All Aboard! China’s Real Estate Tour Groups are Now In Full Steam

Thursday, February 12, 2009 19:56
Posted in category Uncategorized

A while back I began to speculate that the first assets that “Chinese” would take up in mass would be foreign real estate assets. Initially, I confined this to the US market as I know banks were holding assets at very attractive prices, but as the economic downturn that can only be called cascading took shape, there were a few other markets that saw stunning losses as well.

Perhaps it took a little bit longer than I predicted, but in the last few days I have heard about trips of Chinese buyers being arranged to major markets in the US to buy up property. LA, NYC, SF, and a couple other cities that have traditionally seen large Chinese enclaves.

.. and today’s AP article The Chinese are coming, to buy bargain US homes provides the journalistic proof:

Beijing lawyer Ying Guohua is heading to the United States on a shopping trip, looking not for designer clothes or jewelry, but for a $1 million home in New York City or Los Angeles.

He expects to get a bargain. Ying is part of a growing number of Chinese who are joining tours organized especially for investors who want to take advantage of slumping U.S. real estate prices amid a financial crisis.

If real scale can be achieve, it is a process that I expect will dramatically improve the real estate conditions on a short term basis. We saw this 5 years ago as planes from Singapore, Taiwan, HK, and other parts of China would land in Beijing and Shanghai to purchase flats for investment.

EVERYONE HAD TO HAVE A FLAT IN SHANGHAI

Now that there is a bit of pent up wealth, and many want to hold assets outside of the mainland, these assets are going to only look more attractive.

So, for all those real estate brokers who are in the US and want to ramp up, I suggest you buy your Rosetta stone tapes, get on iTalki, and have your brochures translated into Chinese (and don’t use traditional characters). I am not saying you are guaranteed business, but this is something that I saw coming 18 months ago and I am fairly confident that we are only in the beginning stages of this.

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4 Responses to “All Aboard! China’s Real Estate Tour Groups are Now In Full Steam”

  1. Dan says:

    February 12th, 2009 at 9:18 pm

    As someone who actively participated in the last big go-round with this sort of thing, back when the Japanese were trying to buy up nearly every big building on the West Coast, along with some mansions to go with them, I have very real concerns about this whole thing, only some of which were quoted in this USA Today article on the same topic: http://www.usatoday.com/money/economy/housing/2009-02-10-china-foreclosed-us-houses_N.htm.

    I just know this whole thing is going to end badly. It has to.

    There are already some US companies doing this sort of thing, mostly for Chinese and Russian investors (the Russians are fleeing their currency like never before and looking for real estate in the US) and of these, there are definitely some who are honest and knowledgeable, but there are also many that are not and, near as I can tell, most of the putative investors lack the tools to discern which do and which don’t.

    As a lawyer I don’t care. Our lawyer in China, Steve Dickinson is always talking about how he was part of the two biggest building buys in Oregon (both by Japanese companies) and then part of the two biggest Oregon building restructurings when they tanked a few years later. But while we lawyers profit coming and going, many people are going to get nothing but taken. You heard it here, sorta first…..

  2. Rich says:

    February 13th, 2009 at 12:16 am

    Dan.

    honestly, cannot disagree with you more in that it will end badly. I have spent 15+ years working with Asia, Lived in Japan and China, and these are two different economic phenomenon all together.

    All you need to do is spend time speaking with those that have real estate assets in America, and you will see this.

    They are ont buying the biggest buildings, or buildings with names on them. they are buying assets that have immediate return via rental income or insofar as they will be residences for a member of the family.

    The assets are being bought through the banks and are in areas that are considered attractive for lifestlye and Chinese community – unlike 20 years ago when the Japanese were buying properties at a huge premium in areas that made no sense.

    and yes… you did here it here first.

  3. Dan says:

    February 13th, 2009 at 5:49 am

    I agree with you on the homes that have been bought over the years by Chinese as a way to establish roots in the US, but that is not what is going on now. Now we are seeing Chinese wanting to buy “10 houses” w/o any clue where they want those ten houses to be. And we are seeing Chinese who insist that by buying a house in the US, they are going to get a visa (there is no connection). These are two very different groups, trust me.

  4. Linda D'Ambrosi says:

    January 16th, 2010 at 12:29 pm

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