China has maintained its status as the number one investor in commercial real estate in the United States in sales dollar volume, and it seems it will continue to grow. This year, Chinese buyers have spent $31.7 billion on residential real estate. This number is $3.1 billion more than the previous high that was set in 2015 of $28.6 billion. They are also buying the most housing units. This year they bought 40,572 which is up from the 2016 numbers of 29,195.
According to the National Association of Realtors or the NAR, sixty-five percent of Chinese buyers paid in cash opposed to the twenty-six percent who used United States mortgage. When looking at some of the reasons behind these purchases, we find that thirty-nine percent bought property as a vacation or residential investment, twenty-one percent bought as a general investment, while only eight percent bought property as student accommodation.
Another interesting statistic to point out is that sixty-seven percent of purchases went to detached single-family homes. This left fourteen percent of the sales going to townhouses and condominiums making up thirteen percent.
Location was another strong factor when looking at the growth of Chinese investment. California seemed to be the location that was most favored by the chinese buyers. Within that detail, it was found that suburban purchases were the most popular making up for sixty-one percent. Following that were central city and urban areas that accounted for thirty-one percent of purchases while small town purchases came to about seven percent.
However, there have been a few hiccups in this growth. NAR’s chief economist, Lawrence Yun, said that “realtors mentioned that tighter regulations on capital overflows in China cooled off non-resident foreign buyer interest in 2017.” Sue Jong, who is the chief of operations at Juwai.com, said that “international real estate investment will be down by at least ten percent from 2016.” Although, despite this statistic, she also mentions that Chinese buyers still trust the American market and see at as a long-term fit. So higher peaks are on the horizon.
While China only ranks eighteenth in the world by aggregate ownership of foreign real estate and other assets compared to GDP sitting at twelve percent which is below the average of forty-two percent, Jong sees this being fixed the future with a continued strong Chinese investment.