When I was living in a rowhouse in Cherry Creek North, a late 20’s Chinese couple purchased the rowhouse bordering my south wall (presently for sale again). Both had been educated in the southern United States and were presently working in Denver. They purchased the residence I assume in cash while I was away on an extended business trip as I came home and met the new neighbors.
Within one year the rowhouse was put up for sale. Selling for a healthy 9.3% gain yet considering commissions and closing costs the couple broke even. I asked why they were selling? The answer; their visas were not approved for permanent residency.
As a licensed real estate broker in Colorado and New York I was curious where the Chinese are purchasing. Hong Kong has become a major market for Mainland Chinese pushing prices to record levels (a parking space just sold for in excess of US $600,000) and angering the local populace as prices continue to rise in a market that has been considered the most expensive in the world. Anecdotally I know New York is a favored place to park Yuan as well. Also, if in the market for a parking space I can fix you up with a nice space in Vail Village for $200,000.
As outbound Chinese tourism continues to increase worldwide, real estate purchases usually do not lag too far behind. In a report titled Immigration and the Chinese High Net Worth Individuals 2017, 300 plus individuals with net worth ranging from US$1.5M to $30M were interviewed.
The top destinations for these individuals concerning immigration in order of preference were the United States, Canada, the United Kingdom, Australia, Malta, Portugal, Ireland, Spain, Antigua, and Dominica. Of note, 2017 was the first time Antigua and Dominica have made the top ten list. Having been to Antigua; its UK heritage may be an attraction for Mainland Chinese of which many are fluent in English.
For the United States, the top destinations in descending order were Los Angeles (4th year at the top of the list), Seattle, San Francisco (which was 2nd last year) and New York. The location demand is partially due to geography as air-lift to Mainland China is most plentiful from the West Coast (Vancouver in British Columbia is very popular) yet also cost is a factor as San Francisco has become prohibitively expensive when compared to Seattle or Los Angeles.
Of note activity has slowed with the election of President Trump. Prior to the election per this article from Forbes titled Chinese Investments in U.S Real Estate Is Going Strong, this is not a new phenomenon.
Additional interesting findings from the study:
- Education opportunities was the top concerning for 76% of the respondents
- Living Environment came in second at 64% of the responses
- 84% of responses were concerned about the devaluation of the Yuan
- 50% were concerned about their housing market yet many feel values will continue to rise
In speaking with brokers familiar with the Mainland Chinese purchasers a few general themes came about concerning their real estate purchases in the United States including but not limited to:
- Education opportunities for their children and grandchildren.
- Stability of the investment i.e. bricks and mortar coupled with the US Dollar.
- Quality of Life i.e. concerns about pollution and environmental challenges in Mainland China.
- The sheltering and protection of their assets into what is considered safety i.e. housing and real estate in general.
In the worldwide market with some exceptions capital is fluid. During times of instability jewelry and precious commodities are in demand as a hedge against inflation and offering portability i.e. jewelry, gold, precious stones. Yet in this era of modern economics and worldwide interconnectivity housing and real estate have now become the preferred asset class for stability and protection.