Chinese Investments in American Real Estate
Why are the Chinese buying up so much American Real Estate estate? The answer comes down to money. Without question, the Chinese are the largest and wealthiest players in the U.S. housing market. In fact, Chinese purchases of U.S. residential properties will reach over $32 billion in April of 2015. Chinese investors have been riding the U.S. commercial real estate (CRE) wave, perhaps motivated by the gradual shift in the Chinese government’s policy to promote outbound investments and their preference for investing in real estate that provides comparatively modest and stable returns. The slowing of the Chinese economy and government restrictions on second and third homes are pushing these buyers into the hands of U.S. sellers of both commercial and residential properties. As a result, U.S. luxury real estate has become a safe haven for Chinese investors, and China has now emerged as the second-largest foreign investor, after Canada, with an 8 percent share of the total cross-border investments in U.S. CRE.
The location of the properties being purchases primarily by Chinese investors vary, but according to the National Association of Realtors, the top states for residential Chinese buyers are California, Washington State, New York, Pennsylvania, Texas, and Florida. Interestingly, Chinese investors are most attracted to the combination of warm climate and low cost of housing. The particular type of residential property that is most popular amongst Chinese buyers are detached single-family homes that they can use for about 6 months of the year. The NY Times recently ran an article forecasting that 47% of all second-home sales in 2015 would be from international buyers. The Chinese are the most powerful international group — a group so large that it can immediately impact an entire market.
If you are interested in learning more, please consult with a member of the team at Buda Law Group and they will be more than happy to answer all of your questions. Buda Law Group is a principal owner/operator of Golden Bridge Realty which specializes in Southern California Residential and Commercial Real Estate.
John B. Buda, Esq.
1201 W. Huntington Dr. Suite 209
Arcadia, CA 91007