China's State Administration of Foreign Exchange (SAFE) is reportedly planning to invest a part of its $3.4 trillion foreign exchange reserves in the American real estate market on account of a steady growth in its property market, according to several reports.
According to Shanghai Daily, SAFE started studying the possibilities of investing in the real estate market of the U.S. after it observed a strong growth in the property market's graph. The administration might either buy stakes in major properties, invest in real estate funds or buy individual assets to invest in the market. The safety of these investments will be the top priority for SAFE.
SAFE has the largest amount of foreign currency reserves in the world. More than one third of the $3.4 trillion is invested in American treasury bonds and other financial instruments. It is also the largest foreign creditor of the U.S. government.
Apparently, SAFE has already met with a few U.S. banks to identify and analyze potential investment opportunities in the country. Much details about the "when and how" of SAFE's investments are not known.
Meanwhile, U.S. has become a centerpiece for real estate investment. Chinese investors have been increasingly looking toward foreign shores in the wake of the housing bubble in China. But the huge tide of foreign investment is not only from the Chinese investors but also those from Russia, the UAE and Europe.
A report at GMC Realty Advisors states that, the sturdy property market is not the only factor that is making the country a worldwide investment favorite. Favorable exchange rates, economic instability in native markets and America's wish to create a geographic and product diversified market makes the market so attractive.
According to the report:
"Foreign investors looking to the U.S. now likely are experienced investors who have invested in a number of countries around the world. These savvy investors believe that they can take advantage of the problems that the U.S. commercial real estate industry currently is facing. They believe that the U.S. offers the best global opportunity for capital appreciation at this time, while also being the safest country in which to invest. They can be aggressive and effective negotiators and can wield their foreignness as both a sword and a shield in negotiations. They know how to make a deal but also are willing to walk away if the deal doesn't suit them."
