Tariff Wars Don’t Spook Chinese Investors

September 25, 2018

Chinese home buyers continue to be drawn to U.S. real estate, despite rising tension from trade wars and new regulations, a new report shows. Chinese investors purchased $39.7 billion in U.S. real estate in 2017, according to Juwai.com. A report from the National Association of REALTORS® from earlier this summer also confirmed that Chinese buyers were the largest group of foreign purchasers in the U.S. The top three states for their purchases are Florida, California, and Texas.

Two opposing cargo ships

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Carrie Law, CEO and director of Juwai.com, told RISMedia that the Chinese are being drawn to the U.S. for the economy and lifestyle. “What Chinese home buyers like about the United States is the educational opportunities, clean food and air, our diversified culture, and our economic and employment opportunities,” Law says. “For a Chinese buyer, purchasing properties in the United States is seldom really about the home itself; it’s about the lifestyle and opportunities they are acquiring by moving there.”

Still, Chinese buyers may be showing signs of lessening their U.S. real estate purchases. The Juwai.com report found that the amount they’ve invested has decreased by nearly 30 percent compared to the previous year. However, Law says the growth rate has decreased because of the “larger starting point,” which “will give you a lower rate of growth.” But she also points to greater capital controls, which were applied in an attempt to limit investments in real estate overseas, but have ended up being less restrictive than Chinese investors originally thought they would be. She also points to a movement of Chinese buyers purchasing lower-cost properties in the U.S. than the luxury properties they were originally drawn to.

“Has the trade war impacted Chinese demand in 2018? It has caused some buyers to hold back, but as time goes on the fear may be evaporating,” says Law. “For example, in August, Chinese buyer inquiries for U.S. residential real estate were at their highest level in the past 12 months.”

The amount of wealth Asian buyers are accumulating may drive even more U.S. purchases in the future. A separate report from Wealth-X found that Asia is creating the most ultrawealthy individuals—those worth $30 million or more—than any other place in the world. The percentage of the ultrawealthy Asian population surged 18.5 percent last year and their total wealth rose by 26.7 percent, which is double the rate in the U.S.