'Home abroad' gaining traction with purchasers

By Bloomberg (China Daily) Updated: 2014-07-10 07:16

An increasing number of affluent consumers from China are buying property in the United States and helping prop up prices there, Bloomberg reports

Henry Nunez, a real estate agent in Arcadia, California, met with so many homebuyers from China that he bought a Mandarin-English translation app for his phone.

The $1.99 purchase paid off last month, when he sold a five-bedroom home with crystal chandeliers, marble floors and two kitchens, one designed for smoky wok cooking. The buyers were a Chinese couple who paid $3.5 million in cash.

"Last year, it would have been $2.8 million," said Nunez, a property broker for 27 years in the city, 32 kilometers east of Los Angeles. "The biggest driver is a lot of people wanting to invest their money here."

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Buyers from China, including people from Hong Kong and Taiwan, spent $22 billion on US homes this year through March, up 72 percent from the same period in 2013 and more than any other nationals, the National Association of Realtors said in its annual report on foreign home purchases. That's 24 cents of every dollar spent by international homebuyers, according to the survey of 3,547 real estate agents.

Chinese purchases of US homes are likely to continue increasing as the country's swelling ranks of affluent consumers seek refuge from pollution and economic uncertainty, according to Thilo Hanemann, who tracks cross-border investment for the New York-based Rhodium Group.

"A lot of people are trying to hedge against a generally bearish outlook for the Chinese economy," Hanemann said in a telephone interview. "Buying real estate overseas has been in the past limited to a relatively small group of wealthy individuals and sometimes government officials. But it's become a much bigger trend, involving affluent middle-class people."

Chinese buyers paid a median of $523,148 per transaction, compared with a US median price of $199,575 for existing home sales. While Canadians bought more houses than the Chinese, they spent less - a median of $212,500 per residence, for a total of $13.8 billion.

Publicly traded builders are responding by catering to Chinese buyers in areas with high demand. Brookfield Residential Properties Inc staged feng shui blessing ceremonies before beginning work on projects in Anaheim and Foothill Ranch communities in Orange County, south of Los Angeles. The New Home Co consulted with a feng shui master on the land plan for its Orchard Park development in San Jose, California, that opened in April.

California is the most popular US destination for Chinese real estate buyers, according to Juwai, a Hong Kong-based property search engine.

Chinese customers bought 32 percent of the homes sold to foreign buyers in the state, double the share sold to Canadians, according to an April survey by the California Association of Realtors. About 70 percent of international buyers pay cash, the survey said.