Mainland Chinese companies and individuals are ramping up purchases of property in California, accounting for an increasingly significant share of real estate deals in the Golden State.
Property agents in San Francisco and Los Angeles fly in groups of Chinese investors, sometimes as many as 50 people in one group, to buy property, said Robert Pearce, a director of Blackfish, a company that markets United States real estate. The Chinese end up buying property as well as top brands like Chanel, he said, adding: "What do mainland Chinese have? Cash."
Chinese buyers accounted for 18 per cent of the US$68.2 billion that foreigners spent on homes in the US during the 12 months to the end of March, according to the US National Association of Realtors. That is up from 11 per cent in 2011, 9 per cent in 2010 and 5 per cent in 2009.
California is the second most attractive state for foreign buyers of US property after Florida, said an Asia Society report. At present, more than half the homes sold to foreign buyers in California go to Chinese nationals, estimates CNN Money.
California, with its historical ties with Asia, has the biggest Chinese population in the US and accounts for more investment deals from China than any other US state. This puts it in a position to lead the US in attracting Chinese investment, said Charlie Rosier, director of Blackfish.
The Chinese go to the US for their children to be near schools and universities, clean air, and the American lifestyle, "which continues to be highly aspirational for Chinese buyers", said Andrew Gates, international realty associate broker at auction house Sotheby's.
The number of documented Chinese investments in US real estate has increased from virtually zero five years ago, said the Asia Society report. A new trend is of Chinese property firms acquiring projects in California, said Gregory Karns, a partner at US law firm Cox, Castle & Nicholson.
Shanghai-based Greenland Group acquired a site in Los Angeles in July with a planned total investment of US$1 billion.
"These Chinese groups see a flattening of their [domestic] market, and are looking to the US and California for greater returns," said Karns.
Two Californian cities, Stockton and San Bernardino, have gone bankrupt, said Christopher Thornberg, founding partner of Beacon Economics, an economic consultancy, adding that the economy is otherwise resilient.