Chinese Real Estate Investment
Written By: Miller and Associates Realty On: 1st December 2012 Under: Market Updates, Real Estate Market
Turns out the American Dream isn’t just for Americans anymore. Riding the strength of an increasingly powerful yuan, which has risen in value by over 8% in the last couple of years, the Chinese are now second only to Canadians in terms of foreign investment in U.S. real estate. The population of China is becoming more and more affluent and looking to invest around the world and in the U.S., specifically, where average home prices are nearly a third lower now than in 2006. In the one year period preceding March 2011, for example, the Chinese spent over seven billion dollars on homes, nearly two billion on commercial property, and over 80% of applications to live abroad were for the U.S. From single family dwellings to luxury homes, from foreclosures to ultra high end apartments, wealthy Chinese often buy more than one property at a time, paying cash all the way. This is even more impressive when you consider that most have to set up offshore accounts, through a business or the like, to circumvent the Chinese government’s 50,000 yuan per year currency exchange limit. Prices aren’t the only thing that make the United States an attractive buy, however. Around 60% of Chinese who purchase a home in the United States do so with the intention of sending their children to school here. On top of that, they will actually own the land they purchase whereas, on the Chinese mainland, a citizen cannot own land – it is merely leased from the government. Our politicians are encouraging the investment, as well, drafting legislation that offers special resident visa terms based on the amount a foreign investor spends in our market. As indicated in the chart above, this isn’t necessarily a new trend but the numbers are only rising. In some markets, the rate of Chinese investment is high enough to actually increase the value of homes by as much as 3 percent! This injection of foreign funds is one of the few signs of life in our market, one of the slowest to show significant recovery in these slow economic times.
