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China on the Move

Several Factors Spark New Interest in U.S. Property

By Kevin Brass

Editor, International Property Journal

For the past year groups of Chinese investors have been touring the United States inspecting residential and commercial property, heralding what some industry executives believe will be a new wave of buyers.

Interest from China is “infinitely stronger now,” said Chaim Katzap, c.e.o. of New York-based Lion’s Property Development Group, an investment advisory firm with offices in Beijing and Shanghai.

So far Katzap and other China experts say the interest hasn’t translated into a flurry of deals. But few doubt that China is poised to become a significant player in U.S. real estate.

In 2007 Chinese buyers accounted for 7.5 percent of international buyers in the U.S., according to National Association of Realtors. Although that number dropped to 5.4 percent last year, agents in California and Texas report a sharp increase in contacts from China in the last six months.

In Southern California, Chinese-language listings have replaced Spanish as the most-searched foreign language listings, according to data compiled by Immobel, the translation services company.

“They’re really paying attention to what the U.S. is doing,” said Kelvin Wong, owner of Resource Realty Services, a management company in Temple City, Ca., which deals with many Chinese clients “They are taking a look at what is going on so they are prepared when the opportunity comes.”

Several factors are converging to peak Chinese interest. For one, the U.S. is seen as less expensive than Europe and other markets. China is also growing wealthier, creating a new upper class eager to find new international investments. The number of Chinese millionaires grew by 20 percent in 2007 and last year China moved past the U.K. into fourth place on the list of countries with most high-net-worth individuals, according to the Merrill Lynch-CapGemini World Wealth Report.

As the dollar fluctuates, the yuan continues to grow in value, giving these new Chinese millionaires increasing buying power. Executives familiar with cautious Chinese buyers believe many are biding their time, waiting for the yuan to rise and U.S. properties to bottom out.

“The Chinese currency has nowhere to go but up,” Katzap said. “When that happens they will be able to buy quite a bit of our real estate at prices 30 to 40 percent below today.”