Great Rise of the Chinese Consumer

Great Rise of the Chinese Consumer

Great Rise of the Chinese Consumer

In the past few years, Chinese buyers have started to make their presence felt on the global property market, snapping up everything from luxurious trophy homes and vineyards, to more modest condominiums and investment opportunities. For many Chinese, global property investment is an emerging opportunity which until recently was out of reach.

Second only to the US in terms of international buying power, Chinese buyers represent a tremendous new market opportunity for property sellers around the world. Yet, new opportunity brings new challenges in reaching, communicating and engaging this new market.

China boasts some of the wealthiest people on the planet, most whose personal fortunes can dwarf treasuries of medium-sized countries, and the growing population of upper-middle-class Chinese now also has their eyes set on international property.

Chinese consumers may have soured on some American products, like iPhones, but they have only sweetened on U.S. residential real estate.

They have been the top foreign buyers in both units and dollar volume of residential housing for six years straight, according to the National Association of Realtors, and now they expanding to new, lower price tiers.

Chinese consumers appear to be less interested in trade wars and more interested in bidding wars, according to San Francisco-based real estate agent Michi Olson, who just returned from an international real estate property show in Shanghai.

“The Chinese are basically politically agnostic,” Olson said. “What I mean by that is even though there is a great tension between [the] U.S. government and Chinese, the Chinese citizen seems to be able to separate the political turmoil with the sound real estate investment.”

Olson said the biggest difference this year is price point. Initially, it was wealthy Chinese buyers purchasing million-dollar properties, all in cash. Now more middle-class Chinese buyers are searching for lower-priced homes and they are using mortgages much more often.

“The Chinese people still see the United States as a safe harbor where they can take their assets and park their money not only for their money but also for the future of their children,” Olson said.

Several lenders in the San Francisco area now specifically cater to Chinese buyers. The median price of a home sold to a Chinese buyer dropped from just under $530,000 in 2017 to $439,000 in 2018, according to the Realtors. And while California is still the favorite among Chinese buyers, they are now moving into markets in Texas, Georgia and Florida.

Laura Barnett sells real estate in the Dallas/Fort Worth area and sees healthy Chinese demand there. She said while most foreign buyers there still use cash, she is also seeing the shift to mortgages.

“It is difficult to get loan approval on foreign buyers unless they put 50 percent or more down on a home, but several lenders specialize in this market now, so it is getting easier,” said Barnett of RE/MAX DFW Associates.

As technology jobs spread across the U.S., it seems more Chinese workers in the sector are starting to buy properties in new locations.

Olson has several Chinese clients whose children are already working at tech companies in California. Once they are settled, a parent will fly in from China with a down payment for a condo. That is happening now in other places.

For instance, Chinese buyers flocked to an open house in Long Island City in Queens, New York, just a week after Amazonannounced it would open a new headquarters there.

100 million – upper-middle-class Chinese by 2020

3.88 million – high-net-worth Chinese by 2020

280 million – affluent Chinese by 2020