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US Real Estate Slowly Recovering With The Help Of Chinese Investments

Posted by Staff Reporter on Apr 15, 2016 09:41 AM EDT
Despite National Woes, Bay Area Housing Prices Hit New Highs more big
Real estate agents arrive at a brokers tour showing a house for sale with a list price of $1.3 million May 17, 2007 in San Rafael, California. The San Francisco Bay Area has seen the median price for existing single family homes surge 6.6% to $720,000 while the national median home price dropped 0.9% to $215,300 in March. Marin County led the Bay Area surge with the median home price reaching a record high of $1,010,000, the first county in the state of California to surpass the million dollar mark. (Photo by Justin Sullivan/Getty Images) (Photo : Justin Sullivan/Getty Images)

The slowdown of commercial real estate growth in the US had been the subject of arguments recently. Morgan Stanley, a multinational American financial corporation, believes that the United States' commercial estate prices may be flat for the current year, if to be compared with earlier forecasts made. 

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Most other in the industries are concerned that generated income from any property will not be sufficient to keep investors receiving long-term rewards. With the given economic slowdown, projected earnings reduction and the possible recession, a surge was more likely to be delayed.

The Urban Land Institutes (ULI), a nonprofit education and research organization, had predicted that the nationwide growth of the commercial real estate may decline, especially in the next two to three years. ULI had in fact expected a mass volume to slow down to $475 billion in 2018.

However, market growth, although slow, was still expected. With unemployment reaching near the 2007 levels, with several companies hiring at a fast pace and the Labor Department making a report that payrolls have jumped to 215,000 for March, the economy is more likely moving towards the right direction.

With the present global low-interest rate, the capital inflows towards the U.S. commercial property will undoubtedly increase, according to a feature from the Huffington Post. Global issues, like the imploding Chinese market, will deliver capital into what is considered as the safe haven. The US is the choice because the country's property market is stable and transparent.

In the recent years, China's Fosun International purchased the One Chase Manhattan 60-story for $725 million. Zhang Xin, the Beijing real estate mogul, also took part by purchasing the General Motors office tower.

Dongdu International (DDI), on the other hand, bought the $4.2 million David Stott and $9.4 million Detroit Free Press buildings.

Overall, regardless of the low interest rates, the market has been perceived as a safe place to invest with significantly lower risks, according to a feature from the Forbes. On top of this, the Foreign Real Estate Property Tax Act Investment changes in 2015 have constructed easier, more attractive investing mechanics.

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