North Amer­ica realty ap­peal varies

China Daily (USA) - - BUSINESS FOCUS - By PAUL WELITZKIN in New York paulwelitzkin@ chi­nadai­

As prop­erty in the United States re­cov­ers steadily from re­ces­sion, New York City’s com­mer­cial real es­tate is likely to con­tinue to in­ter­est Chi­nese buy­ers, ac­cord­ing to ob­servers.

But the same can­not be said of Van­cou­ver city in the Cana­dian prov­ince of Bri­tish Columbia, another fa­vorite des­ti­na­tion of Chi­nese realty buy­ers, where a new tax has been slapped on for­eign pur­chases.

“The Chi­nese eco­nomic growth is slow­ing. But it’s still healthy. Real es­tate prices have re­cov­ered in most US mar­kets and this gives con­fi­dence to for­eign buy­ers, in­clud­ing the Chi­nese, to in­vest in US real es­tate,” said Danielle Hale, man­ager of hous­ing re­search for the Na­tional As­so­ci­a­tion of Real­tors in Washington.

US real es­tate is at­trac­tive in part be­cause there are large Chi­nese com­mu­ni­ties in the US that have ex­panded be­yond San Fran­cisco and New York, the usual land­ing ar­eas for those from the main­land. Seat­tle, Texas and Florida are gain­ing pref­er­ence among Chi­nese buy­ers, said Hale. “It’s re­as­sur­ing to buy a home in an area with an es­tab­lished Chi­nese com­mu­nity.”

Many Chi­nese buy­ers are also ac­quir­ing prop­er­ties for their school-, col­lege- or univer­sity-chil­dren, Hale said.

On the com­mer­cial real es­tate front, Chi­nese in­ter­est seems to be heat­ing up again after a brief lull, Joseph Sitt, CEO of the New York-based Thor Eq­ui­ties, told Bloomberg. “We saw a slow­down about six months ago when China went through that lit­tle bump in the road, but now I am start­ing to see it go­ing in re­verse.”

Last week, Xinyuan Real Es­tate Co Ltd, one of the first Chi­nese de­vel­op­ers to en­ter the US mar­ket, an­nounced the ac­qui­si­tion of the RKO Keith’s Theater, a land­mark movie palace lo­cated in the Flush­ing neigh­bor­hood in Queens, New York. Xinyuan plans to tear down most of the build­ing and con­struct a 269-unit con­do­minium tower.

Prop­erty records also in­di­cate that the US arm of Shang­hai Mu­nic­i­pal In­vest­ment, the largest State-owned en­ter­prise in Shang­hai, is re­port­edly in line to be in­volved in a planned $1 bil­lion con­do­minium pro­ject called the Cen­tral Park Tower in New York City.

But the story is dif­fer­ent in Canada. On Aug 2, the pro­vin­cial gov­ern­ment of Bri­tish Columbia in­sti­tuted a 15 per­cent tax on for­eign prop­erty buy­ers in met­ro­pol­i­tan Van­cou­ver as a surge in real es­tate pur­chases by rich for­eign­ers, par­tic­u­larly the Chi­nese, has set prices soar­ing in the area.

Van­cou­ver has be­come a haven for wealthy Chi­nese buy­ers as the av­er­age sales price of a home more than dou­bled be­tween 2005 and 2015, to C$1.6 mil­lion ($1.22 mil­lion), ac­cord­ing to the Real Es­tate Board of Greater Van­cou­ver.

Thomas David­off of the Sauder School of Busi­ness at the Univer­sity of Bri­tish Columbia said the ef­fect of the tax is hard to gauge right now. “The an­swer de­pends in large part on the im­pact on af­flu­ent buy­ers from China who make up the ma­jor­ity of for­eign buy­ers,” he wrote in an e-mail.

David­off said that if for­eign de­mand dis­ap­pears en­tirely, Van­cou­ver prices could fall some­where be­tween25 and 50 per­cent. “But I don’t think all for­eign buy­ers will dis­ap­pear. Some will pay the tax, some will find ways around the tax, like friends, fam­ily, and busi­nesses to which they are con­nected and are not sub­ject to the tax. If I had to guess, rel­a­tive to a world with­out this tax, a 10 per­cent drop in prices, but there is a lot of un­cer­tainty around that num­ber.

“Ex­change rates, macro vo­latil­ity in China, and cap­i­tal con­trol en­force­ment have also im­pacted Chi­nese de­mand for Van­cou­ver real es­tate, and we aren’t hold­ing those con­di­tions con­stant.”

Real es­tate prices have re­cov­ered in most US mar­kets and this gives con­fi­dence to for­eign buy­ers ...”

Danielle Hale, man­ager of hous­ing re­search for the Na­tional As­so­ci­a­tion of Real­tors in Washington


A girl holds a bill­board to pro­mote over­seas homes at a realty expo in Bei­jing.

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