CHINESE BUYERS BIG ON BOSTON,
Analysts: New rules policing cash removal expected to chill purchases
whom pay cash for pricey Hub properties — industry experts expect the slowdown will be equally abrupt.
“We are going to see more Chinese buyers in the market over the next few months, but the trend is going to slow down very fast,” predicted Xiaowen Yang, CEO of GeoHome, a Boston-area real estatedata startup, citing stricter rules announced last month by the Chinese government that will police cash exiting the country, further tightening a $50,000 perperson, per-year cap.
By June, when the rules go into effect, Yang said she is anticipating “a dramatic dropoff.”
The expected decline would come after the Chinese have been splurging on U.S. property, spending $93 billion on homes between 2010 and 2015 and an additional $17 billion on commercial property, according to a report last year by the Asia Society in New York and Rosen Consulting Group. And though the Bay State isn’t the top destination, it’s a key player, where Chinese buyers have snatched up more than 4,000 homes from January 2012 to September 2015, according to another report released last year by the The Warren Group and GeoHome.
“No one knows exactly how it’s going to play out … but the expectation is that there will be a significant falling off of purchases for the next 16 to 18 months,” said Arthur Margon of Rosen Consulting Group in New York. Areas in California are expected to get hit the hardest, he said, adding “There will be an effect in Boston, but it won’t mean the sky is falling.”
But others are optimistic that cash for housing will still flow into the region from China’s vast population of wealthy citizens, some of whom use the EB-5 “business investment” visa to gain legal residency here.
“Boston is a strong city, it punches above its weight,” said Jim Heffernan, a counsel with Rich May, P.C., a small law firm that works with many Asian clients seeking commercial real estate in Boston. The attorney and others said that buyers have so far circumvented China’s current $50,000 limit, either by withdrawing money in banks in Hong Kong or Canada or by gathering family members to collect big sums for property.
In addition, many agree that Boston remains an attractive place for Chinese property buyers, because of prestigious universities like Harvard and MIT.