Slumping US real estate prices are proving to be irresistible to many
(Beijing)BEIJING lawyer Ying Guohua is heading to the United States on a shopping trip, looking not for designer clothes or jewellery, but for a US$1 million home in New York City or Los Angeles.
He expects to get a bargain. Mr Ying is part of a growing number of Chinese who are joining tours organised especially for investors who want to take advantage of slumping US real estate prices amid a financial crisis.
ATTRACTIVE INVESTMENTS - The United States has plenty of unsold homes to offer - some 3.67 million, according to the National Association of Realtors'It's a great time to buy because of the financial crisis, and houses in large cities like New York and Los Angeles will definitely go up in a few years,' Mr Ying said. The home is an investment, but he's also planning long term: He hopes his five-year-old son might use it if he goes to college in the US.
While China's ultra-rich have been buying property in the US for years, the buying tours are new, made attractive by still-rising Chinese income levels and American real estate prices that have been falling for two and a half years.
More than 100 Chinese buyers have joined such tours since late 2008, according to Chen Hang, the China-born vice-president of real estate at Fortune Group. The Pittsburgh, Pennsylvania, company shows foreclosed commercial property to Chinese buyers. 'The Chinese are going to seize the opportunity to take advantage of some great deals,' Mr Chen said.
Mr Ying, the Beijing lawyer, is one of 40 investors going to New York, California, Boston and Las Vegas on a Feb 24-March 6 tour organised by Beijing-based SouFun Holdings Ltd, a real estate website. SouFun plans to show participants foreclosed properties priced at US$300,000 to US$800,000.
'We never thought these tours would garner such interest, but we've had an overwhelming response,' said SouFun CEO Richard Dai. 'Before, we heard of Chinese or Hong Kong movie stars buying homes in the US, and now more and more Chinese can afford to have the same.'
The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are looking to buy resources made suddenly cheaper by the downturn or companies suffering under the global debt meltdown. On Thursday, the Aluminum Corp of China, also known as Chinalco and the world's leading aluminium producer, invested US$19.5 billion in debt-burdened global miner Rio Tinto Group - China's biggest overseas investment to date. Because the authoritarian government has imposed controls limiting China's exposure to international capital flows, the country has largely avoided the worst of the global financial crisis.
Meanwhile, high-level incomes have continued to rise. China had the world's fifth-largest population of millionaires in 2008 with 391,000, up 20 per cent from the previous year, according to Boston Consulting Group.
But Chinese with money in the bank have few good investment options at home. Real estate prices have cooled and stock prices peaked in October 2007 after a two-year boom that saw shares rise six-fold in value. After years in which foreign money poured into China to take advantage of the hot economy, economists estimate that tens of billions of dollars began leaving the country in the last three months of 2008 as Chinese investors began bargain-hunting.
Chinese buyers are looking at both commercial property and homes to rent out or use on business trips. And the US has plenty of unsold homes to offer - 3.67 million as of the end of December, according to the National Association of Realtors.
Many buyers are unfamiliar with US markets, so they focus on well-known ethnic Chinese neighbourhoods, according to John Wu, president of the Chinese American Real Estate Professionals Association in San Gabriel, California.
Lion's Property Development Group in New York City organises Chinese groups to visit New York homes. The company also treats visitors to Broadway shows and famous restaurants in hopes that they will take to the city and buy a US$1 million to US$2.5 million home. -- AP
No comments:
Post a Comment