Downtown L.A.'s Chinese Real Estate Cycle
To a large extent, Asian money is driving much of the current development in Downtown L.A. Developed by Korea's Hanjin Group, the Wilshire Grand Center is currently the tallest building on the West Coast. And in recent years, David Pierson writes, "Chinese developers such as Greenland, Oceanwide and Shenzhen Hazens are pouring billions into the neighborhood, adding thousands of new residential units in soaring skyscrapers that will fundamentally change the city's skyline."
"'When all these megaprojects are finished, they’re going to have to reshoot the postcard picture of downtown L.A.,' said Mark Tarczynski, executive vice president for Colliers International's L.A. office."
Flush from the go-go building climate in cities like Shanghai and those surrounding the Pearl River Delta, Chinese developers have had to get used to a safer, more regulated approach in the United States.
In addition to the usual anti-development arguments, a concern on the American side is that Chinese developers "can rely on both local and Chinese-based home buyers to scoop up their condos. [...] Some downtown L.A. residents have expressed concern that Chinese investors will leave their properties empty — a phenomenon common in China and antithetical to the dense urban neighborhood many local boosters have long championed."
Taxes are also structured differently between both countries. "In China, there's no real property tax, so local governments rely on land sales for more than a quarter of their revenue. That gives them every incentive to expedite real estate development."