Money flows in every direction in the modern global economy. At one time, it was mostly the U.S. dollar that traveled all over the world in search of the best return on investment. And while domestic funds still do journey abroad, today, more and more Asian and Pacific money is headed in the opposite direction, as realms with excess capital – China, Japan, South Korea, and Hong Kong, for example – see the United States as the most desirable place in which to invest. And that money is coming both from sovereign wealth funds, as well as private companies.
The two major segments of the U.S. economy that seem to be drawing the most money from the Far East are real estate and emerging technologies. For example, one Chinese developer, the Greenland Group, is heavily invested in a $1 billion mixed-use development in downtown Los Angeles called “Metropolis.” It has also acquired 70 percent of a 14 building development in Brooklyn, NY, called the “Atlantic Yards.” Another Chinese builder, China Vanke, has invested in a 655 unit apartment development in San Francisco.
And according to the Commercial Real Estate Services (CBRE), the world’s largest commercial real estate services firm, Asian investors have spent more money on U.S. multifamily real estate assets last year, than at any other point in history. Between January and August of 2014, Asian buyers had already invested $522 million, as compared to a total sum of $537 million for all of 2013. Asian investors are now responsible for 18 percent of the cross-regional multifamily investment in the U.S – an increase of 8 percent.
KPMG, one of the world’s largest professional services companies, expects the trend to continue. According to Phil Marra, KPMG’s National Real Estate Funds Leader: “We’ve seen a substantial amount of Chinese capital deployed in 2014, and we expect that trend to continue as real estate funds, large institutions and foreign investors look for direct and indirect investment in real estate equity and real estate debt because of the attractive yields.”
Regarding emerging technologies, some of Asia’s wealthiest companies are leading a wave of investment in U.S. start-ups, looking for the “next big thing” and hoping, eventually, to import the newest technologies back home. For example, the Alibaba Group, China’s largest online retailer, recently invested $200 million in Snapchat, Inc., the social network that allows people to send photo and video messages that disappear within ten seconds. Last year, the company invested $120 million in Kabam, Inc., a gaming start-up. It has also made investments in e-commerce start-ups, ShopRunner and Fanatics, and the app search engine, Quixey. Rakuten, a Japanese e-commerce company, recently led a $530 million round of funding for Lyft Inc., the San Francisco ride-sharing start-up.
According to Dow Jones VentureSource data, Asian corporations, or their venture-capital arms, were investors in 86 equity financings of U.S. venture-backed companies in 2014, more than doubling the number of deals they joined in three years earlier. SoftBank Corp. of Japan, China’s Tencent Holdings, and Alibaba have all set up U.S. investment offices and hired stateside investors with the goal of acquiring stakes in mobile software, gaming, digital media, e-commerce and payment technologies.