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Chinese home buyers heading overseas

By Hu Yuanyuan (China Daily)
Updated: 2010-10-21 07:49

BEIJING - Individual Chinese investors are quickening their expansion into the overseas property market as tightening measures on the sector at home continue to restrict their opportunities.

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So far, 13 local governments have rolled out policies to restrict the number of homes that a family can purchase. The further increase in down payments for both first and second homes has also raised the cost of investment.

According to Real Capital Analytics, China-based companies have invested $62.6 million in the US real estate market this year. The figure does not include US-based Chinese companies or other intermediaries. Statistics from the US National Association of Realtors also show that investors from China are the most likely foreign investors to purchase US properties valued at $1 million and more.

Li Ye, a 42-year-old company executive, has been thinking about buying an apartment in the US as her company just floated shares on Nasdaq. She believes it is now a good time to buy a house overseas instead of investing in property at home.

Joyce Rey, executive director of US real estate brokerage firm Coldwell Banker Previews International, also said she is witnessing a sharp increase in interest from mainland investors.

As a leading real estate agent in the US with about $2 billion worth of sales in her career, Rey has come to China for the first time to promote luxury apartments in California.

According to Rey, California is growing in prominence as a destination for Chinese real estate investment, following close on the heels of other popular markets such as Singapore, London and Vancouver.

During her visits to Beijing and Shanghai, Rey will also be meeting high net worth Chinese individuals to provide them with information on luxury real estate investment strategies. She plans to highlight the best possible luxury properties currently on the market, including the current No 2 development in the US, Fleur de Lys, listed at $125 million; and the No 6 development, Hummingbird Nest Ranch, ranked at $75 million.

"Low interest rates and good value after the financial crisis will provide investors with an attractive return," Rey said.

Global real estate service provider Colliers International said in a report on Monday that Chinese buyers from the mainland also continue to be a dominant factor in Vancouver, particularly in Vancouver-West and Richmond.

"Due to China's continuous tightening real estate policies, we are expecting many more mainland investors to buy properties overseas in the future," the company reported. The growth potential for property prices in Vancouver is expected to hit 20 to 40 percent in the following 10 to 30 years.

Similarly, Chinese investors spent about 170 million pounds ($260 million) buying up newly built properties in central London in the 12-month period ending March 2010, driven by a weaker pound and tightened real estate policies at home, international real estate agent Knight Frank said.

Figures from real estate service provider Savills also showed that buyers from Southeast Asia - as well as those from the mainland and Hong Kong - account for 35 percent of new development sales in London, making Chinese people the most active overseas buyers in the city.

"Recent tightening of (the government's real estate) policy towards Chinese domestic property investments has led to an increased appetite for overseas real estate purchases. And the strengthening of the yuan against major currencies in the past two years has also meant Chinese buyers could acquire foreign real estate assets at a bargain," said Randall Hall, CEO of Savills China.