Chinese nationals became the largest foreign buyers of US homes last year as they pour billions into American real estate, seeking safe offshore assets, according to a new study.
A huge surge in Chinese buying of both residential and commercial real estate last year took their five-year investment total to more than $110 billion, according to the study from the Asia Society and Rosen Consulting Group. And despite a slowdown due to Beijing's clampdown on capital outflows, the figure for the second half of this decade is likely to double to $218 billion, the study said.
"What makes China different and noteworthy is the combination of the high volume of investment and the breadth of its participation across all real estate categories," the study said. The authors of the study said their numbers, based on public, understate the total. They necessarily miss purchases made by front companies and trusts that don't identify the sources of the funds.
While big deals, like the Anbang insurance group's $2.0 billion purchase of the Waldorf Astoria hotel in New York last year, and its failed $14 billion offer for the Starwood group in March, make headlines, the study said Chinese buying of US homes far outpaces its investment in commercial land and buildings.
Between 2010 and 2015, Chinese buyers put more than $17 billion into US commercial real estate, with half of that spent last year alone. But during the same period at least $93 billion went into US homes. And in the 12 months to March 2015, home purchases totalled $28.5 billion. That put the Chinese past Canadians, who have long been the biggest foreign buyers of US residential real estate.
Geographically, Chinese buyers are concentrated in the most expensive markets: New York, Los Angeles, San Francisco and Seattle.But Chicago, Miami and Las Vegas have also drawn buyers.
That focus means they pay well above the average US home price: last year, Chinese buyers paid on average about $832,000 per home in the United States, compared to the average for all foreign purchases of $499,600.
"This familiarity of utilizing real estate as an investment or wealth preservation tool is more prevalent in China and reflects the broader comfort of purchasing second homes in the United States by Chinese individuals and families," the study noted. The study says it expects a lot more commercial real estate buys in the United States by Chinese companies.