According to recent reports, Asian investors are buying up real estate in Millbrae and Foster City at quick rates, surprising even local brokers and agents who cannot remember a period of such excitement coming from a foreign group of buyers.
Donald Kung, owner of San Mateo’s Remax Investments and a broker with 25 years of experience, said, “there’s more Asian money flooding in than I’ve ever seen before. They look at the U.S. as kind of on sale, but we still have a AAA-rating appearance.”
Another agent, Stanley Lo, from Green Banker in Burlingame, said he personally has seen a quadrupling of overseas investors into the real estate market over the past two years. Lo notes there appears to be “no sign of slowdown.” He adds that his open houses typically attract around 50 families, “all of them Asian.” However, Korean and Japanese buyers are not as common as Chinese, according to Lo. In addition, the Chinese buyers tend to prefer homes that are in the $1 million to $1.5 million range.
So what is driving this influx? A few factors may be contributing to the increase in Chinese real estate buyers, including the value of the Chinese Yuan compared to the U.S. dollar. The Yuan has increased by 30% over the past decade. In addition, Chinese property values continued to rise even after the U.S. real estate bubble burst. Foreign buyers are also extremely attracted to immigration rules that allow people who invest more than a million dollars and create or maintain at least 10 U.S. jobs to obtain a visa and start down the road to citizenship.
Mary Bee, an agent for Sotheby’s in San Carlos, adds that unlike most U.S. homebuyers, more stringent U.S. lending requirements does not hinder her Chinese customers, primarily because they tend to buy property in cash.
While locations such as Millbrae and Foster City are popular among Asians, homes in Hillsborough, Palo Alto and Cupertino are also hot contenders. These communities have large Asian populations and convenient access to airports, shopping malls, good private schools and world-class universities, such as Stanford and UC Berkeley. Foster City’s Bayside canals is specifically attractive to Chinese buyers because they happen to look like two dragons when viewed from above. Dragons and water both symbolize prosperity in China. Buyers also come for the stable political climate and the opportunity to own property – a stark difference to what they are used to in China, where property can only be leased from the government.
There is only one hurdle the buyers have to over come before they realize their American Dream of owning their own property: Chinese law permits citizens to export no more than $50,000 per year so, theoretically, it should take investors 20 years to accumulate enough money to buy a million-dollar property with cash. It is reported, however, that some Chinese nationals get around that rule in various manners, including having numerous family members wire money into separate accounts that are consolidated in the U.S., something that even middle-class families can now afford.
In addition, private business owners with U.S. contracts also are able to get around the rule by channeling profits into American accounts. Regardless, no matter how investors are getting a hold of their cash out of China, they are keeping quiet about it. Many investors do not speak publically about their money or purchases.
Source: San Francisco Examiner