Chinese investment in US real estate tops $300 billion, according to a recent report. In addition, Chinese investors are now the largest group of foreign buyers in US properties. Chinese real estate investors have poured money into the US real estate market, and continue to do so, as China’s financial power continues to grow.
Buying into the American dream
Chinese investment abroad has led many Chinese nationals to buy both residential and commercial properties in the US. In the last five years, Chinese investment in the US totalled more than $100bn.
Asian Society and Rosen Consulting Group have studied Chinese investment into the US and believe the purchasing of America properties has helped the real estate market recover from the market’s 2006 crash.
The crash that begin in 2006, led to the economic crisis that engulfed much of the world over the next several years. Chinese investment in real estate has helped to expand prices in other countries such as the UK and Australia.
Interestingly, the report from the Asian Society and Rosen Consulting Group noted that Chinese investors spend more on real estate due to their tendency to buy in expensive property markets. Last year, 35% of all Chinese investment in residential properties were in California.
Meanwhile, Chinese buyers also bought heavily into properties in Washington and New York. While the lion’s share of Chinese investment has been in those three markets, China’s growing real estate buyers have also bought into cities such as Chicago, Miami and Las Vegas.
The reasons behind the investment in US properties is varied, and on average, Chinese investors paid $832,000 per home. That figure is far more than the average US home price as Chinese citizens look for second homes or use the properties as rental and resale investments.
One of the best examples of Chinese investment in the US was the purchase of the Waldorf Astoria hotel in New York City. Insurance group Anbang bought the iconic American hotel for $1.95bn from Hilton. Chinese investors are keen to buy what has been called trophy assets to showcase their real estate might. This preference for high-profile property has allow China’s investors to usurp Russians in the real estate market of Manhattan. Experts anticipate Chinese real estate magnets to continue their love affair with trophy assets in the US further, with New York City being at the top of the list of cities to invest in.
Is Chinese investment in US real estate long-term?
While the upswing in the market and Chinese investment has been a welcome sign, the authors of the report stated the increase may not be long-term. China is currently facing its lowest growth rates in 25 years. Those growth rates have influenced China’s President Xi Jinping to focus on improving the country’s middle class. This could cause negative results in the US, if Chinese investors lose interest in America’s real estate market.
Yet, with the interest of trophy assets and investment from major Chinese companies, more money could be spent on US properties in the coming years.