Several Chinese travel companies are embarked on a new mission, taking their Chinese clients for home shopping in the US. Sliding prices of the houses in the US are attracting many cash-rich Chinese investors to have a home away from home, of course for a steep bargain.
Previously only sport stars and movie stars from China could indulge in such excesses, but today a decade of prosperity allows many Chinese to afford those luxuries. China is believed to have produced the world’s fifth-largest number of millionaires in 2008 with 391,000, an increase of 20 percent from the previous year.
SouFun Holdings, one of the real estate firms is sponsoring a tour (February 24 – March 6) to the US for as many as 40 prospective buyers. The trip will touch down at places like Los Angeles, Las Vegas, San Francisco, Boston and New York for the investors to view the houses.
Since late last year, most real estate companies which have connections with Chinese investors are engaged in such tours. More than 1200 would-be investors are understood to have travelled to the US individually or in groups. Many have already bought properties, triggering huge outflow of Chinese investments to the US, both on houses and commercial properties since last 5 months.
According to the National Association of Realtors, there are close to 4mn houses alone in the US up for grabs. Currently, the investors are keener on buying property in the Chinese neighbourhood as they are unfamiliar with other places, and thereby to minimize risks.
An investor who has already bought a house said that he got it for 30 percent lower than the 2007 price. He added that his daughter, a university student would occupy the house in California as he was shelling out $1000/month as rental for her and therefore it made a good business sense.
During a press meet before SouFun’s trip, their chairman Vincent Mo expressed that both countries would benefit from the new area of investment. He further assured that just a fraction of the investments would go out of the country, thus doused fears of outflow affecting the Chinese markets.
Foreigners can by property in the US under simple guidelines, they have to either pay a large chunk as down payment or pay more taxes. Investment experts say that taking money for overseas investment from China is relatively easy and this is likely to play a part in boosting investments to the US.
Notwithstanding the new found interest by the Chinese in the US housing market, experts warn that the prices have not reached the bottom yet and those who have long term plans only should invest. The prices of houses skyrocketed by about 150 percent since 2000 till 2007 but the bank-owned and median range houses have collapsed just by 40 percent as compared to the boom period. Taking into account the current economic crisis, analysts predict further slump till this year end.
Toboc Trade News