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Chinese Purchase of U.S. Real Estate Expected to Continue Growing Despite Capital Controls

2016-08-01  Source:JinList.com
Chinese purchased $27.3 billion worth of residential real estate in the U.S. in the 12 months ending March  2016.1   However, that does not include their investments in commercial real estate, which is estimated at no less than $8.5 billion by JinList.com, the leading technology platform dedicated to connecting real estate professionals with Chinese buyers.

Despite talks of capital controls, Chinese total investments of $35.8 billion in U.S. real estate in 2016 represents a 25% growth over the prior year, said Dr. Jin Zhao, CEO of JinList.com.

The data released by NAR confirms JinList's prediction that growth of Chinese investments in U.S. real estate will only continue. The underlying social economic factors of U.S real estate remain unchanged: Clearly defined land ownership, property rights, quality education and a clean environment. Dr. Zhao said that China's fast growing property sector has helped form a 69 million plus affluent middle class who view real properties as a more attractive investment than stocks.

Chinese buyers have become the largest international buyers of U.S real estate, paying on average $936,615 per transaction, which represents a 12.6% increase over the prior year.

What is also worth noting, said Dr. Zhao, is that sale prices by Chinese property owners reached $694,500, which is also higher than the national average sales price of $446,191 sold by international clients2. For those real estate professionals who are seeking to work with sellers of properties in this price range, the Chinese owners will be a growing potential customer base worth paying attention to.

While affluent Chinese are buying into luxury real estate, institutional investors are buying into commercial real estate and related entities. China's Taikang Life Insurance became the largest shareholder of Sotheby's International through a 13.5% equity stake  investment.3

So even with capital controls in place, Chinese investments into U.S. commercial and residential real estate alone in the next five years will reach $218 billion, accelerating through 2025 as China's economy resumes equilibrium.4

1. The National Association of Realtors, July 2016.
2. NAR, July 2016.
3. WSJ.com July 28, 2016.
4. Asia Society and Rosen Consulting Group, 2016.

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