Buyers from China could be landing as much as $50 billion annually in US residential real estate in fewer than 10 years, a new report is predicting.
That’s a step up from the roughly $30 billion buyers from China spent on homes last year, according to the comprehensive, 112-page Breaking Ground: Chinese Investment in US Real Estate study.
Asia Society, an educational organization, and Rosen Consulting Group (RCG), a real estate economics consulting firm, put out the report. It looks at Chinese investment, both past and present, in stateside property.
“With the larger and diversified pool of investors, new investment vehicles, greater market knowledge and connections, as well as the domestic economic pressures in China, RCG expects Chinese investment to increase in the coming years,” says the report, which Asia Society says is the first of its kind.
If the projected growth pans out, it will continue a trend that has seen Chinese buyers overtake Canadians as the leading foreign buyers of US homes.
Chinese buyers have shelled out at least $93 billion on residential real estate from 2010 to 2015, according to the report, accounting for annual growth of 20 percent through this period.
“Still, it should not be expected to rise in a linear fashion, as it is still subject to the US economic and real estate cycles,” the report notes.
And though the projection for 2025 activity casts a long shadow on current investment, a slowdown is in the cards for 2020, according to the report. “China’s economic turbulence will create a short-term speed bump for real estate investment overseas,” it says.
Last year, 35 percent of homes that Chinese buyers purchased were located in California, making it by far the most popular state, going by the total number of homes sold. Washington and New York followed at 8 percent and 7 percent, respectively.
The report lists Texas and Hawaii as other major markets for buyers from China, highlighting an increasing number of properties in Florida are getting purchased by these investors as well.
“These markets correlate well with the availability of direct flights from China and established Chinese and Chinese-American populations,” the report explains.
While researchers interviewed industry sources and culled public records, other reports, information from trade groups, the machinations of the Communist Party of China complicates forecasting outbound investment growth accurately.
“Chinese regulatory changes can be implemented much more quickly… than in some Western countries, and there is always a possibility that the Chinese government will enact policies to significantly curtail outward real estate investment activity,” the report notes.