Juwai.com, a website that provides global property information in Chinese in order for the nation’s citizens to mine international properties. It recently put out data that showed the United State remains an attractive investment destination.
We look at the data closer to see what this means.
The United States the most viewed country and most inquired about foreign destination by Chinese investors, continuing a trend, according to Juwai. The sustained interest comes as the relationship between China and the United States has chilled somewhat due to trade concerns and the North Korea saga.
A National Association of Realtors (NAR) survey showed China’s residential property buying has surged. For instance, from April 2015 to March 2016, the Chinese spent $27.3 billion on United States’ real estate, which grew 16% to $31.7 billion the following year. It was the most amongst foreign buyers
A Hurun report, Immigration and the Chinese HNWI 2017 Report, released July 2017, showed the United States rated the most popular emigration destination among high new worth Chinese individuals. This is the third year in a row that the U.S. has been at the top of the list. Los Angles was the most popular North American city, with New York in fourth place.
Looking at the city level data from Juwai, this reveals even more interesting and relevant conclusions for our readership. Based on locality, Los Angeles was the most viewed destination and New York City was in second place, with Seattle in the third spot. These cities occupied the same three spots in 2016.
Is this sustainable?
California and New York have attracted Chinese buyers for several reasons. These include the strong culture, creating familiarity and acceptance. U.S. real estate also serves to diversify their investments beyond China’s border.
Last year, China’s government put in new measures, which are partly designed to restrict currency outflows.
The regulation, which went into effect in July 2017, forcing the country’s financial institutions to report cash transactions of more than 50,000 yuan, down from 200,000, and any overseas transfers conducted by individuals in the amount of $10,000 or more. Thus far, the latest regulations do not seem to have stemmed from real estate buying, particularly in Los Angeles or New York. Nonetheless, it bears watching to see if this crimps buying.
Political events, particularly given the latest vitriol emanating mostly from the United States, are also a potential headwind. The latest was the implementation of steel and aluminum tariffs, with countries threatening retaliation.
China has promised a “necessary response.” No one knows how this will play out, but there is the prospect that the United States will become a less-friendly place for foreigners to invest.
The currency could also play a factor. A weakening yuan makes U.S. property more expensive but also builds in price appreciation for existing property holders.
The Juwai shows Chinese real estate investors continue to have a strong interest in U.S. real estate. Both Los Angeles and New York City remain prime targets. This means continued strong demand and increased competition for properties.