Chinese To Spend Billions On American Real Estate

Wealthy Chinese with a few million yuan to burn will spend billions on U.S. real estate in the years ahead, according to a report released Wednesday by CB Richard Ellis, a large global real estate firm. The United States is the country of choice for China buyers.  Canada and Australia come in next at No. 2 and No. 3 respectively. That rich Chinese individuals and savvy corporations are buying up real estate in world class cities is no surprise at this point. News of new Chinese real estate deals are popping up every quarter.  Similar moves happened with the Japanese back in the 1980s. Now its China’s turn. And by most estimates, they are snatching up high end real estate in Los Angeles, San Francisco and New York, in particular. In California, China is the third largest foreign buyer of real estate, following Mexico and people from the Philippines, according to Realtor.org. In New York, the Chinese are second only to wealthy people from the Dominican Republican. Across the country, however, Chinese purchasers bought over $10 billion of U.S. real estate in 2011 and account for 9% of foreign U.S. house buyers, second only to Canadians, according to Juwai.com, a Chinese real estate website geared towards international home shoppers. By comparison, and across the 50 states, the Chinese buy more U.S. homes than Indians, Mexicans or the British. While Mexicans are big in California and all across the south, China still ranks within the top five foreign nationalities buying real estate in 44 states. China, for instance, is ahead of Mexican buyers throughout the more costly Northeast. They already are the number one foreign buyer group in states like West Virginia and Massachusetts. They are number two in New York, Maine, Indiana, Missouri, Colorado, Wyoming and Hawaii.

Christine Lu, founder of Affinity China, is hosting an event in Hawaii in October for rich Chinese.  And one of the topics is how to buy your American dream home.

During the week, well be providing complimentary tours of Hawaii’s best neighborhoods to give visiting Chinese an overview of Hawaii’s real estate market. They will tour some open houses and schedule follow-up private appointments with real estate partners,” Lu told Forbes on Thursday. For a select few, we will also include private sessions that gives Chinese investors an overview of investing in commercial real estate in Hawaii.

Companies are starting to cater to this niche globe trotter looking for their dream home. The Chinese are interested in real estate as both investment opportunities and also second homes outside of China. The properties they purchase as their own personal homes tend to be in the $1 million to $5 million range whereas as investment purchases range from $500,000 to $2 million, according to Affinity China.

Residential properties are as hot as commercial ones right now.

Deep pocketed Chinese investment firms are out shopping for commercial real estate.

“Those in our network tend to look at commercial property in the $10 million to $25 million range,” said Lu.

Right now, Chinese investors see the U.S. as a bargain following the worst foreclosure crisis since the Great Depression.  In fact, some cities and towns across the country are cheaper than properties in Shanghai and Hong Kong.  Home prices in the U.S., coupled with economic uncertainties and tight regulations designed to curb a housing bubble in China, are driving record Chinese investments in the U.S. residential and commercial real estate markets, according to the Asia Society, a multinational think tank with offices throughout the U.S. and Asia Pacific.

For instance, Chinese commercial real estate purchases in the U.S. totaled over $3 billion in 2012, much of it in California.  The state is expected to see record investments by the Chinese in 2013, the Asia Society said.  Two sizable deals took place this year already.

China Vanke and Tishman Speyer signed a deal for a $620 million luxury condo project in San Francisco this winter. In April, another deal for a cool $1.5 billion was inked in Oakland between Zarsion and Signature Development Group.

In June, several big deals in New York City went down. Zhang Xin, CEO of Soho China , joined forces with the wealthy Safra family (of Banco Safra fame) of Brazil to buy a stake in the General Motors Building in Midtown, The New York Times reported on June 25. Dalian Wanda Group, another Chinese developer, is planning to build a greenfield luxury hotel in Manhattan.

The U.S. won’t be the only country to greet China real estate dealers with open arms.

Chinese insurance firm Ping An bought the Lloyds of London building in the U.K. this week for $387 million.

One Canadian realtor told me that young Chinese are starting to come to Toronto and buy into that cities booming real estate market now.

If CBRE China’s report is right, Chinese real estate buyers are just getting their feet wet abroad. All told, CBRE said Chinese real estate investors are likely to dish out an estimated 1.1 trillion yuan, or $178 billion, buying up properties abroad in the years ahead, be it residential or commercial properties.