While China is in the middle of a housing downturn, wealthy Chinese buyers are travelling to the US in groups on home-buying tours. Many are buying homes in the US to take advantage of the recent reduction in real estate.
Yin Guohua, a partner in a law firm stated ”The real estate prices in America have gone down drastically. It’s a good option for Chinese people who want to buy for investment purposes.”
The Chinese media now flaunts this trend as a new strength of the nation. Numerous newspaper articles and live TV broadcasts have dedicated time and resources to this new trend. Some even say that this new buying power of the rich and wealthy Chinese might actually help revive the depressing US real estate market.
One of the two companies known to organize these home buying trips is SouFun Holdings. The company is already planning to take another 10 groups of people to the US this year alone. At present there are some 500 individuals who have applied to accompany the group to the United States to look at property.
While these tours have been organized to present US homes to rich Chinese buyers, some of the tours participants are partaking for the sheer fun of touring the US in a whirlwind tour, and others yet are considering to buy property to help their children to obtain a US education.
Real estate professionals stated that many homes were actually cheaper to buy in the US than they were in China right now. An equivalent of a brand new inner city apartment in major Chinese cities like Beijing, Shanghai or Guangzhou, is actually cheaper in the United States said Anna Kalifa, vice president of business development at GTC Real Estate China.
Homes in America give c more bang for their buck. The weak dollar provides Chinese investors with more opportunities. Legally there are no barriers to stop Chinese buyers from purchasing property in the US, however, a prolonged stay isn’t possible unless these investors possess a valid green card.
The tours are being offered for a fee of US$3,600 apiece. This gives tour group members opportunities to buy homes in the US$500,000 to US$1 million range.
Trips were so popular in China that the tour operators had to run down hundreds of people so far and put them on waiting lists.
The one hurdle that could potentially stop Chinese investors from getting their currency out of the country to buy foreign investments is that the Yuan can only be exchanged under certain conditions for trade, tourism and other purposes.
Speculations are ripe that many are simply trying to evade taxes and are therefore afraid to voice their participation toward the media in China. People thought to be part of these groups include government officials as well.
The Oriental Horizon program stated that 7.5 percent of U.S. residential property sold to foreigners last year went to investors from mainland China, Taiwan or Hong Kong.
According to the agents who organize these US home buying tours, they are simply providing a solution for a demand. These tours provide eager buyers with the link they need to overcome language barriers and lack of familiarity for the procedures.
Photo Credits: JTContinental via flickr