February 21st, 2018
There have been many regulatory changes in the Chinese government which are effecting how Chinese Buyers are buying real estate in these United States. The question comes up now, will Chinese buyers continue to buy Palos Verdes homes? The quick answer is yes, and the demand from this subset of buyers, Chinese investors, is likely to rise – for homes; maybe not so much for commercial property.
New policies might make it more difficult for Chinese companies to do large overseas merger-and-acquisition deals and invest in the overseas real estate markets. With the Chinese currency under pressure for the last couple of years, it’s understandable that the government of China would enact policy to make the expatriation of the Yuan more difficult. Did you know that the foreign exchange reserves for mainland China has decreased 45.7 billion to $3.12 trillion.
The Wall Street Journal recently reported that the Chinese regulator is looking now to oversee and review any overseas investment of more than $10 billion and foreign real estate investments of more than $1 billion.
This is going to cause two negative effects on the big money commercial markets here in these United States.
- large commercial real estate deals will take now much longer time to complete
- many deals may get disapproved outright
BUT individual Chinese investors and Chinese buyers of residential homes are not effected by these new regulations. I’ve affiliated with a major real estate conglomerate in China*, Eastwestproperty, whose reporting shows that after the USA Presidential Election, 53 percent of Chinese property investors are MORE LIKELY to invest in the United States real estate market. There will be some challenges and Chinese buyers will have to be more creative in getting money out as since January 2015, my team in Shanghai has seen an increase in challenges for individual investors related to their money transfers out of China. China has a policy in place that limits the amount of money that a Chinese individual can transfer out of the country to a maximum of $50,000 per year. Although this $50,000 limit has been in place for a while, the local regulator in China has become much more active this year in enforcing it.
Nonetheless, California is sure to capture a major percentage of that activity and specifically, Palos Verdes will benefit. The reason is simple. Chinese buyers crave
- safe, stable and long term yield
- sending their children to study in the U.S in good school districts (such as the Palos Verdes Unified School District)
- hedge against a falling yuan
If you’re looking to sell your property here in Palos Verdes, make sure to contact me to learn more about how to prepare your home for maximum demand and as a result, maximum dollars in your pocket.
*helps get my Palos Verdes homes sellers get their homes sold faster and for a higher price
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