American Real Estate Is Part of the New Chinese Dream

on May 31 2012 | in Real Estate Trends | by | with No Comments

new-york-city-home

Nearly half of mainland China’s 960,000 millionaires — individuals with residences, private businesses and investable assets of more than 10 million yuan or $1.5 million, according to the Hurun Report – are seeking permission to move abroad. The overwhelming destination of choice among them has been the United States.

“For China, the world is an emerging opportunity,” says Andrew Taylor, founder of Juwai.com, a real estate site based in Hong Kong that was launched in 2011 to match Chinese buyers with U.S. real estate. “We’re talking about a huge chunk of people with cash and the desire [to invest overseas].”

Buyers from mainland China and Hong Kong have been diversifying their portfolios by investing in American real estate, with New York, Los Angeles, and San Francisco among the most popular locations. They often pay cash for the properties they want.

Chinese spent  $7.4 billion buying homes in the United States in the 12 months ended March 2011.  This shows a 24 percent increase from the previous 12 months according to the National Association of Realtors. Buyers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011, more than quadruple their investment in 2008, says Real Capital Analytics. Patrick O’Neill, founder of ONeill Group, a Hong Kong-based company that helps Chinese buyers find U.S. property, thinks those numbers likely understate Chinese investments, as investors may buy under business entitites they have established on American soil.

Roughly 40% of Chinese buyers want property in the U.S. as investments, while 60% are buying in anticipation of their children going to school here, or for business or immigration purposes, says Steven Lawson, chief executive of Windham China, a firm that helps match Chinese buyers with U.S. sellers.

Lily-Sui Zhang, 30, says her husband’s Beijing family bought a house in South Pasadena last year so her three young children would have access to good public schools. The family thought investing in the U.S. was “probably more stable than in Beijing” due to concern about a Chinese real estate bubble, Zhang says.

“The prices here are more reasonable than in China,” says Lee Xiao Jun, from Hubei Province in China. Her husband’s work keeps him frequently between the United States and China, prompting them to look at a $4.5 million Hillsborough home close to the San Francisco Airport.

Interest in the Big Apple’s commercial properties remains healthy. Last year China’s HNA Group, the owner of Hainan Airlines, purchased 1180 Avenue of the Americas, a 23-story office building, for $265 million, and $126 million for the luxury Cassa Hotel and Residences near Times Square. Manhattan “trophy apartments” are all the rage at the moment.

The trend of snapping up American properties likely won’t end soon. Zhuang Nuo, president of SouFun International, a Beijing real estate company, says, “The U.S. is always the Chinese people’s dream.”

This is what $50 million can buy in New York City’s Tribeca.  A 30,000 square-foot loft with eight bedrooms, 10 bathrooms, an elevator, a private gym, and half basketball court.

[usatoday]
photo credit: prudential douglas elliman real estate

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