California Top U.S. Destination for Chinese Real Estate Investors

The Golden State is proving to be the most popular of U.S. destinations for Chinese real estate investors, outranking New York with over 20% more buyers. A recent report on foreign investments issued by the National Association of REALTORS ® indicates 35% of China's $15 billion residential real estate investments in the U.S. are now in California, as compared to just 14% in New York.

"If you think about it, California is closer to China and has always been within the top U.S. destinations for real estate purchases," said Gay Cororaton, NAR's Director of Housing and Commercial Research. "There's also a history of a large Chinese population there – in fact. Asians are now the largest minority population in San Francisco."

In addition to the warm climate, Cororaton noted that California also remains popular because of the Silicon Valley, home to dozens of major software, internet, and tech companies such as Google (Nasdaq: GOOGL), Intel (Nasdaq: INTC), Facebook (Nasdaq: FB), Apple (Nasdaq: AAPL), Hewlett Packard (NYSE: HPE), and others. "California also has the highest fraction of Chinese buyers who are purchasing property for student use," she added.

Typically, said Cororaton, these investors have concentrated on New York City and its suburbs, but with continuously rising prices and China's recent increased controls on foreign investments, California offers more desirable areas, including those around San Francisco, San Diego, Los Angeles, San Jose, Fresno, and Sacramento. "There are a lot more metro areas to choose from," she also said.

Still, Chinese buyers remain the most significant foreign buyer group in New York City, says Juwai IQI Executive Chairman Georg Chmiel. "However, the number of foreign buyer transactions has decreased in 2020 due to the practical challenges imposed by travel bans and lockdowns. The Chinese believe long-term in New York's market and that transactions will climb as the COVID-related restrictions are lifted," he added.

Juwai.com, established in 2011, is one of the largest global platforms listing international properties. Juwai, meaning "home overseas," is visited by thousands of Chinese buyers each day from over 326 cities throughout China, as well as major Chinese communities in Taiwan, Hong Kong, Malaysia and Singapore. The site lists properties in 90 nations.

Among the other top U.S. destinations for Chinese investors are North Carolina, at 8%, Virginia at 7%, New Jersey at 6%, Texas at 5%, Florida at 4%, and Ohio at 3%.

"Many are attracted to northern New Jersey because it's just across the river from New York City," Cororaton said. "It also tends to be a lot less expensive than New York." North Carolina's Raleigh and Austin are also known for their tech industries, while Cleveland, Ohio, has always had a large Chinese community.

The NAR report shows single family homes account for about 62% of these investments, with about 48% of that number as primary residences.

Internationally, Thailand was the top destination for Chinese buyers in 2020, accounting for about 50% of foreign residency there. "Thailand has broad-based appeal and attracts both investor and owner-occupier buyers," Chmiel said. "There are families who rent villas for themselves and purchase several rental properties to generate income to fund their expenses. Demand for Thai property may be sustained by the country's high-quality healthcare sector."

Global medical experts rank Thailand sixth in the world for health security. It is the only Asian country to rank in the top 10. Health security is defined as "the ability to detect and manage a health emergency," such as a viral outbreak.

Chmiel indicated that 2020 also saw a shift from high net-worth families and individuals to more upper middle-class Chinese buyers investing in properties abroad. He attributes the change to China's rapid economic growth and rise in property values in tier-one Chinese cities.

Because these buyers often make frequent trips back to China, Juwai.com finds many of them prefer homes that are low-maintenance and can be safely locked up and left during an overseas trip. "They also want high-quality fixtures and finishes, including marble, well-designed lighting schemes, and high-end appliances in the kitchen and laundry," Chmiel added. Buildings with doormen, security guards and biometric locks on public areas like fitness centers are also in demand, both in the U.S. and internationally.

A recent Juwai.com global real estate report also reveals that the largest growth of real estate investments over the past year have been in the Asia-Pacific area, accounting for six out of 10 residential buying inquiries. "Going forward, we expect Chinese investors to continue to favor Asia-Pacific markets predominately because of the benefits of proximity, good yields, and low entry prices," Chmiel said.

Juwai has no current plans to take the company public, according to Chmiel.