to include a five-star hotel, apartments and retail space.” Earlier this year, CBRE Group, Inc. (@CBRE) was retained to market portions of the project.
And a recent 2015 Milken Institute Summit (@MilkenInstitute) highlighted the continuing acceleration and expansion of Chinese real estate investment into Los Angeles. China Real Estate Developer Hazens Group’s recent investments into the Los Angeles real-estate market was one highlight of a Summit panel discussion moderated by Curtis S. Chin (@CurtisSChin) dedicated to Chinese and Mexican investment into California. As LA Downtown News has detailed, [Hazens Group] “broke into [the Los Angeles market] with a purchase of the 802-room Sheraton hotel at Los Angeles International Airport in December 2013”. The firm is now in the process of developing a $700 million three high-rise project in Downtown Los Angeles, its’ first ground-up development in the United States. Chinese developer Greenland has also begun a “multi-tower mega-development” [in] Downtown Los Angeles, as LA Downtown News noted.
China investment expanding, California poised to win big
These investments reflects a growing trend of China investment expanding in the United States, and the potential for California to capture a substantial percentage of that investment as we move toward 2020. As Ambassador Chin outlined at the Milken Institute California Summit, “California received 48.9 Billion in foreign investment in 2014, followed by New York State at 35 Billion.”
And as the Asia Society (@AsiaSociety) outlined in a comprehensive recent report entitled: Chinese Direct Investment in California: “California, with its long history with China, the most sizable Chinese American population in the country, and more inward investment deals from China than any other state, is in a position to lead the nation in attracting Chinese investment in the decade to come. The Golden State has the potential to attract between $10 billion and $60 billion of Chinese direct investment by 2020. Those ﬂows would bolster employment, feed the tax base, generate exports, and bring positive spillovers of know-how and relationships. However, these beneﬁts are not foreordained.” the report cautions, “maximizing California’s success as a host for Chinese investors must start with better coordination among interested stakeholders, including government, business, and civil society.” [emphasis added].
California law firms must make a concerted effort to win China investor business
As the Asia Society outlines, the numbers are staggering. Chinese investment overseas is expanding exponentially. California is uniquely positioned to win a substantial amount of that foreign direct investment. But it cannot do so without focused effort. Law firms in California can if they wish – act as the tip of the spear in securing Chinese investment into California – and therefore win significant new business around this single effort. But in order to do so – firms must take a focused, sophisticated and long-term view of the opportunity. And act accordingly. The recent deal which sees Nixon Peabody acting for a Chinese real estate investor is just one example of what is possible for any California law firm willing to make the effort to win this work.