Looking West | CER

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The United States is becoming ever-more attractive for Chinese property buyers, and Colorado is the top up-and-coming alternative to the two coasts. 

The tidal wave of Chinese funds heading out of the country looking for investment opportunities is reaching even the slopes of the Rocky Mountains in the center-west of the United States, and the location that seems to be benefitting most is the state of Colorado, and its capital, Denver. Denver was named number 1 best city to live in 2016 by U.S. News & World Report. The United States, retained its position as the most popular destination for Chinese real estate investment outside the mainland. 

This surge into US property is reflective of a wide range of issues, including the desire of many wealthy Chinese to diversify their assets abroad, as well as the underlying strength of the US economy. The trend is being felt across the country. According to law firm Baker & McKenzie, Chinese investments into the United States rose by almost 200% from 2015 to 2016 to USD 45.6 billion with real estate and hospitality being the biggest recipients, amounting to US$17.4 billion last year. Investments into Canada were also up 120 percent.

But a particularly bright spot is Colorado which is becoming a strong alternative to the traditional property investment points of California and New York with the city of Denver attracting particular attention from property investors thanks to the strength and diversity of its economy.

In an address in January, the chief economist for the Metro Denver Economic Development Corporation (Metro Denver EDC), Patty Silverstein, said that job growth and consumer confidence were very high. “After a stellar 2016 where our region was truly hitting on all cylinders, our only challenge in 2017 will be maintaining the equilibrium of our market dynamics,” she said.

Metro Denver’s employment growth in 2016 of 2.9 percent was 1.2 percentage points higher than the national average at 2.9 percent. Silverstein forecasted that Metro Denver’s job growth in 2017 will be 2.4 percent, representing an addition of about 39,000 jobs.

“One of the greatest strengths in this region’s economic development strategy is its commitment to look ahead and build great infrastructure to support 50- to 100-year planning decisions in Metro Denver,” Tom Clark, CEO of the Metro Denver EDC, ways quoted as saying. “These investments have not only brought new jobs, but enhanced our brand internationally with business decision makers.”

The forecast also reported that strong net migration into the Denver region and positive economic activity are expected to continue to push home prices higher.

“We do anticipate that continued residential construction activity, slower sales activity of existing homes, and potential interest rate increases will ease home price pressures,” Silverstein said.

Benjamin Curran, Managing director of Global Edge Investment (GEI), said the group has been tracking the economic expansion of several American States and was particularly bullish about Colorado.

“There are more than 10 Fortune 500 and 22 Fortune 1000 companies headquartered in Colorado, with more on the way. Amazon plans to open its first Fulfilment Center in Colorado, which will create 1,000 full-time jobs,” he said. “This is having a direct effect on real estate, for example new Fort Collins homes rose 7.8% to $395,427. Colorado Universities are expanding, as is the demand for land suitable for student housing.”

“We as a company, along with our investors are very excited about the growth in the greater Denver region over the next three years,” Curran added.

The backdrop of the US economy remains positive, too. The unemployment rate fell to 4.9 percent at the end of 2016, and income continued to rise. Gross domestic product is forecast to grow around 2.3 percent in 2017, with rising consumer confidence, increased consumption, new construction, and an improved business investment. The Federal Reserve is expected to continue to gradually increase interest rates, reflecting the fundamental strength of the US economy.

Colorado, meanwhile, was among the top 10 states for employment growth during 2016, a trend expected to continue this year.

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