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August 14, 2015

Economic turmoil won't stop Chinese investors from snagging trophy properties

Puget Sound Business Journal

Marc Stiles

Real estate experts say that a Hong Kong group's jumbo acquisition of the 76-story Columbia Center late last week is the first of more investments to come from Chinese buyers.

The jitters roiling China's stock markets won't slow down the pace of investment. If anything, the softening of the economy in China, which this week devalued the yuan, will accelerate interest in Seattle properties among wealthy Chinese investors seeking a safe haven, said Holly Yang, a Kidder Mathews broker in Bellevue who works with overseas buyers.

Gaw Capital Partners paid Boston-based Beacon Capital Partners $711 million for the Northwest's tallest building. It's a big deal not just because of the size, but because of what it portends.

"A lot of Asian buyers, they want to follow. They don't want to be the pioneer," said broker Sophia Wong, also of Kidder Mathews. She said buyers from China already are looking at acquiring office buildings in downtown Seattle.

Asian investors have been snapping up high-rise development sites in Bellevue and Seattle for more than a year, and now comes Gaw, a private equity fund management company, buying one of Seattle's best-known office buildings.

Gaw specializes in buying what's known in the business as "value-added" properties, or ones that can be upgraded to generate more income, according to its website. The firm focuses not just on office assets but residential development, retail properties and hotels. The portfolio ranges from a Courtyard by Marriott in Sacramento, California to Cupertino Gateway, one of Apple's main campuses.

In the U.S., Gaw targets properties in "major knowledge and innovation markets marked by a young, well-educated population and strong employment growth prospects," the website states.

Now Gaw has made its first Seattle buy with Columbia Center.

Gaw has retained a Seattle real estate company, Urban Renaissance Group, to make what URG says will be significant capital improvements to the common areas on the office floors and the retail levels at the base of the tower.

Whether Gaw plans to hold Columbia Center long term or improve the property and fill up the 1.5-million-square-foot tower is unclear.

Gaw officials declined an interview request.

Wong and Yang's boss, Skip Whitney, heads Kidder's China Services Group from the company's San Francisco office. Whitney said Chinese investors for years have been buying real estate in Los Angeles and San Francisco and Seattle's is an emerging market for those investors.

"Seattle, this is a new wave," Whitney said. "We're involved in a number of transactions here that are too early to discuss. But we see given the opportunity here and the lack of opportunity in other markets."

For the full story, go to Puget Sound Business Journal.

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