China’s early summer stock market crash may have a big impact on the US housing market as Chinese investors seek more stable investment opportunities. When property values in China began a downturn about four years ago, many investors sank money into the stock market.
Since June of this year, Chinese stocks have declined 40 percent, causing investors to conclude that “money in the bank is not safe,” according to David Ji, of international real estate brokerage Knight Frank.
He says that Chinese investors “will look to real estate as a more solid investment channel,” causing an influx of foreign investments in international cities like New York, Sydney, and London, and an accompanying increase in property values.
Investments from China could quickly double
Chinese investors are already the top foreign buyers of US homes, and the recent market crash will only bring more Chinese investment in the US market. The National Association of Realtors reports that last year Chinese investment in US real estate constituted more than one quarter of the total value of foreign purchases, at $29 billion.
The multinational investment firm, Credit Suisse, predicts that Chinese purchases of homes outside of China will double by 2020, estimating sales of $60 billion.
Chinese investors are also sinking money into commercial real estate internationally. Knight Frank reports that Chinese investors spent $5.5 billion on commercial real estate in other countries back in 2012, but predicts that they will spend $20 billion this year.
Some limitations to foreign investment
As markets becomes flooded and property prices increase, Chinese investors are beginning to look towards untapped markets, such as Surrey County around London or various cities in Poland; Chinese investors may also look to collaborate with local investors.
The Chinese government also limits investors from moving more than $50,000 out of the country, which requires investors to do some creative long-term planning. However, this limitation hasn’t stopped investors from buying up home and commercial real estate in global cities around the world.
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