Real Reasons the Chinese are Buying up US Property

“My husband handles the big purchases, I negotiate the small ones” says Zhōu fān referring to the $3 million dollar home purchase she made earlier this year in Shanghai. Zhōu fān’s husband only gets involved in transactions over $5 million.

These “big purchases” include their $8 million Manhattan condo and $7 million family compound in China’s Fujian province. This apartment was bought in Shanghai’s financial district, their second purchase in the same building, illustrates the Chinese appetite for property. This hunger began as a domestic phenomenon, helping spur a property bubble within China, the appetite has become increasingly international. With little trust in Chinese banks, the Shanghai stock exchange, and the Chinese government Chinese citizens with means are looking elsewhere to invest. They see U.S. property as the best safe haven for their newfound wealth, and are investing heavily.

Prolific Purchasing

According to the National Association of Realtors, in 2014 China will become the largest source of foreign home buyers in the U.S. property market. The Chinese will account for more than $22 billion worth of American property acquisitions. The second and third largest foreign buyers of U.S. property are Canadian and British. Combined, citizens of these two countries won’t buy the same dollar amount that Chinese buyers will purchase in 2014. According to Clay Coker, with Berkshire Hathaway Homes Services in California “there has been a surge in overseas buyers. In the $1 million plus home value community, it is now more important than ever to relate and communicate with buyers at their level of communication.”


As Xi Jinping’s anti-corruption campaign has ramped up, it’s begun to scare not only corrupt officials and shady businessmen, but also the legitimate entrepreneurs that have fueled China’s rapid growth. Mr. Hǔ, Zhōu fān’s husband, is a former factory owner in Fujian. He says that while he has always done everything according to the law, the crackdown has made him nervous. “They’re trying to make a statement, and while that is good for the country as a whole, I want to protect myself because they are going after everyone, even honest business people.” This is one reason Mr. Hǔ decided to purchase his apartment in Midtown Manhattan.


The crackdown isn’t the only reason he wanted foreign property however. Many Chinese buyers are looking to the future. Since Confucius, education has been paramount in China. With a lackluster education system at home, many middle class and wealthy Chinese seek out a Western education for their children. Owning a property in the U.S. makes it easier for Chinese parents to give their children a U.S. college degree. The popularity of U.S. universities among Chinese college students helped boost the number of foreign students at U.S. universities to an all time high in 2013. This is a huge attraction for the Chinese elite and middle class alike; many are buying near universities like NYU and Columbia in NYC. The hope is that their children will use the residence as a “dorm” room in the future.

Property Bubble

After years of frothy growth in the Chinese domestic property market it is at best experiencing a cool down, at worst a melt down. Stories of Chinese ghost cities are well documented, and accurate. This is another reason why the U.S. market has become attractive. With continual talk of the bubble bursting at home, the U.S. market’s relative stability is seen as a safe haven. Confirming this, Mr. Hǔ says “the U.S. market is a much better investment. I didn’t want to put money into the banks in China, there is a bubble in real estate, where else could I turn?”

Building An American Bubble?

Zhōu fān and other Chinese buyers like her are adding competition and in turn helping buoy prices in major cities like New York, Washington D.C., and L.A. These cities have always been targets for wealthy Americans, and NYC in particular for the global elite. The added competition from wealthy Chinese may be just starting to form a new property bubble. This bubble, while just in its infancy looks to be concentrated on the luxury market. According to appraisal firm Miller Samuel prices were up 45% in the first quarter of 2014 in the New York luxury market. The questions become how long will the Chinese continue to see this as a safe haven, how high will they push prices, and how can real estate professionals take advantage of this. According to Mr. Coker “to have an edge in the market, and truly show that I care more about understanding the buyers, I need to step into their actual language. I have begun to learn Mandarin.”