Wednesday, December 28, 2016

Noticeable Real Estate Buying Trends by the Chinese in US Markets

It's no secret that the US has always attracted international investors.  They have included individual buyers/investors as well as larger institutional buyers.  One noticeable trend that has been documented by Chinese investors has been shift in acquiring both trophy and real estate in sectors that do not have the same "curb appeal", or get the attention that previous buyers have focused on when purchasing US real estate.

In a recent article, it was noted that many Chinese investors are seeking out investments that do not necessarily stand out, including luxury hotels, class A office buildings and other well known properties that are well documented in first tier cities.

As I stated in a previous post, with our new administration, much of the emphasis was place on middle income workers in 2nd and 3rd tier cities and a commitment to improve the quality of lives, incomes, jobs and education in those areas of the country.

 Location of Chinese Buyers ( from New York Times map ) 2015

Could the Chinese be on to something?  Do they recognize a forthcoming plan to get into the real market on a sizable level (at an early stage) in many of the potential growth areas?  It is no secret that while many foreign investors are still buying in tier one areas of the country, prices in many of these areas appear to have reached record highs and the days of buying at asking price has declined in many of these major cities.

More recently, international investors are seeking out mid- tier properties, which also includes investments that have not always been a priority for international investors.  These include student housing, senior living communities, affordable housing, mid level rental communities, and the like.

In summary, I believe that several factors are contributing to this gradual shift into broader real estate markets, locations and types of investments.  As I have stated before, real estate is local in nature.  Knowing these 2nd tier cities and where high potential opportunities exist is paramount in making strategic investments in the coming years that may very well offer excellent returns for savvy buyers.

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