8.25.2016 | Continued Chinese Spending on U.S. Real Estate -Rusty Tweed team
A new report issued in May 2016 by the Rosen Consulting Group and the Asia Society showed that between 2010 and 2015, Chinese buyers purchased $93 billion in residential real estate, close to $208 billion of mortgage-backed securities, and approximately $17 billion of commercial real estate, including hotels and office towers.
Altogether, Chinese investment in the U.S. real estate market has topped $300 billion and is growing despite China’s increased currency controls and recent economic challenges.
The report found that while interest from some Chinese home buyers may lessen, overall Chinese buyers usually have larger budgets for home purchases than other international buyers. It also demonstrated that from 2013 to 2015 China outspent every other country in relation to the total dollar amount spent on U.S. homes.
While direct investment from China still only comprises 10% of all foreign direct investment into the United States, the Rosen and Asia Society report is significant because it is the first independent study to show that Chinese investors rank among the top in every sector of real estate. It also reveals the staying power of Chinese investors and their ability to withstand short-term market events, said Arthur Margon, a partner at Rosen Consulting Group and co-author of the report.
“There are strong signals that there will be continued, maybe even increasing appetite,” said Margon.
Rosen’s team forecasts a minor slowdown within the next 18 to 24 months for the United States, and a further worsening of China’s economic slowdown.
Xi Jinping, China’s president, recently said he will promote supply-side reforms and concentrate on increasing the middle-class, demonstrating the pressure China is under to turn around growth rates that are the lowest in 25 years.
From economic slowdowns to terrorism to votes over European Union membership, the increasing international footprint in major U.S. real estate markets means we’re increasingly likely to witness the impact of those issues, says Ross Milroy, owner and broker at Ross Milroy Realty in Miami.
“The Miami real estate market – and I think New York is very similar as well – we’re so dependent on the international buyers, and they’re such a huge part of our market,” Milroy says.
“A lot of our real estate markets do not follow traditional patterns, and a lot of our demand is dependent on what’s going on in those home countries of our buyers.”