Soho CEO buys NY tower

Chinese real estate tycoon Zhang Xin, CEO of Soho China, paid around $1 billion for a 40 percent stake in a landmark New York office building, a person familiar with the deal was quoted by Reuters as saying Monday, a move indicating growing confidence by foreign investors in US commercial properties.

But a Chinese expert warned that investors should be more cautious about investing in the US commercial property market, which is showing signs of a slight recovery but still faces uncertainties in its outlook.

Sungate Trust, which is controlled by the family of Soho China's Zhang, joined with M Safra and Co Inc, the investment firm of Brazil's Safra family, to buy the stake in the General Motors Building, which values the tower at $3.4 billion, Reuters reported.

Zhang invested in the GM building with her personal wealth, not Soho China's funds, Soho China told news portal qq.com Monday.

Neither Soho China nor Zhang could be reached by press time Monday, but Zhang reposted reports by media about her investment in the GM Building on her Weibo account Monday with the comment, "the news spread so fast."

Reuters described the building as the most expensive office building in the US.

"There are still potential risks to investing in US commercial properties, which usually see asset price and rent fluctuations, although signs point to a slight recovery of the market and the US economy," Wang Jun, deputy director of the Consulting Research Department at the China Center for International Economic Exchanges, a government think tank, told the Global Times Monday.

Bloomberg reported last month that China's State Administration of Foreign Exchange (SAFE) is studying the possibility of investing in US commercial real estate using foreign reserves.

Although the rumor has not been confirmed by SAFE, Wang said it would not be a good long-term strategy, and warned Chinese investors to avoid the difficulties that Japanese investors confronted three decades ago.

During the 1980s, Japanese investors enthusiastically bought a huge number of US properties, but ran into big trouble when the bubble burst in the 1990s. "Chinese investors must be aware that property investment is not the only way to invest in the US," Wang said.

Some foreign agencies have already begun to observe a recovery of the US commercial property market.

"(US) commercial property prices, which hit a bottom in late 2009 and early 2010, have enjoyed a strong and almost uninterrupted recovery," said Moody's Director of Commercial Real Estate Research Tad Philipp on Moody's website in May.

Total Chinese investments in the New York office and hotel market between 2003 and 2012 added up to $1 billion, global real estate consultancy Jones Lang LaSalle said.