Contrary to speculation, the recent devaluation of the yuan or the fall of the stock market in China hasn’t stopped wealthy Chinese from investing in overseas property. If you are looking to sell your overseas property soon, you will find the information in this article useful.
Chinese investors had a very active 2015, buying overseas properties worth nearly $52 million. This number is expected to get higher by 2020, up to $220 billion. Real estate analysts from Knight Frank says that the outbound property acquisition of the Chinese shows a very encouraging trend, and that it is largely driven by policy support from the Chinese government.
There is a strong desire to diversify among cash-rich Chinese investors, which is why they are investing more and more in safe havens abroad, such as the United States, the UK, Spain, Australia, New Zealand, Portugal and France.
It is much easier for Chinese residents today to convert their Renminbi to other global currencies – especially the USD, British Pound and the Euro, which makes it so much easier for them to invest in overseas property. The Chinese are also much more aware of the world than they used to be in the past, as they are richer than before and better travelled.
They are also very picky about what they buy. Zhou, a business executive from China has met with several overseas property agents in road shows in the country, before deciding where to buy. She says, "On the one hand, US properties now are more expensive than 12 months ago, when I first decided to diversify my investments. On the other, if I didn't buy as soon as possible, the current value of my wealth wouldn't have been retained.”
The US is the top overseas property destination for cash rich Chinese investors. It is particularly attractive because many Chinese business executives have their children studying in American colleges, or working there. So there is a strong desire to be close to their children, which leads them to buy properties in California, Florida, Texas, New York and Boston.
But since Chinese homebuyers are pickier about the right property to buy, selling a house to them represents a challenge to most estate agents in the U.S. Scott McFarlane, a Houston based property agent says, "In the past, (Chinese) buyers would decide to buy a property just by looking at PowerPoint. Now, they would like to do on-site research, talk to lawyers, property inspectors and agents, and visit the properties time after time before they sign the deal.”
Henry Chin, the head of research at CBRE explains that the wealthy Chinese today value investment in property much more than investing in the stock market, especially after the series of stock market crashes in China in 2015. He says, "While the stock market's performance of one country may immediately affect that of another, the same can't be said of the property markets. So, it requires a lot of research for investors to decide."
"For this reason, traditional popular destinations, including Los Angeles, San Francisco, New York and Washington, are still the hottest destinations. For people seeking rich yields from property investments, sub-premier locations can be a good option," Mr. Chin added.
Most Chinese homebuyers invest in overseas properties that are in the range of $500,000 and $2 million. Generally, Chinese prefer to buy properties in peaceful neighbourhoods, which are not densely populated and prefer to live in large spacious homes than in apartments. They survey the investment destinations very carefully and study each property before making a purchase.