US housing market still 'very appealing' for Chinese buyers, with purchases tipped to surge in 2022

Chinese demand for US property grew late last year and is predicted to climb further in 2022 as coronavirus travel restrictions are eased, industry insiders have said.

About US$700 million worth of Chinese money entered the US commercial property market over the year ending in September, up from US$600 million the previous year, the Washington-based National Association of Realtors said in a February outlook.

Though demand is about half of pre-pandemic levels, it is expected to rebound strongly this year, according to Asian real estate technology group Juwai IQI Holdings.

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"Even though China's borders remain closed at this time, we believe 2022 will see Chinese buying of US property begin to climb again," Kashif Ansari, the group's CEO, said on Monday.

China's stringent border controls aimed at containing the spread of the coronavirus have slowed travel between the two countries, cramping purchases among Chinese who prefer to view properties before buying.

A 20 per cent reduction in the number of Chinese students studying in the US has been particularly bad for property purchases, Ansari said. Students sometimes buy homes with family money.

"When China's borders reopen to free travel, the rebound in Chinese property acquisition will rapidly gain pace as visits climb," said Ansari, whose firm gauges demand based on client enquiries and advertises US$4 trillion worth of property from 111 countries.

"The US home market is very appealing to Chinese buyers," he said. "In particular, the prospect for continued rapid price growth attracts buyers who are eager for capital gains."

Wealthy Chinese see US property as a solid investment for overseas-earned income and one that is hard for the Chinese government - which imposes stringent capital controls - to touch.

China became the leading foreign buyer of US real estate around 2012, according to Knowledge@Wharton, an online business analysis journal of the Wharton School of the University of Pennsylvania.

Homebuying by Chinese nationals hit an 11-year peak of US$31.7 billion in 2017, but had fallen to US$4.5 billion last year, according to the National Association of Realtors.

California, Georgia, New York and Michigan were the top four US destinations for Chinese residential property money as of March 2021, the trade association said.

San Francisco and Los Angeles led buying in California, said James MacDonald, senior director of research for the real estate services provider Savills China.

In Los Angeles, purchases by Chinese nationals picked up in late 2021, according to Tanya Stawski, a real estate adviser in the city who specialises in overseas clients.

Buyers were attracted to the limited inventory in western Los Angeles, distressed rental properties - which can be on the brink of foreclosure - around the urban mass, and expensive houses east of downtown, she said.

Chinese investors often did not mind that tenants in distressed flat complexes owed rent, said Stawski, who works for Sotheby's International Realty. California banned evictions in 2020 to protect people put out of work by Covid-19 closures, lowering vacancies.

"I feel it has a lot to do with the eviction moratorium and the inventory and there are more people who want to buy here with limited space on the west side," she said.

Chinese buyers were also heavily drawn to properties near schools and amenities, MacDonald said. "In cities where the city core is more active, it might be a condo in a downtown location," he said.

Chinese investors are also focusing on less expensive markets such as Florida and Texas, places with "higher yields and lower taxes", Ansari said.

Most Chinese buyers across the country preferred remodelled homes with few maintenance hassles, he said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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