As prices shoot up in top cities, grass looks greener else­where

Chi­nese home­buy­ers are be­gin­ning to shun the most sought-af­ter lo­ca­tions, re­ports.

China Daily (Canada) - - FRONT PAGE -

The United States is now the No 1 choice for Chi­nese in­vestors look­ing to buy prop­erty abroad, and the trend shows no signs of abat­ing, stud­ies sug­gest.

Yet as real es­tate prices in­crease in “the most de­sir­able cities”, in­dus­try in­sid­ers say savvy buy­ers are shift­ing fo­cus to other lo­ca­tions to get more bang for their buck.

A 2014 joint re­port on the habits of wealthy Chi­nese by mar­ket re­searchers Hu­run Re­port and Visas Con­sult­ing Group, an im­mi­gra­tion agency, showed that 60 per­cent see the US as the best place to in­vest in prop­erty, well ahead of Canada (22 per­cent) and Europe (7 per­cent).

The find­ings were based on a sur­vey of 141 high-net-worth in­di­vid­u­als, with av­er­age fam­ily wealth of 42 mil­lion yuan ($6.8 mil­lion).

Los An­ge­les, San Fran­cisco, New York, Seat­tle and Bos­ton were iden­ti­fied as the top US des­ti­na­tions for Chi­nese real es­tate in­vest­ment. How­ever, the grow­ing de­mand for prop­er­ties in th­ese cities has in­evitably pushed up prices, prompt­ing money-con­scious buy­ers to search for bar­gains else­where.

“A lot of in­ter­na­tional buy­ers have shifted into more­af­ford­able large cities, such as Hous­ton and Miami, be­cause they see trends in the de­mog­ra­phy, econ­omy and hous­ing mar­kets that are very sim­i­lar to New York, while prices are around one-third of what they are in New York,” said Peggy Fucci, CEO of OneWorld Prop­er­ties.

Her com­pany han­dles mar­ket­ing for the Para­mount Miami World­cen­ter, a 60-story luxury con­do­minium project still un­der con­struc­tion. She said wealthy Chi­nese had al­ready pur­chased half of the prop­er­ties for sale.

“Chi­nese buy­ers go for newly built, high-end wa­ter­front build­ing, where they can eas­ily find renters at at­trac­tive yields,” she said.

Texas is also wel­com­ing a greater num­ber of Chi­nese house hun­ters, par­tic­u­larly Austin and Hous­ton, said An­drew Tay­lor, co-chief ex­ec­u­tive of Juwai, a Hong Kong web­site that helps Chi­nese buy­ers find US prop­er­ties.

The Lone Star State is per­haps an ob­vi­ous choice for in­vestors, con­sid­er­ing it en­joys an­nual trade worth al­most $10 bil­lion with China, while the city of Plano, near Dal­las, has the sixth-largest pop­u­la­tion of Chi­nese res­i­dents in the US, ac­cord­ing to the last na­tional cen­sus.

The flow of real es­tate in­vest­ment to Michi­gan is per­haps more un­ex­pected, Tay­lor said, adding that Chi­nese in­vestors — with one eye on the re­vival of the US auto in­dus­try — are snap­ping up homes in man­u­fac­tur­ing bases such as Detroit, Sag­i­naw and Flint.

Peo­ple are also pur­chas­ing prop­erty in Ann Arbor and other col­lege towns in the state to ac­com­mo­date their chil­dren while they study over­seas, he said.

It is now com­mon for wealthy Chi­nese par­ents to send their chil­dren over­seas for ed­u­ca­tion. Last year, roughly 270,000 Chi­nese stu­dents were en­rolled at US schools na­tion­wide, ac­cord­ing to China’s In­sti­tute of In­ter­na­tional Ed­u­ca­tion.

“Ten years ago, Chi­nese stu­dents on av­er­age stayed for only two years for over­seas ed­u­ca­tion,” said Ru­pert Hoogew­erf, chair­man of Hu­run Re­port. “But now the time range has been ex­tended to about eight years, as early as from ba­sic ed­u­ca­tion.”

Chi­nese cit­i­zens spent $22 bil­lion on res­i­den­tial prop­erty in the US be­tween March 2013 and March last year, ac­cord­ing to the Na­tional As­so­ci­a­tion of Re­al­tors. They ac­counted for 24 per­cent of all sales to in­ter­na­tional buy­ers, and 76 per­cent of their trans­ac­tions were com­pleted in cash.

The num­ber of pur­chases is ex­pected to in­crease even fur­ther thanks to China and the US agree­ing in Novem­ber to in­tro­duce 10-year tourist and busi­ness visas for each other’s cit­i­zens.

“It (the agree­ment) makes buy­ing a va­ca­tion home in the US much eas­ier, and it has cer­tainly led to more deals be­ing done,” Tay­lor at Juwai said.

The as­so­ci­a­tion said 51 per­cent of the trans­ac­tions over the 12-month pe­riod were made in the states of Cal­i­for­nia, Wash­ing­ton and New York.

Cal­i­for­nia, which ac­counted for 35 per­cent, is par­tic­u­larly at­trac­tive be­cause it is rel­a­tively close to China, has at­trac­tive cli­mates and life­styles, and its ma­jor cities all have large Chi­nese-Amer­i­can pop­u­la­tions, said Shi Ruixue, CEO of Global House Buyer, a Bei­jing com­pany that helps Chi­nese buy abroad.

“Chi­nese restau­rants and Chi­na­towns are real pos­i­tives, and the state also has a thriv­ing tech in­dus­try that em­ploys many Chi­nese,” she said.

Shi said many in­vestors to­day are en­trepreneurs or higher mid­dle-class pro­fes­sion­als, such as doc­tors and en­gi­neers, rather than Chi­nese ty­coons. “Con­dos or one-room apart­ments are the type of prop­erty most Chi­nese in­vest in, with the av­er­age price about $2 mil­lion.”

While those look­ing to live in the prop­er­ties they pur­chase head to the west coast, Chi­nese in­vestors mo­ti­vated by em­ploy­ment or ed­u­ca­tion benefits are con­tin­u­ing to snap up valu­able real es­tate in Man­hat­tan, said Tan Weimin, a re­al­tor who caters to Chi­nese home­buy­ers.

His client’s trans­ac­tions range from $1 mil­lion to $4 mil­lion, and many treat the prop­er­ties solely as in­vest­ments, he said.

“They use them as a hedge to di­ver­sify their hold­ings.” Con­tact the writer at li­jing2009@chi­nadaily.com.cn

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