Rich Chinese fly in to buy bargain homes in US
Jane Macartney in Beijing
China's economy may be cooling rapidly, but that doesn't mean that Beijing's super-rich are feeling the pinch. On the contrary, many see the global downturn as a chance to buy a bargain - wherever it might be. That's why a group of them will be setting off this month for a shopping spree in the United States.
They will not be splashing out on jewels or designer suits, but on houses foreclosed in the recession.
Such is their hunger for a property bargain that a trip organised by SouFun Holdings, China's leading property website company, was heavily oversubscribed. The 40 who will make the tour expect to be buying properties costing several hundred thousand dollars.
Mo Tianquan, the chairman of Soufun.com, told The Times that his clients were hardly run-of-the-mill Chinese in a country where GDP per head is about $4,000 a year. “These people are not ordinary members of the masses,” Mr Mo said.
Soufun received 400 applications for the trip and whittled the number down to 40. The group will visit San Francisco, Las Vegas, New York and Boston. Mr Mo said: “Most members of the group are between 35 and 50. They are looking for houses and apartments in the $300,000 to $800,000 [£208,000 to £555,000] range.”
These are successful entrepreneurs or professionals who already own at least one property in China. They are looking for a home to accommodate a child while at university in America, or simply an investment opportunity.
He said: “I don't know how much money these people have. I would say they must have at least a million dollars in cash. That's cash they can spend any time - not investments fixed already in real estate or shares.”
He estimated that at least a third of the group were buying for their children studying in the United States. They are interested in both houses and flats - “properties near universities or high schools, and bankrupt homes auctioned by the courts. Usually these houses are only half the price they used to be”.
Mr Mo said that New York, Los Angeles and many American cities were not expensive. “In Manhattan, $300,000 can buy just a kitchen, but the average price for a house in the US is $300,000. That is two million yuan. Nothing for some Chinese.”
Yin Guohua, a lawyer in his forties from Beijing, will be among the group of buyers. The property could be a home for his son, who is now only aged five but who, Mr Yin thinks, might go to university in the US one day.
But he insisted that finding a good price would be the key to securing a deal. “Take New York, for example. A 20 per cent to 30 per cent discount from the peak price is acceptable. But the house must have a good location, so even if I don't use it for my child's education later, it will still be of investment value.”
One question is why the Chinese would want to buy in the United States when the yuan is seen as likely to rise further in the long term, thus effectively harming the value of their American property.
Mr Mo said that this was a minor consideration for these members of China's tiny elite. “They don't care if the dollar will rise or not,” he said. “They are using pocket money to buy houses. To spend these sums has no impact on their way of life. If it makes a profit, and how much, is not a consideration.”
There is one final hurdle: it is not clear how even the super-rich will get their assets out of China, which limits the amount a Chinese person can take out each year to $50,000.