Chinese Investors Dominate US Real Estate

Chinese Investors Dominate US Real Estate

Globally, China’s foreign investments are rapidly increasing. These are investments in the different sector such as infrastructure, energy and today most prominently, real estate. China ranked 3rd in US commercial real estate following Canada and Singapore. Around 18.1 billion US dollars was used for US direct investments alone. Chinese investors are not only looking to invest in residential homes but also commercial spaces that can be developed and shows high potential for profit. Chinese Investments play an important role in US’ recovery from recession. It is one of the main contributors to the re-rise of the real estate industry then. In addition, investing in real estate also has been one of the alternatives of Chinese Investors to becoming a contractor for government projects where Chinese Investors face challenges to compete with US companies. This gives them the opportunity to enter the US market in a different way, a much easier way compared to entering a joint venture with another US company. Over the years 2010-2015, Chinese real estate investments can be categorized to the following: Residential property, Commercial property, Property for Development, EB-5 Visa Program, Securities-backed properties, and Real estate loans.

For residential properties, it is known that Chinese buyers pay more compared to other foreign investors. They tend to invest more in residential properties that are located in the state of California or the City of New York. China’s economy relies on the consumer’s drive to purchase different products. Chinese Citizens are well known for their superior power to invest in such properties. The expenditure made for this type of property arose to 20% over the past five years. As for commercial properties, investments made by big Chinese Companies went to hotels, towers, buildings etc. They’ve shown a surprising annual growth of 70 percent in the acquisition of commercial properties.

The projects for development, on the other hand, has served as a good source of local jobs, generated not only through the construction period but also post construction once the developed structure is already under operation. The investments of Chinese Developers and construction companies rose to 15 Billion US dollars over the 5 year period. As for the EB-5 Visa, these developments were found to be quite effective as a tool to increase foreign investments, especially the Chinese. This pathway to citizenship has enticed Chinese investors to pursue a project in the US, by investing at least 500,000 US Dollars to generate 10 jobs. If this criterion is met, a green card is waiting upon completion of the project. As for securities-backed properties. The Chinese government surpassed all other countries in the investment of mortgage bonds amounting to 207.5 Billion US Dollars last 2015. Finally, Chinese investors composed primarily of Chinese Banks, lend money to companies, individuals or developers to invest in real estate. Chinese Banks were also found to be competitive to US Banks.

The rise of Chinese Investments in the US market has remained to be one of the main issues that the US faces today. As the Chinese Investments increase in the country, political leaders often contemplate on how to retaliate. This may be due to economic standing issues, or merely the aim to balance the benefits that the two countries gain from each other. This concern is on top of the existing political tension caused by the US stand on the South China Sea conflict as well as Nanking Massacre, which are mostly brought by US several allies and their respective interests. Nonetheless, Chinese investments even though foreign have created thousands of jobs for Americans as well as benefited the financial sector. Overall, Chinese citizens have shown aggression in pursuing US investments, especially in recent years. This is seen to be driven by multiple sources of motivation, the intention to protect liquidated assets from currency fluctuations, to simply venture in a US based business, or the belief that there is a good future in America for Chinese companies, their owners, and their families.

 

Categories: Real Estate

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