China just overtook Canada as the largest foreign buyer of US residential real estate


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Chinese nationals overtook Canadians as the largest foreign buyers of U.S. residential real estate for the first time ever.

The Asia Society and Rosen Consulting Group co-authored a new report that found Chinese buyers spent at least $93 billion on homes, including condos, for living and investment purposes, between 2010 and 2015.

Chinese investment in commercial real estate was also substantial — spending rose at an annual rate of 70% — but Canada, Singapore and Norway still have acquired more U.S. real estate in dollar volume than China.

One of the increasingly popular investment methods for the wealthy Chinese is a program called EB-5, also known as the immigrant investor program. Foreigners invest capital to get on the fast track to obtain a green card. Since Congress first created the program in 1990, the program has resulted in $11 billion of investment from Chinese, or about 70% of total EB-5 investments from all countries.

Bruce Pickering, Vice President of Global Programs at The Asia Society, told Yahoo Finance that over the past 25 years, these Chinese investments alone have created 200,000 jobs. “I would say that’s real and material [economic impact]. In the last few years, the increase is startling — it’s significant for the U.S.”

One of the projects that has been powered by EB-5 investments is Hudson Yards, New York’s biggest real estate development in a generation; in fact, it’s the largest pooled EB-5 investment to date with 1,200 Chinese families investing $600 million into this project.

Pickering noted that a primary motivation for Chinese buyers is their desire to eventually move overseas. “They are moving to the U.S. either to manage their investments or frequently to bring their families and consider moving — what you see often is the husband or wife comes and plants the family and then moves back and forth to China,” he says.

According to the report, Chinese investors are still seeking out major gateway markets, with 70% of aggregate transaction volume concentrated in New York, San Francisco and Los Angeles. But Pickering says more and more Chinese are looking elsewhere to settle down, specifically mentioning Tennessee, Missouri, Georgia, and North Carolina. “As the Chinese get more sophisticated, as they’re here more often, and as they start looking for value, the real bargains are not in these cities any longer; they’re inland and they’re places you wouldn’t normally expect to see it,” he says. “So the Chinese are moving out pretty fast into cities that frankly could use the investment.”

But with increased capital controls expected in the near term, Pickering expects slower individual purchases of U.S. homes, but also sees it as an opportunity for investors who are looking for predictability. “Because we’re in this election cycle, you hear a lot of hyperinflated rhetoric, but the truth is the U.S. is still perceived to be one of the world’s best, if not most, stable economy and therefore a place where you can take your money. If you do your homework, you can make a steady investment and protect your assets.”

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