By Claire Curry
What U.S. cities offer Chinese investors the best potential ROI in residential real estate?
This is the question Fordham EMBA students investigated on behalf of their pro bono client, China-based lender CreditEase, for their capstone consulting project, which culminated in an on-site presentation at the firm’s headquarters in Beijing on Aug. 19.
“There’s a lot going on with the Chinese economy that made our presentation timely and meaningful,” said Colin Cassidy, EMBA ’15. “When their currency was gaining strength, they were losing in exports. Ultimately, that makes our research even more powerful.”
To accommodate the investment needs of the country’s growing middle-class population in a fluctuating economy, CreditEase is exploring U.S. real estate as a safe investment for its clients, and it looked to the Gabelli School’s Westchester-based EMBA cohort for guidance and recommendations.
The result? The 22 students recommended five U.S. locations — New York City (Queens and the Bronx), Philadelphia, Seattle, Houston and San Francisco — as markets that could be good matches for CreditEase clients looking to invest an average of $5 million.
“The teams conducted deep analyses of each market to justify why these cities make sense,” explained An Yan, professor and associate dean of research and faculty development, who accompanied the cohort to China for the client presentation. “They considered brokers and developers, how to build and manage buildings in each of these cities, potential investment complications and how to create the best investment structure to minimize taxes.”
According to Cassidy, who delivered the opening remarks and final summary before eight members of CreditEase’s corporate strategy division, the cities were chosen based on specific criteria, such as how quickly they rebounded from the 2007-2008 financial crisis, the strength of the local economy, unemployment rates, real estate tax advantages and rent-to-buy ratios.
“The clients asked a lot of questions about all of the cities and seemed most intrigued by the potential of Philadelphia, which made a lot of sense given their budget,” Cassidy said. “They told us it was a job well done and that they’d like to continue working with us.”
The cohort of executive students includes two medical doctors and senior-level executives from organizations like MTV, King Kullen grocery store, Morgan Stanley and Liberty Insurance.
In addition to their presentation, the group also visited the Great Wall, the Summer Palace and Peking University, among other sites during the week-long trip.
“The feedback from the presentation from CreditEase was extremely favorable,” said Francis Petit, associate dean for academic programs at Lincoln Center. “They found the recommendations very useful and believe it will ignite a strategic dialogue within their organization. At a celebratory lunch after the presentation, the senior officials of CreditEase were not only thankful to the Fordham EMBA students for their work, but also were excited to explore the recommendations further.”