60% of rich Chinese investors prefer investing in real estate in the USA as opposed to 22% and 7% for Canada and Europe respectively. Commercial real estate investments in the USA by Chinese investors grew from $1.96 billion in 2014 to over $3.67 billion in just the first six months of 2015—an increase of over 150%. Residential real estate attracted Chinese FDI worth $28.6 billion with the average purchase price exceeding $800,000.
Investing in real estate in the USA offers numerous benefits to affluent Chinese. Investors are assured of protection of property rights, rule of law, a stable polity, and a place to reside that will make it easier for their children to obtain American education.
Seven out of the top ten overseas investment destinations preferred by the Chinese are located in North America with major cities like New York, Vancouver, San Francisco, Los Angeles, and Seattle ranked high in the list. These markets offer attractive returns, safety of investment, and access to quality educational institutions for young Chinese students.
Chinese investors are providing much-needed liquidity to a real estate market that has seen steady recovery in demand and price appreciation. This has boosted homebuilder confidence, which is currently at levels last seen in October 2005. Currently, Chinese investors have outpaced Canadian and European investors in residential real estate transactions.
Chinese demand for real estate in the US has risen primarily due to the EB-5 visa program. Of the three categories of property investors—individuals, developers, and institutions—the EB-5 visa targets affluent individuals seeking permanent residence in the USA. Real estate projects allow applicants to fulfill the norms related to minimum investment and creation of jobs without risk of loss of capital.
The EB-5 program offers green cards to individuals and eligible family members in lieu of minimum investment of $500,000 to $1 million and creation of at least 10 jobs in the country. Demand from Chinese applicants led to the annual cap of 10,000 visas being met for the first time since the program was introduced in 1990.
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