By Joel Cone, Staff Writer
They can’t own property in their homeland; they can only lease it from the government. The number of millionaires there is growing and they want to invest their money somewhere other than their own country. So buyers from mainland China are looking to purchase U.S. real estate — both residential and commercial properties. The housing markets they are looking at come with high price tags, but their native currency has much greater purchasing power in the U.S. market.
Whether it is New York, Los Angeles, or San Francisco, these buyers are coming to the table with all-cash deals in some of the priciest parts of the country, as well seeking out foreclosed homes in areas hit hard by the housing market crash such as Florida and Nevada, reported USA Today.
According to figures reported by RealtyTrac, California has led the nation in total foreclosure activity since January 2007 (that’s 62 consecutive months through February 2012) while Florida has ranked second for the same period of time. Nevada, on the other hand, took over the nation’s top spot for highest foreclosure rate from Colorado in January 2007 and has not relinquished the title since.
However, with cash at their disposal, these same buyers are just as interested in trophy commercial properties and hotels in The Big Apple as they are in foreclosed homes for sale, said USA Today.
In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24 percent from the previous 12 months, according to the National Association of Realtors. Buyers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011, more than quadruple their investment in 2008, according to Real Capital Analytics.
Those numbers likely understate Chinese investment, as investors may buy property under business entities they’ve set up in the U.S., says Patrick O’Neill, founder of ONeill Group, a Hong Kong-based company that helps Chinese buyers find U.S. property.
According to USA Today, 40 percent of Chinese buyers are looking for investments, while 60 percent are looking for a place to buy in order to have good schools for their children or for business or immigration purposes.
Some U.S. lawmakers also see foreign investment as a way to boost the U.S. housing market.
Legislation proposed last fall by Sens. Charles Schumer, D-N.Y., and Mike Lee, R-Utah, would let foreigners get a three-year resident visa if they invest $500,000 in U.S. real estate, including $250,000 for a primary home. They’d have to live at least 180 days a year in the property and pay taxes here.