As China’s real estate market enters “retreat mode” and hard assets remain important for affluent Chinese investors, Chinese buyers are heading to the United States in record numbers to scoop up property. According to a recent report, their dominance among foreign buyers in the U.S. real estate market has grown significantly in the past year: nearly one in four international property buys is made by a Chinese customer.
According to the 2014 Profile of International Home Buying Activity published on Tuesday by the National Association of Realtors, Chinese buyers from the mainland, Taiwan, and Hong Kong accounted for 24 percent of all international real estate purchases in the United States during the year ending in March 2014. Spending an estimated $22 billion on U.S. real estate over that time period, their stake is growing: the amount almost doubled the previous year’s $12.8 billion, which accounted for 19 percent of international purchases last year. Chinese investors were far ahead of the second-place Canadians, who spent $13.8 billion to take up 15 percent of international real estate buys.
The most obvious explanation for this trend is the rising tide of affluence in China, but additional factors are also at play. A rising yuan value also makes real estate abroad more attractive, while the United States is seen as a safe bet for property as China’s real estate market stokes fears of a bubble ready to burst. Furthermore, many affluent Chinese parents are buying United States property with their sights set on emigration or U.S. education for their children—a trend which became famous last year when a Chinese mom bought a $6.5 million Manhattan apartment for her two-year-old daughter with hopes that the pampered child would attend Harvard. The report found that 56 percent of the buys were temporary or vacation homes and 39 percent were a primary residence, while 5 percent were intended for commercial rentals.
The top locales for Chinese purchases included Pacific Rim states such as California and Washington as well as New York. Specifically, the five markets of greatest interest to Chinese buyers include Los Angeles, San Francisco, Irvine, New York City, and Las Vegas.
These buyers are willing to shell out huge amounts of money for the properties: the median price of Chinese-purchased real estate in the United States is $523,148. A total of 76 percent of these transactions are all-cash, thanks to factors such as payment method difficulties and rules about how much money can be taken out of China. For 70 percent of buyers, a detached single-family home was the property of choice.