North America

Chinese Parents heavily invest in US Property Market

The influx of more than 40,000 Chinese students attending schools in the United States has compelled their parents to invest in US property market. This decision was taken by most parents of Chinese descent to help them pay for the tuition fees of their children, and it has arguably made them occupy the highest position as the top investors in the US property market.

Countries like Taiwan, China, Hong Kong, and Macau have more of their citizens have spent close to US$31.7 billion on the acquisition of properties in 2017. This amount is a higher figure compared to the amount paid in the previous year valued at US$27.3 billion; these facts are available by The National Association of Realtors. It is surprising that the Chinese nationals are choosing to invest in the US real estate market despite their government’s hard stance on its citizens investing abroad which was perceived as a means to pull money out of the Chinese economy to another country. In 2017, the National Association of Realtors confirmed that 40,572 housing units were bought compared to 2016’s purchase of 29,195 housing units by foreign citizens.

According to Angela Li, an experienced broker who works with Douglas Elliman, a property agency and co-founder of NYstudents.net; she said the local property market in the United States is quietly dominated by Chinese nationals and Chinese Americans. She further opined that most of the open house sessions are filled with the citizens of Asian countries, and the Chinese nationals form a significant part of these groups. She even buttressed her point with a case where some Chinese buyers bought nine studio flats at once. She also observed that most of these buyers coming to the US property market are residents of China’s most prominent cities like Beijing, Shanghai, and Guangzhou.

Angela Li said investment in US property market is one of the best decisions to take as parents who have children studying in the United States. The investors can record a massive profit of $30,000-$40,000 on a property in places like Boston and New York within four years which can be utilized to pay the tuition fees of a child.

She also said most parents who want to invest in property are now shifting focus to the purchase of studios and one-bedroom units in New York, the price of a studio is valued to be between US$600,000 and US$1million while one-bedroom units are evaluated to be within US$1 million and US$2 million.

The average listing price of a one-bedroom flat was around US$3,500 per month on USWoo.net, a reputable listing site created by Tumeibian. William Tung, a managing director of private equity firm, Cindat Capital Management said the value of the real estate in New York has significantly improved in the last five to ten years.
According to him, he confirmed that the price of square feet was a thousand dollars ten years ago, but its value has increased to two thousand dollars today. A steady growth began in 2012 and also grew in the first two quarters of 2015, and there are signs of an improved rise already.

Christopher Yi also confirmed that investing in the New York is a wise investment decision as it has the potential to yield a profit of US$220,000 in the future. He also stressed further that the price of square feet in the second quarter of 2016 was $644 and the average size of a one bed flat is 700 square feet, and the overall mortgage will be US$450,000 with a down payment of twenty percent and a 4.5% interest rate on a thirty-year payment plan. He said the average rent for a bed is valued at $3,000 with a five percent vacancy rate with an expected three percent increase as a result of inflation. If this property is placed on sale after eight years of use, the owner will receive a sum of $220,000 which is expected to pay for the tuition fees in the college for a child.
Richard Yang said a huge profit could be realized in this process to pay for tuition fees in biggest cities in the United States; he also stated that investment in a property situated in places like Pittsburgh could help students save significantly on the costs of housing. He said his family paid $600,000 for an apartment after securing a green card and he is planning to lease the property to raise funds and save rents he used to pay at the end of each month.

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