Even with the China/US trade dispute, Chinese interest in US real estate remains relatively strong. Diversification, yuan devaluation, US relative political and economic security, stronger US property rights, and the very aspirational motivation to have property in the US near hospitals and colleges help drive this interest. A significant amount of the investment comes from investors with money already out of China. There are estimates that over 1 trillion US dollars is outside of China and not subject to foreign remittance.
Jin Zhao, a friend and client, recently wrote an article of Chinese investment drivers. Its reprinted with his permission below:
“Why Chinese Buyers Prefer New Properties
For anyone that follows the Chinese investment market, they know Chinese have been investing in US properties, and with a specific preference towards new construction. Chinese invested $37.7 billion in US real estate last year alone. Such a preference, however, is limited by the available new construction in the US, which is typically less than 20% of the total properties for sale. Why are Chinese so into buying real estate? Why do they keep buying US real estate? What are the factors behind their preference for new construction? We examine key considerations from the Chinese buyers’ real estate experience in China, and how that is driving their decision to invest in certain types of US properties.
For their children’s education, Chinese buyers prefer school properties. Those close to a good elementary, middle/high school, or a university command a premium that may be 2 or 3 times regular properties. That is why owning a school property is considered a coveted social status among many parents. By comparison, school properties in the US are considerably more attractive, as they can be purchased at a 30% premium over regular ones.
Another important consideration for Chinese buyers is the property’s ability to hedge against inflation. Properties, especially new properties with updated designs that attract high rents, tend to have the ability of producing steady income.
In the last 10 years, people have witnessed the rapid depreciation of automobiles, cell phones, stereo, and other technology products. However, income-producing properties have held value relatively well, especially those newly constructed properties near central business districts or school locations.
In large metropolitan cities in China, new properties are usually more desirable compared with those that were constructed in the 1990’s. The older properties were designed and built with certain “commune elements”, which are not suitable to today’s families, which demand easy parking, spacious kitchens and modern bathrooms. Parking spaces and Internet access have become a must. In addition, earlier properties often have poorly designed and lessor quality heating, ventilation and air-conditioning systems. Such systems contribute to indoor pollution, which has been a common health hazard in China.
Those properties constructed 20 or 30 years ago have less remaining land use leases, which normally run 70 years from the date of construction for a residential property and 50 years for a commercial property. In a number of Southern Chinese cities, properties have land leases as short as 30 years, which creates uncertainty for property owners.
Additionally, these older properties are often situated in “Open neighborhoods”, which have few if any parking, not to mention underground parking. In addition to less than optimal interior and exterior designs, they are typically 5-6 story buildings and most do not have elevators. In such properties, residents use walkup stairs, which is difficult for the elderly and deliveries. When it comes to sales transactions, older properties often have complicated sale procedures, which require multiple ownership certifications. For these reasons, some banks in China are reluctant to provide financing for properties constructed 30 years ago.
New properties usually are situated in gated neighborhoods, and most are equipped with elevators. New properties tend to have modern interior/exterior designs which provide more comfortable living. Better security, underground parking and property maintenance services associated with these new properties attract high-income tenants. New properties with large kitchens, great lighting and ventilated bathrooms attract more tenants, especially international tenants.
For the above reasons, Chinese buyers’ property preference has become a benchmark for their hunt for US properties. JinList.com specializes in marketing US properties to Chinese preferences.
JinList.com features brand new US properties including condominiums such as The Beacon at Garvies Point. The Beacon is built and managed by RXR Realty, which is a major real estate developer that manages 61 commercial real estate properties and investments with an aggregate gross asset value of $18.5 billion. Its assets comprise approximately 24.4 million square feet of commercial properties, inclusive of a multi-family residential portfolio of approximately 2,600 units under operation, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area.
In addition to breath taking water views, the new condominiums at Garvies Point offer the latest designs. From high ceiling entrance hallways, to spacious and classically contemporary one, two and three bedrooms. These properties offer modern layouts, generous ceiling heights and 8-foot windows overlooking the Glen Cove creek, Garvies Point Preserve and the Long Island Sound. Master bathrooms include KOHLER brand products, large soaking tubs, Italian cabinetry, and a mix of marble and porcelain flooring and countertops.
Residents have access to various outdoor spaces, including rooftop terraces at the penthouse level, courtyard terraces at ground level as well as outdoor balconies for nearly every unit. The Beacon also offers an outdoor pool, fitness center and yoga studio, library, lounge, club room, screening room and marina.
To learn more about Beacon at Garvies Point and additional real estate properties that offer modern designs, within easy distance to major metro cities and healthy green surroundings, visit JinList.com.
About JinList.com
JinList.com is the world’s leader in connecting real estate professionals with Chinese buyers and investors in international real estate.
Using AI technology and Big Data analytics, JinList.com enables the Chinese real estate buyers half globe away in China to effortlessly search detailed data of international properties for sale and connect them with real estate professionals who help complete transactions. The Chinese buyers and international sellers – the agents, brokers and developers – all converge on JinList.com, which has become the leading marketplace, facilitating investments in international real estate and fulfilling many affluent Chinese’s need to live the American Dream.
With customer service provided in both China and U.S., JinList.com offers an easy access for Chinese buyers to invest in real estate in North America. At the same time, real estate professionals utilize advanced technology platform provided by JinList.com for access to affluent Chinese on both sides of China’s Firewall. JinList™ makes it easy for world’s real estate professionals to connect with Chinese buyers.
JinList.com is owned and operated by JRE, Inc. a global technology company. Its affiliate site, Jinti.com, is a popular platform of local social marketplaces in China. Jinti.com has attracted a large base of registered users and serves local Chinese communities in 435 cities throughout China and 200 cities in North America.
Real estate professionals from numerous established, world-known real estate companies have selected JinList.com to deliver superior results. We are excited to offer this robust platform and technology-enabled services to real estate and investment professionals who can cost-effectively market their brand, listings and properties to the Chinese communities.
We are looking forward to working with more real estate professionals throughout the U.S. and globally.
JinList.com is headquartered in Long Island, New York with offices in Shanghai, China.”