“The Chinese are coming!” From Japan and South Korea to the United States, Europe, and Australia, real estate markets that were left in ruins after the financial crisis have felt the impact of Chinese buyers arriving with cash in hand, heading straight for the property market. It is estimated that 400 billion yuan—funds squeezed out by the Chinese government's recent real estate regulatory policies—has already begun to flow into overseas property markets. One American media outlet stated: “Once the Chinese accumulate some capital, they look for an outlet.” In reports from numerous Western media outlets, being wealthy and affluent has suddenly become a stereotype associated with the Chinese. On the 2nd, the American Forbes website even found a “brother” for “Made in China”—“Bought by China.” But as the popular saying goes, behind the envy may lie “jealousy and resentment,” and the narrative that “the Chinese are taking over the world” has already begun to spread.
Chinese Home Buyers Target Overseas Markets
On May 2nd, Nippon TV aired a special program titled “Japan is Being Bought by the Chinese,” which reported on a seminar for Chinese real estate investors. When the footage showed Chinese investors in Shanghai holding documents for Japanese properties, the host was astonished. The program discovered that the Chinese were targeting high-priced areas in Tokyo—places that ordinary Japanese people would not dare to consider. However, a Chinese man interviewed on the program said, “It feels like Japanese property prices are cheaper than in China,” which stunned the Japanese reporter once again. The host could not help but remark: “In the past, it was the Japanese who went to the U.S. to speculate on property; I never expected that now it would be the Chinese coming to Japan to buy homes.”
The Sydney Morning Herald recently shared several examples of Chinese buyers: a Chinese businesswoman spent a massive sum of nearly 120 million yuan in March to purchase a luxury apartment in Melbourne measuring 900 square meters; a Chinese girl on a student visa, who did not speak English, simply kept raising her hand during a property auction and ended up purchasing a three-bedroom property for approximately 11.43 million yuan. The newspaper stated that the series of restrictive policies currently introduced by China to curb the real estate bubble will prompt a large number of Chinese to come to Australia to buy homes, noting that “Chinese buyers have driven up Australian property prices.”
During the recent May Day holiday, a wave of Chinese investors sparked a mini-boom in home buying in South Korea. According to a report by the South Korean Asia Economy website on the 3rd, more than 150 Shanghai investors purchased 58 vacation homes on Jeju Island at once, worth 183 million yuan, with some even buying three homes at a time under family members' names. It is reported that the project developer plans to invite five or six more groups of Chinese buyers this year. The developer told the South Korean Chosun Ilbo: “After the Chinese government recently introduced policies to curb speculative home buying, overseas real estate markets have gradually become a new investment destination for the Chinese.”
Have the Chinese Driven Up Property Prices?
The influx of Chinese buyers has made the real estate markets in some countries feel overwhelmed. In Canada, a North American country with significantly lower income and population density than the United States, property prices have been rising steadily. In March of this year, a property in the Greater Vancouver area even became one of the most expensive in all of North America. The reason is simple: these places are where the new generation of Chinese investment immigrants are congregating. Since Canada reformed its immigration rules at the end of last year to encourage investment immigration, many new Chinese immigrants have arrived with significant capital, heading straight for the property market.
A real estate agent in Sydney, Australia, said that over the past year or so, about 30% of his clients have come from China.
The immense financial power of Chinese home buyers has also caused some Japanese people to feel unbalanced. When a reporter was chatting with Japanese friends, some mentioned the “anti-Japanese sentiment” that arose among Americans after Japan bought the Rockefeller Center in New York back in the day; now, they hope the Chinese will be mindful of the sentiments of ordinary Japanese people.
“American Money Is Not So Easy to Earn”
Regarding the reasons for the growing trend of Chinese buying homes overseas, He Weiwen, deputy director of the China Institute for World Economic Studies at the University of WorldWay and Economics, believes that, first, foreign property prices have fallen sharply and are clearly cheaper than domestic ones; second, domestic measures to combat real estate speculation are strict. He Weiwen said that while buying overseas property for self-occupation is common internationally, many Chinese are doing so for speculation. In his view, excess capital should be guided through policy and market mechanisms into technology and capital markets, rather than the real estate market. He also reminded overseas home buyers that foreign economies are currently struggling and hope that foreign purchases will boost their domestic economies, but once the economy recovers, policies are very likely to change.
Zhang Yansheng, a researcher at the Institute for International Economic Research of the National Development and Reform Commission, has also observed the shift of international hot money and some Chinese capital from inflow to outflow. Zhang Yansheng warned that lessons from Eastern Europe, Japan, and the United States all tell investors: “If it is a bubble, stay away from it,” and foreign real estate markets often do not have the same potential for appreciation as China's. The American Chinese-language newspaper World Journal also believes that it is indeed not difficult for Chinese to buy homes in the U.S.; as long as the visa is legal, no green card is required, and there is no need to pay agency fees. However, maintaining a house in the U.S. requires paying an annual property tax of 1% to 2% of the home's value, and if it is used for rental, an additional 5% to 10% of the rent must be paid as a management fee. In addition, labor costs in the U.S. are high, and home maintenance and cleaning are also significant expenses. A Chinese real estate agent in Southern California said that American money is not so easy to earn.
