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By Li Jing | Home & Real Estate
Chinese homebuyers are beginning to shun the most sought-after locations, Li Jing reports.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 more-affordable 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.”