Chinese Pullback Won't Dent Real Estate Prices, Brookfield Says

  • Brookfield Property CEO says Europe, Middle East investing too
  • Capital for property ‘comes from a lot of places’: Kingston

Brookfield Property Partners CEO and Brookfield Asset Management Senior Managing Partner Brian Kingston discusses real-estate prices with Bloomberg's Erik Schatzker. (Source: Bloomberg)

Commercial real estate prices, hovering at record highs in the U.S. following a six-year boom, are sustainable even as Chinese regulators tighten restrictions on overseas investment, according to Brookfield Property Partners LP.

There is enough capital pouring into real estate from multiple regions -- including Europe and the Middle East -- to counter any potential slowdown in Chinese investment, Brookfield Property Chief Executive Officer Brian Kingston said in a Bloomberg Television interview. While Asian buyers are often part of the equation, a global shift from low-yield fixed-income holdings to real estate will drive property values for the foreseeable future, he said.

“There was a lot of headlines around how much capital was coming out of Asia,” said Kingston, a senior managing partner at Brookfield Asset Management Inc., the parent company of Brookfield Property. “The reality is it’s broad-based. It comes from a lot of places.”

Price growth for U.S. commercial buildings such as office towers and apartment buildings has leveled off over the past year, according to research firm Green Street Advisors LLC, and a growing disconnect between buyers and sellers is putting a damper on new deals. In Manhattan, one of the biggest beneficiaries of a foreign-capital influx in recent years, transaction volume plunged 39 percent to $18 billion in the first half from a year earlier, according to the Real Estate Board of New York, a trade organization.

Still, there have been a handful of blockbuster transactions. In March, Chinese conglomerate HNA Group Co. agreed to buy 245 Park Ave. for $2.21 billion, one of the highest prices ever paid for a New York skyscraper, from Brookfield Property and its 49 percent partner in the building, the New York State Teachers’ Retirement System.

“We have been over the last couple of years selling in most major markets and we’ve been buying in those same markets,” Kingston said. “That really defines how we invest in real estate, which is we buy these assets, we reposition them, we increase the income. And then ultimately, we sell them and we redeploy that capital into the next opportunity.”

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