In 2015, the Chinese government moved to limit purchases made in foreign currencies to just $50,000. It is one of the chief reasons for the surge in Chinese investment in American real estate over the last several years – an approximately $200 billion surge to be exact.
Why are so many Chinese investors buying up American real estate despite their government’s attempts to curb those investments? Here are 5 things we believe are attracting these investors to U.S. real estate.
#1: A Possible Safe Place to House Their Money
We believe there is a housing bubble brewing in China and that because of that, authorities are curtailing investors’ ability to buy real estate outside of the mainland. At the same time, the U.S. lifted overseas investment caps to $1 billion, up from $100 million in 2014.
On top of that, for Chinese investors willing to create jobs, the U.S. EB-5 Visa program is incentivizing bigger and bigger real estate investments. Nearly three-quarters of all EB-5 visa-holders in the U.S. are now Chinese.
According to one survey, it is the American legal system that makes real estate investment here so attractive. In the entire world, the U.S. ranks the highest for real estate investors. By last summer, Chinese investors had already committed to $13 billion in U.S. real estate endeavors.
#2: Opportunity to Send Their Kids to the World’s Best Universities
America is home to three-fourths of the world’s top universities. For that reason alone, many wealthy Chinese parents seek to give their children a head start in life by investing in a second home in the U.S. so that their kids can establish residency to attend college. That includes more than 80% of the wealthiest individuals in China.
Evidence of this can be seen in the broadening scope of Chinese real estate investments. Historically investors from China have largely concentrated their efforts on the coasts in NY and in CA. Now, there are Chinese investors looking for real estate opportunities in less traditional areas for Chinese investment like the Midwest and Southwest.
#3: An Opportunity for More High Quality Real Estate Available than in Mainland China
China has a bigger problem than the proposed housing bubble. The problem is space. For the many wealthy citizens of China there is flatly no room for real estate investment. New construction is very limited and we believe the quality of real estate there does not compare to American real estate. Even standard features like central air is harder to find in China.
#4 Many Culturally Friendly Places throughout the U.S.
In 2013 Chinese immigration surpassed Mexican immigration to the U.S. Even in New York where Russian real estate investors have led all foreign investments, Chinese investors now outnumber all others.
New York, like California is culturally friendly due to its large population of Chinese immigrants. In fact, outside of China, only NYC has a higher concentration of Chinese residents. High net worth individuals from China by far make up the majority of that influx.
#5: A Viable Path to Citizenship
The EB-5 visa can be used as a green card for investors. One reason why we believe so many Chinese investors love American real estate is because it is a viable path to citizenship, especially for HNWI.
Why Aren’t You Investing in American Real Estate?
At this point, you may be asking yourself, “If they’re doing it, why aren’t I?” Good question. Chinese investments in American real estate are only expected to increase over the next few years. We feel that with a housing bubble set to burst and an urgent need to park some wealth outside of mainland China, now could be the time to invest. Contact us for more information about investing in American real estate.