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February 08, 2018

Starbucks keeps Chinese investors focused on Seattle past the peak

Puget Sound Business Journal

Marc Stiles

Starbucks is an overlooked driver of Chinese real estate investment in the Puget Sound region.

With Starbucks opening a new store in China every 15 hours, the company's reach is dramatically expanding, said real estate broker Holly Yang, the head of Kidder Mathews' China Services group in the Puget Sound region.

"Starbucks is like an ambassador now," Yang said during a recent Bisnow panel in Seattle. "People associate Seattle with Starbucks."

China's influence on the Seattle real estate market has been significant. Yang cited data from Real Capital Analytics that shows Chinese investors have invested about $2.2 billion in the metro-area commercial real estate market since 2011, with 93 percent of that coming in the last three years. Investment peaked at $1.3 billion in 2015.

But now there's uncertainty over how much more investment to expect as China's government limits the outflow of capital.

"The biggest warning sign I see is all over the world liquidity is drying up," said another panelist, Henry Liebman. He's a co-founder of American Life, a Seattle company that has financed large developments with money from China.

Yang and Liebman think money will keep flowing from China as Seattle's status as a global hub grows. The buying spree continued last week when a Hong Kong company paid $145 million for the Motif Seattle hotel.

Yang said the Chinese government has signaled it will continue to allow capital outflows. The question is what kinds of investment will be encouraged.

"The United States is still the safe haven," Yang said, adding she is "a little concerned" about President Donald Trump's approach toward China.

"It's not defined very well," she said.

Labeling China a competitor or an enemy is a mistake, she said, adding that the U.S should instead work toward a collaborative relationship with China.

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

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