Monday, August 31, 2015

Wealthy Chinese Investors Are about to Flood the US Real-Estate Market

The volatility and chaos of the Chinese stock market over the past few weeks will cause an acceleration in the purchase of real estate by wealthy Chinese buyers in the US and elsewhere according to a recent report from Business Insider.

The Chinese see the US real-estate market as a relatively moderate risk, high-return investment, and like the idea of diversifying their holdings for their children who study abroad, according to a Western Washington King 5 News report.

In 2014, Chinese investors led foreign buyers in purchases of single-family homes and condominiums at 16%, according to the US National Homebuyers Association. A reported $2 billion of Chinese capital was invested into Seattle and the greater Puget Sound market in 2014, according to the Puget Business Sound Journal.

With the influx of foreign capital and combination of limited inventory for residential real-estate, one should speculate on how much may ripple into the multifamily market. Chinese buyers have been purchasing multifamily investment properties in major markets across the country, but primarily new developments or trophy assets.

In addition, as cap rates continue to compress to numbers that have many scratching their heads in markets like San Francisco, LA and Seattle, will Chinese investors point their radars towards Portland?