Although real estate agents in the U.S. might enjoy the fact that Chinese buyers have such a love affair with U.S. property, the Chinese government’s feelings on the matter are rather different.
The Wall Street Journal reported this week that Chinese officials were trying “by stealth” to slow an unprecedented exodus of funds out of the country. Banks in China have allegedly increased scrutiny of foreign-currency transactions by businesses — including Chinese entrepreneurs investing abroad and companies paying overseas bills.
And some property advisors of Chinese investors in the U.S. housing market said they were feeling the slowdown in interest from Chinese investors after the banks’ efforts.
Bing Wu, founder and president of Doorhu, the real estate portal that helps Chinese investors make tailored property searches in the U.S., said he’s seen evidence. “Last weekend we attended an overseas property investment show in Shanghai,” he said. “We and others at the show booths all felt the slowdown.”
Yuan depreciating against U.S. dollar
Wu is battling other adverse elements, he said.
“The Chinese currency appreciated significantly against most major Western currencies, such as the Australian dollar, the Canadian dollar and the Euro but has depreciated slightly against the U.S. dollar,” he explained.
“So many Chinese investors are turning their heads to other western countries.”
The Chinese government has also launched several new initiatives to encourage people to buy properties in China.
“The result is that property prices in many first-tier and second-tier Chinese cities are skyrocketing. It is common to see price changes on a daily basis,” he said.
Sophisticated Chinese investors are continuing to find a way around the conditions which have been on-going for the few months.
Effects not widespread?
However, not everyone is seeing the alleged effects of the banks’ crackdown in China. Pacific Union International CEO, Mark McLaughlin, said his company has felt no slowdown.
“In fact, we have recently been approached by a prominent Chinese businessman to see if PUI would sponsor an investment fund for high-net-worth individuals from China to invest in real estate,” he said.
Chinese buyers were looking at other markets with favorable currency conditions, added Charles Pittar, CEO of Chinese real estate portal Juwai. He didn’t, however, see any likelihood of Chinese investors pulling back from their U.S. property investments because of incentives for them to buy more in China.
“Most buyers of U.S. property already have one or several investments in China,” Pittar said. “One of they key reasons they are investing in the U.S. is to diversify their investments. I don’t think anyone sees a reversal of flows, or Chinese pulling money out of the U.S. to invest it back in China.
“We have seen increased purchasing power for Chinese in markets like Australia, whose currencies are depreciating,” he added. “But against the U.S. dollar, the depreciation in the past year has been very slight, so there’s no sticker shock. Chinese are still paying basically the same amount in their own currency for US property,” he said.
Although Juwai does not direct Chinese buyers to any particular international market, operating in 89 international countries, Pittar said the U.S. has been the favorite since Chinese investors began buying international property in earnest nearly five years ago.
“The U.S. is the no. 1 market for Chinese buyers, the no. 1 destination for Chinese emigrants and the favorite location for Chinese students to study,” Pittar said.
In February, Chinese buyers used juwai.com to make 68.5 percent more enquiries to property sellers than a year earlier, he noted.