Chi­nese de­mand stokes big­gest cross-bor­der res­i­den­tial prop­erty binge

China Daily (USA) - - BUSINESS -

If they were any­where else in Bei­jing, the five young women in cow­boy hats and match­ing red, white, and blue cos­tumes would look wildly out of place.

But here at the city’s big­gest in­ter­na­tional prop­erty fair— a fre­netic gath­er­ing of bro­kers, de­vel­op­ers and other real es­tate pro­fes­sion­als all jock­ey­ing for the at­ten­tion of Chi­nese buy­ers — the quin­tet of wannabe Tex­ans fits right in.

As they pro­mote Hous­ton town­houses (“Yours for as lit­tle as $350,000!”), a Por­tu­gal con­tin­gent touts its Golden Visa pro­gram and the Aus­tralian del­e­ga­tion lures passersby with stuffed kan­ga­roos.

Wel­come to ground zero for the world’s largest cross-bor­der res­i­den­tial prop­erty boom. Mo­ti­vated by a weak­en­ing yuan, surg­ing do­mes­tic hous­ing costs and the de­sire to se­cure off­shore footholds, Chi­nese cit­i­zens are snap­ping up overseas homes at an ac­cel­er­at­ing pace.

They’re also ven­tur­ing fur­ther afield than ever be­fore, spread­ing beyond the likes of Syd­ney and Van­cou­ver to lower-priced mar­kets in­clud­ing Hous­ton, Thai­land’s Pat­taya Beach and Malaysia’s Jo­hor Bahru.

For cities in the cross-hairs, the chal­lenge is to bal­ance the eco­nomic ben­e­fits of Chi­nese de­mand against the risk that ris­ing home prices spur a pub­lic back­lash.

“The Chi­nese have man­aged to ac­cu­mu­late very large amounts of wealth, and the op­por­tu­ni­ties to de­ploy that cap­i­tal in their own mar­ket are some­what re­stricted,” said Richard Barkham, the Lon­don-chief global econ­o­mist at CBRE Group Inc, the world’s largest com­mer­cial prop­erty bro­ker­age. “China has more than a bil­lion peo­ple. Per­son­ally, I think we have just seen a trickle.”

Ping An Hao­fang, an on­line real es­tate plat­form owned by China’s sec­ond-largest in­surer, says its $15 bil­lion first-half es­ti­mate of cross-bor­der real es­tate in­vest­ments, de­rived from mar­ket data, nearly matches the fig­ure for all of 2015.

Fang Hold­ings Ltd, the coun­try’s most pop­u­lar prop­erty web­site, pre­dicts overseas buy­ing on its sys­tem will in­crease 130 per­cent this year, while trans­ac­tions through Septem­ber at Shen­zhen World Union Prop­er­ties Con­sul­tancy Inc, China’s largest bro­ker for newhome sales, were al­ready 50 per­cent above last year’s level.

The coun­try over­took Canada as the largest source of res­i­den­tial pur­chases in US last year, ac­cord­ing to a May re­port by the Asia So­ci­ety and Rosen Con­sult­ing Group.

BLOOMBERG

Peo­ple walk past res­i­den­tial build­ings on the Jom­tien Beach area of Pat­taya, Chon­buri prov­ince, Thai­land, on May 29, 2015. Thai­land is one of the emerg­ing overseas prop­erty in­vest­ment des­ti­na­tions by Chi­nese.

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