The Chinese are coming … to buy US homes
Last updated 2-19-09 at 11:25 a.m.
By Chi-Chi Zhang
The Associated Press
BEIJING (AP) — Beijing lawyer Ying Guohua is heading to the United States for a shopping trip, and he's looking not for designer clothes or jewelry, but for a $1 million home in New York City or Los Angeles — and he expects to get a bargain.
Ying is part of a growing number of Chinese who are joining tours organized especially for investors who want to take advantage of slumping U.S. real estate prices amid the financial crisis.
“It’s a great time to buy because of the financial crisis, and houses in large cities like New York and Los Angeles will definitely go up in a few years,” Ying said. The home is an investment, but he’s also planning for the long-term: He hopes his 5-year-old son might use it if he goes to college in the United States.
While China’s ultra-rich have been buying property in the U.S. for years, the buying tours are new, made attractive by still-rising Chinese income levels and American real estate prices that have been falling for two and a half years.
More than 100 Chinese buyers have joined such tours since late 2008, said Chen Hang, the China-born vice president of real estate at Fortune Group. The Pittsburgh-based company shows fore-closed commercial property to Chinese buyers.
“The Chinese are going to seize the opportunity to take advantage of some great deals,” Chen said.
A lawyer based in Bejing, Ying is one of 40 investors going to New York, California, Boston, and Las Vegas on a Feb. 24–March 6 tour organized by Beijing-based SouFun Holdings Ltd., a real estate Web site. SouFun plans to show participants some foreclosed properties that are priced between $300,000 and $800,000.
“We never thought these tours would garner such interest, but we’ve had an overwhelming response,” said SouFun CEO Richard Dai. “Before, we heard of Chinese or Hong Kong movie stars buying homes in the U.S., and now more and more Chinese can afford to have the same.”
The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are looking to buy cheaper resources due to the downturn.
Because the authoritarian government has imposed controls limiting China’s exposure to international capital flows, the country has largely avoided the worst of the global financial crisis. Meanwhile, high-level incomes have continued to rise.
China had the world’s fifth-largest population of millionaires in 2008 with 391,000, up 20 percent from last year, according to Boston Consulting Group.
But Chinese with money in the bank have few good investment options at home. Real estate prices have cooled and stock prices peaked in October 2007 after a two-year boom.
Many buyers are unfamiliar with U.S. markets so they focus on well-known ethnic Chinese neighborhoods, according to John Wu, president of the Chinese American Real Estate Professionals Association.
Trips are pricey. Ying paid $2,200 — nearly the equivalent of the annual income for many Chinese — plus airfare.
Participants in a 10-day January tour organized by Beijing-based Environment International Travel Agency had to show proof of an annual income of at least $30,000 and that they owned a car and property in China.
Zeng, a developer who only spoke on the condition that he only be identified by his surname, found a house in California’s Silicon Valley that he had planned to buy for his 20-year-old daughter, a university student in Boston who plans on attending graduate school in the area.
“My daughter’s month-ly rent is $1,000, so it makes sense to buy a place, because I’m getting a return rather than throwing money away,” he said. (end)
Associated Press business writer Joe McDonald contributed to this report.