Vietnam, India and Mexico are seen as the countries most likely to win business from China.
“Vietnam and Mexico are welcoming, so it’s easy.” [Chinese firms] We are setting up production facilities,” Gau said. “But India does not like domestic investment from China.
“The biggest beneficiaries will be those who allow Chinese factories to open and hire local workers to produce the same goods for foreign customers.”
At the peak of hardship: Hong Kong’s luxury property owners resort to expensive private loans
At the peak of hardship: Hong Kong’s luxury property owners resort to expensive private loans
Gaw Capital’s latest investment strategy comes at a time when mainland China’s economic recovery has stalled.
Gau said the country’s office market is in a difficult situation, with vacancy rates rising to 80% in some cases, and rents continuing to be depressed due to corporate budget cuts. Data centers are also under pressure from a combination of lower demand due to the economic slowdown and disruptions in chip supply, Gau added.
According to JLL China, China’s office sector will remain a tenancy market in 2024, with landlords weighed down by a weak economy and new supply forced to continue lowering rents throughout the year to stimulate demand.
Gaw Capital asks Hong Kongers to sell apartments near Foshan-West Kowloon Line
Gaw Capital asks Hong Kongers to sell apartments near Foshan-West Kowloon Line
China’s economic situation will have an impact on Hong Kong, as Hong Kong remains the financial gateway to the mainland and depends on its economy. “Unless mainland China’s economy stabilizes, there will be no stimulus to improve Hong Kong’s economy,” Gau said.
The company will invest in logistics sectors in Vietnam and Mexico, with a team in California responsible for the latter strategy.
Gaw Capital has raised US$22.3 billion in equity and invested in 4 million square meters of logistics space across all countries since 2005. Its investments span all sectors of the real estate market, including residential developments, offices, shopping malls, serviced apartments, hotels, and logistics warehouses. As of the third quarter of 2023, assets under management were USD 33.7 billion.
Gau Capital eyes further Japanese real estate deals as TSMC expands
Gau Capital eyes further Japanese real estate deals as TSMC expands
In the US, Gaw Capital is eyeing the struggling office market as an investment strategy and is betting on AI developments over the next decade.
Since the coronavirus pandemic, U.S. office prices have fallen sharply due to high interest rates and increased vacancy. “The office asset class has declined the most,” Gau said. “For example, in San Francisco, we bought real estate for just one-third the price in 2019.”
Go Capital closed on a 293,347-square-foot office project on San Francisco’s Embarcadero Square late last year.
Meanwhile, AI will change the way people work, improve productivity and transform many areas, including the office, Gau said. The AI company will primarily operate in three locations: San Francisco, Seattle, and Cambridge, Massachusetts.
There will be a big wave of office demand from these AI companies. “If you buy at the right price and hold for five years without debt stress, you can make a big profit,” Gau said.
Go said major tech cities such as Seattle, San Francisco and, to some extent, New York, have a nine-month grace period during which distressed office assets can be purchased at a reasonable discount.
” [US] The office market has never bottomed out. [yet],” he said. “Leasing is still in the doldrums, interest rates are still high and banks are not willing to lend. But we haven’t hit the bottom yet so you can buy. [distressed assets]”
Mr Gow said he did not expect a rate cut in the near future. “They don’t have that pressure,” he said. “The US economy is doing very well. There is no hard landing pressure on the S&P, stocks or corporate earnings.
“If there’s no hard landing, why would the Fed cut rates?”
Go said the Fed could cut rates by 25 percentage points in June and 50 to 75 percentage points by the end of the year, for a total rate cut of 1% this year.
