Chinese Purchases Of U.S. Real Estate Poised To Rise

Russell Flannery

Growth in the number of well-off mainland Chinese, an increase in overseas study by their children, and a drop in U.S. property prices are leading to more purchases of U.S. real estate by buyers from China. Where are they buying and why? How can U.S. developers and other sellers connect with Chinese buyers?

To find out more, I talked to Steven Lawson, CEO of the Windham Realty Group of Michigan. He opened the company’s China headquarters in Shanghai in 2008 and has lived in the city since 2007. Excerpts follow.

Q. From a Chinese point of view, why is it a good time to buy U.S. property?

A. The U.S. represents a good value for what we consider to be a rapidly globalizing Chinese investor. Permanent private ownership and the market adjustment in the last five years represent a good time for people who are well funded with cash to take advantage of market conditions.

Q. What do you mean by good value? The market is still coming down on the whole, according to some news reports.

A. The U.S. on the whole does have some softness. In particular, Las Vegas, Detroit are Atlanta are really dragging down the market. But when you look at the two cities that our clients are most interested in – New York, particularly Manhattan, and the L.A. area, they are not behaving in the same way as the U.S. market. In L.A, properties are still in many cases 20% below their 2007 peak, and there is some room for capital appreciation.

Importantly, a lot of our clients have some level of self- use intention, whether it’s a business connection, a children’s education connection, or an immigration intention connection. In terms of the clients who’ve transacted, I think we would say 60% + have an education connection. Education is a huge driver. So Boston is a rather natural market for us to kind of dig into. It’s only more recently that we’re seeing more purely investment-driven clients…

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