Tag Archives: Real estate USA

More Chinese buyers for California Real Estate

Chinese family invest in US real estateIn January 2015, President Obama announced a new plan to further open the American door to the Chinese and predicted that this new visa agreement could inject billions of dollars into the U.S. economy. “Under the current arrangement, visas between our two countries last for only one year. Under the new arrangement, student and exchange visas will be extended to five years; business and tourist visas will be extended to ten years,” said President Obama at the Asia-Pacific Economic Cooperation summit in Beijing.
Prior to this agreement, Chinese citizens had to renew their American business, tourist, and student visas annually. This visa regulation for travel from China to the U.S. was “one of the biggest stumbling blocks” for Chinese buyers of U.S. real estate, said Simon Henry, co-chief executive of www. juwai.com, China’s largest international real estate website. According to the White House, 1.8 million Chinese tourists visited the U.S. in 2013, generating $21.1 billion to the U.S. economy, and with this new visa law, up to 7.3 million Chinese visitors are projected to visit America in 2021, contributing roughly $85 billion per year to the U.S. economy, predicts U.S. Secretary of Commerce Penny Pritzker.
But what impact will this new visa law have on the real estate market here in Silicon Valley? We predict the local real estate market will receive a further boost as a result of the new U.S./China visa agreement. The new business and tourist visas will encourage more Chinese to travel to the U.S. and stay for longer periods of time. Likewise, with the extension of student visas, more Chinese parents will consider sending their children to U.S. schools. For these Chinese, having a permanent place to live while working or studying will be important.
GERVOIS magazine Advertising and sponsored content opportunitiesFor years, many affluent Chinese looked to U.S. real estate due to its stability and diversification. The new visa agreement will encourage those on the fence to consider taking the plunge and investing in U.S. properties. Not only will it be easier for them to come to the U.S., but it will also be easier for their friends and family to make frequent visits. Given our thriving local economy, appreciating real estate market, excellent schools, and great weather, Silicon Valley properties will be serious considerations for these folks. Moreover, Silicon Valley properties are considered reasonable compared to those in Shanghai or Beijing. “International buyers…are often surprised at how reasonable our prices appear,” says Ken DeLeon, founder of DeLeon Realty.
While the new visa agreement will likely contribute greater investment into the U.S. market, China’s strict currency regulations remain in effect, and we have seen enhanced enforcement by the Chinese central government over the past six months. These regulations prevent large amounts of currency from moving out of China. For example, Chinese nationals are allowed to transfer the equivalent of U.S. $50,000 per year into a foreign bank account. Given the hot, all-cash, non-contingent real estate market in Silicon Valley, buyers from China looking to purchase properties in this area should plan ahead and care should be given to ensure compliance with all U.S. and foreign laws. Additionally, these buyers should be prepared to provide proof to sellers that the funds are available. Along the same vein, sellers and agents should request for proof of funds with the offer letter to ensure that the buyers have the ability to close on time. Furthermore, when verifying funds, listing agents must understand the significant differences between the rules that apply to mainland China and to Hong Kong, which is classified separately as a special administrative region.
Gervois magazine - Marriott Hotels“California Realtors must also be aware that most of Mainland Chinese investors interested to buy U.S. properties over $5M will use funds coming from Caribbean banks or Switzerland banks, to avoid the Chinese regulations on currency control”, said Pierre Gervois, CEO of China Elite Focus Magazines LLC, the publishing company of the Shanghai Travelers’ Club magazine, a publication for the wealthy Chinese.
The market for Chinese investors in the U.S. is therefore much bigger than “official” forecasts. It’s time for Realtors to be proactive with Chinese buyers and increase their presence in Chinese media.

References:
1. Kenneth Rapoza, “Obama’s New Visa Law Seen Helping Chinese Buy U.S. Real Estate,” http://www.forbes.com, November 14, 2014.
2. E. Scott Reckard, Andrew Khouri, Hugo Martin, “New Visa Rules Expected To Boost U.S.-China Tourism, Investment,” http://www.latimes. com, November 13, 2014.
3. Ken DeLeon, “Worldwide Real Estate Impact On Silicon Valley,” DeLeon Insight, September 2014.
4. Pierre Gervois, “How U.S. Retail, Travel, and Hospitality Industries Can Attract Affluent Chinese Tourists” , June 2012, China Elite Focus Editions. ASIN: B008L98Q3U

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Chinese travelers to the US: tourists or investors?

Yin Guohua heaved a sigh of relief last week as his plane touched down in Beijing after an 11-day tour of the US.
As a member of China’s first-ever delegation to shop for American real estate, Yin was prepared for hectic travel, endless showings, and pushy salesmen.
He was not prepared for the reporters. “Everywhere we went, there were cameras chasing us,” Yin said ruefully.
The novelty of Chinese shopping for American property guaranteed publicity for the 21-man delegation, which visited Los Angeles, San Francisco, Las Vegas, New York, and Boston. Another 19 delegates, most of them 35-50 years old, missed the trip because of visa problems.
Soufun.com, the real estate portal, organized the trip but did not announce the results.
Yin, a lawyer who had said he intended to buy a $1 million apartment in either Los Angeles or New York, also declined to say whether he had made a deal, but said the trip met his expectations. “In fact, we had a wider range of choices than we expected,” he said.

Howard Rosen, a senior manager at Grubb & Ellis, a New York-based property agency, said he does not think most Chinese individuals are qualified to purchase real property in the US “unless the money is here.”
Investors with deposits in Hong Kong may qualify, he said, but assets on the Chinese mainland will not satisfy US sellers, Rosen said.
In addition, foreign investment in US property requires a lengthy process, according to Rosen. Without “certainty of disclosure,” Chinese investors will not be taken seriously, he said.

Chen Yunfeng, secretary general of the China Real Estate Managers Association, said he also doubts that the time is right for Chinese to buy US investment property.
“Given the current US economy, there is no sign that the price of property will appreciate strongly in the short term,” said Chen. The price may even continue to slide if the crisis worsens, he said.
More buying trips are likely, however, as China’s new millionaires look for places to invest their wealth.
According to a report by the Boston Consulting Group, China had the world’s fifth-largest population of millionaires in 2008 with 391,000, up 20 percent from the previous year. “Wealthy Chinese are now considering to buy luxury properties when they come to the US, not only Rolex and Louis Vuitton bags”, said Pierre Gervois, CEO of China Elite Focus, a Shanghai based marketing and PR company specialized on rich Chinese.
The growing interest among Chinese in buying overseas properties is not focused solely on the US.
“There are more people coming to us, asking about the process of buying an overseas property,” said Rainer Schleif, a manager of Aimeilan Consulting (Beijing) Co Ltd, a company that deals mainly with Australian and Singaporean real estate.
Desire to emigrate and the sharp depreciation of the Australian dollar have piqued investors’ interest, Schleif said.

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