Reports of a slowing Chinese economy have rattled stocks and sent sensationalist headlines across investment newswires, but real estate seems to be unaffected by worries from China. In fact, Chinese investors have poured over $110 billion into American real estate over the last five years.
Massive Chinese Investment in Real Estate
According to a new report, Chinese investors put $93 billion into United States resident real estate from 2010-2015, and $17.1 billion into United States commercial real estate in the same period.
While news of a slowing Chinese economy in 2015 sent worst-case worries to many investors, 2015 was a record year for Chinese investment in American real estate, reaching over $8 billion, more than the prior two years combined.
The E5-B Visa Program, which grants residency visas to individuals who invest over $500,000 in US real estate, helped drive $9.5 billion of Chinese investment over that five year period. This led to an estimated 200,000 jobs in addition to other economic benefits.
Where Chinese Investment is Focused
New York and California brought in over $1 billion each in Chinese real estate investments in the 2010-2015 period that the study focused on. Not surprisingly, Los Angeles, San Francisco, and New York City were the top destination for those foreign funds. Those cities are also served by non-stop flight routes from mainland China.
Texas and Illinois followed with investments in the $500 million to $1 billion range. Other states including Washington, New Mexico, Florida, and New Jersey were included in a list bringing in over $100 million, but it is noteworthy that 70% of the total went to the big three cities in California and New York.
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Controversy in Big Cities
When Chinese stocks dropped last year, shifty investors were on the lookout for less threatening waters. American real estate was a top target, and a surge of foreign funds came in from Asia.
Destinations for those funds included areas like Canyon Lake Ranch, north of Dallas, where 108 acres of former camp land are poised to become 99 small mansions designed specifically for Chinese buyers. The developer, also Chinese, kept three lots for his own mansion.
While developments 35 miles from a metro area will do little to spike real estate prices in other areas, that is not the case for all Chinese investments.
In Vancouver, Canada, Chinese investors are happy to pay $1 million for modest bungalows, driving up prices for locals looking to upgrade into a bigger home. This type of buying was popular for luxury apartments in Manhattan and mansions in Silicon Valley, which played a role in rising prices in those markets.
That type of purchasing is now moving inland, with investments in places like Iowa. But how bad is it on those coastal cities? Apparently really bad. Chinese investors are buying up about a third of Vancouver properties.
Work with a Trusted Agent
If you live in a market with skyrocketing real estate prices, make sure to work with a trusted real estate agent who can help you navigate the waters. When looking for a quality agent, start your search at AgentHarvest.