Watch out world!
Wealthy Chinese has the cash to spend and they are not just spending it at home. Traveling more and always with a sharp eye for value, they are spotting deals and snapping up goods including real estate.
Property prices are high at home and in nearby Taiwan and Hong Kong, but wealthy buyers are seeing great property values overseas. They are eyeing communities that have a growing Chinese presence and buying top-notched properties in London, New York, Vancouver and Sydney.
The reasons for this surge, according to The Daily Reckoning, is that “for a growing number of well-to-do, geographically mobile Chinese citizens, property investments abroad are becoming a popular store of wealth, and a hedge against an increasingly precarious market back home. The Middle Kingdom’s emerging middle class has relatively few options when it comes to protecting their savings. (The National Bureau of Statistics announced yesterday the annual rate of inflation rose to 3.1% in May – up from April’s figure of 2.8%.) Many are wary about investing in stocks after recent, violent selloffs in the markets (the Shanghai Composite Index “officially” entered a bear market last month after declining more than 20% from its 2009 high). And again, fears over government efforts to cool the housing markets in major cities are further encouraging them to look farther afield.”
With the number of Chinese millionaires growing at an astounding rate, it is no surprise they are prouncing on the depressed real estate markets abroad. Real estate companies are assembling “property investment tours” to take Chinese buyers around different cities to preview homes. In the U.S., these would be properties in the $500,000-$1 million range. These tours, which cost several thousand dollars, have been so popular that there is even a wait list.
Vancouver, Canada is a hotbed for property investments by the Chinese. “Out of the nearly $200-million [worth of real estate] we’ve sold so far this year, I’d say 50 per cent was sold to Mainland Chinese,” George Wong of Magnum Projects recently told Vancouver’s The Globe and Mail. “There’s a growing middle class and a growing wealthy class. And they have become the fuel to our real estate.” Similar story could be told of Sydney as super wealthy Chinese are buying high0-end luxury apartments. Ewan Morton, managing director of Sydney-based Morton and Morton, said “Chinese investments in Sydney’s real estate market more than tripled during the past year, accounting for 16% of the agency’s $21 million turnover.”
Whether this trend is sustainable is unclear. We do know that smart Chinese investors are looking to diversify.
photo credit: corey leopold