With China’s stock market steadily plummeting and the overall value of the yuan dropping right along with it, many of the country’s investors are turning their attention, along with their business deals, overseas to the U.S. real estate market. Originally starting along the coast, Chinese homebuyers have starting scooping up properties located in Dallas and the Midwest and don’t show any signs of slowing down anytime soon.
In addition to buying up residential and commercial real estate in the U.S., Chinese investors have also been buying properties in London and Canada. With this influx of cash, the norms of buying and selling property have been flipped upside down. In 2015, Chinese investors made up the largest segment of buyers in the U.S. The desire to invest overseas has been so great that demand has swiftly outpaced supply, which has resulted in a rash of hopeful buyers putting in their bids.
What’s more, buyers from China seem to prefer larger investments, buying homes for an average of $831,800 — more than triple the price of what an American buyer would pay. Reasons for pouring so much money in international investments stems from the fact that many in China simply want to protect their finances from the Chinese government while others see United States properties as a good business investment that comes with a moderate risk and high reward.
American real estate sellers have taken advantage of this trend themselves and have started setting up real estate businesses in China. Available properties run the gamut from waterfront communities and housing developments to golf course communities. While China’s current breed of property investors are better educated and younger as well as less wealthy than buyers of yesteryear, they are nonetheless ready to take advantage of the possibilities waiting for them overseas.
These possibilities come at a most fortunate time when the Chinese government has gone to great lengths to bolster the economy and has loosened restrictions on moving large sums of money across the country’s borders, two efforts that represent a more lenient financial system.
The Chinese government seems to have no problem with money being invested overseas. In fact, they’re encouraging it. While citizens of China have so far been able to convert only $50,000 into other currencies every year, the creation of the Qualified Domestic Individual Investor program will change that. Also referred to as QDII2, the international investment scheme will permit China’s investors to directly invest funds overseas, but only those who have financial assets of at least $160,000 will be able to take advantage of the program. In the coming years, the U.S. residential and commercial real estate market might see even more Chinese investors buying and renovating properties.
The U.S. real estate market has made quite an impression on foreign investors. With China’s investors buying properties for themselves and their families as well as for investment purposes, the trend will surely affect industries tied to housing, such as construction and interior design.