How To Succeed In The Growing Chinese Real Estate Market

There is a growing trend in the U.S. of Chinese investors snapping up American properties. Higher prices at home, instability in the Chinese real estate market and a number of other factors have all contributed to making the U.S. an attractive place to buy real estate. American real estate professionals who want to work within this niche market should understand what investors are looking for and how best to serve them.

Chinese Real Estate

Larger homes
According to Bloomberg, larger homes that can be had for a comparably good price are a big draw for Chinese investors and buyers. While prices in the U.S. are rising again, they are still much lower than those in mainland China. A two-bedroom condo in Shanghai’s Pudong district costs about $1 million, for example. The same condo in West Los Angeles, however, might only cost half as much.

Hui Hui Huang, one such buyer who purchased a five-bedroom townhouse in San Mateo, told the news source that the home fit all of his family’s criteria, and for the right price.

“We said, ‘Wow, this is really attractive and serves our needs,’” Huang said, according to Bloomberg.

Real estate professionals who work with Chinese buyers should keep in mind that space is very limited in China’s cities, so these buyers may place a special importance on open space.

Better return on investment
Chinese buyers who are looking to rent out their purchase may also be able to find something that better suits their needs in the U.S. The same Pudong condo compared above would rent for $1,400 per month, while the Los Angeles condo would rent for $3,300. That is quite an opportunity for foreign investors!

“From an investor’s point of view, it’s better to be a landlord in L.A. than [in] Shanghai,” University of California economist William Yu told the news source. “If you compare the rent-to-income ratio, it’s much better in Los Angeles than Shanghai.”

Bloomberg also noted that buyers from Greater China had already spent $22 billion in real estate purchases in the U.S. in March, which was a 72 percent year-over-year increase.

There are several online sources that can help to calculate the expected rental income for a unit, which may be useful when marketing properties to Chinese investors.

Targeted real estate marketing
Word of mouth among international buyers has traveled surprisingly quickly, some real estate sales agents have noted. Asian American and Chinese buyers have accounted for a significant portion of the residential property sales in New York City during the last several years, CNBC recently reported.

Using data compiled by the National Association of Realtors, the news source noted that international purchases increased from $68.2 billion to $92.2 billion during the past year, with Chinese buyers accounting for $22 billion of that total. This represents a rise of 19 percent from a year earlier – and the majority of these transactions were completed in New York City.

Tapping into the forms of communication that international buyers use to talk about properties may be a great way for real estate professionals to attract buyers and investors in this lucrative niche market.

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Posted in Broker Insights