What Chinese property buyers go for in NY

> And, if China experiences economic problems, Bailey believes more Chinese may invest in property abroad. “My view is that China is at risk of a bust. There is an argument that any fallout could be positive, with wealthy Chinese targeting offshore locations as their home market struggles.”

Wouldn't the process of wealth creation be impacted if China experiences economic problems... ie: less Chinese buyers buying, more Chinese owners having to unload. Wasn't that the case during the Japanese crash?

notadmin,

You make the logical and correct point, but you have to understand that in the twisted world of RE articles, China blowing up is actually a good thing for foreign real estate b/c no matter what happens in the world, RE always goes up.

The article makes a great deal of sense, in the context of the political and economic stability represented by the United States vs China.

Chinese currency is not freely convertible on the world market and the country is not a Democracy. Further while life in China has in many ways improved dramatically over the past several decades, they don't enjoy many basic freedoms we take for granted.

The article mentions factors like seeking permanent residency, it also represents an emergency income source if their wealth in China becomes inaccessible to them. In the meantime, they are happy to collect rent and are not too worried about capital appreciation..

And not discussed is whether they have children who may go to college in this country or chose to live here for some extended duration.

China is a real opportunity for the condo portion of Manhattan real estate. Interestingly this may open up opportunities for subsidies of those who rent in condos.

Let's get something straight: If the Chinese economy "blows up" it will have a far greater negative impact on the world's economy that won't be mitigated by a group of rich Chinese that have decided to flee China and live abroad.

It is not to deny that Chinese buyers may push prices higher in certain RE sectors and locations, but only if the world's economy remains relatively stable - which it wouldn't be when the Chinese ponzi-scheme growth finally comes to an end.

Let's get something straight: If the Chinese economy "blows up"

.....but it's the fear of the economy blowing up, or the fear that individuals may lose access to their wealth or be forced to leave home.

Again, I agree that Chinese buyers can and will have a temporary impact on certain RE mkts, but I wouldn't count on the Chinese fundamentally transforming these markets or making them impervious to macro economic events.

Statements that the "fallout" from an Chinese economic crisis "could be positive" seem to imply that these escaping condo-buying Chinese would be buying in an economic vacuum. If anything, in such a scenario the Chinese might be finding themselves getting some good deals rather than boasting already inflated prices even higher.

It is typical of RE industry risk-analysis talk to try to turn an event that would create a world economic crisis into a "plus" for condo-sellers. But I guess nearly 10+ years of near zero interest rates and the crazy domestic and international bubbles they have created have permitted an environment where such nonsense talk can florish.

boasting = boosting

The reason why Asians go for Trump Buildings is the same reason why they want their kids to goto Harvard or Stanford....also why they like to buy LV or Chanel or Hermes. Most Asians love brand names. If the Chinese economy goes bust, the Chinese will still be buying real estate everywhere they can. This is because wealthy Chinese people are REALLY REALLY REALLY wealthy. Not just a little wealthy. And most Chinese people do not think of stocks as long-term holdings or real assets. They think of real estate as the best asset.

"Again, I agree that Chinese buyers can and will have a temporary impact on certain RE mkts..."

Also agree

"...but I wouldn't count on the Chinese fundamentally transforming these markets..."

I wouldn't count on it (in terms of making investments that need this to happen on order to work out). However, the numbers (of potential buyers, of the amount of money that they have to throw around, etc) are so large that I do think Chinese buyers have the capacity to make a sustained impact on desirable markets where their interest is likely to be concentrated. I also think that the chance that this impact actually happens is not small. Manhattan condos would be on any short list of those markets.

"...or making them impervious to macro economic events."

Agree. This takes it too far.

I can't see Chinese demand "transforming" NY real estate, but it's an important source of demand in key neighborhoods within certain price ranges.

"But what the Chinese crave most in Japan are holiday homes. “Big Chinese cities are as futuristic as anywhere else on earth,” says Liam Bailey, head of residential research at Knight Frank, yet China’s impoverished countryside affords little in the way of retreats for the rich. “Rural backwaters in Japan with excellent transport and civilised local shops and restaurants are a real novelty.”

Will this save LIC and the holiday homes of the Williamsburg waterfront?

Keep selling overpriced real estate to the Chinese. You are doing them a favor. China is a communist country. The newly wealthy from China will rather give 50% to Americans for every dollar they have because they know they get to keep the other 50% no matter what their government does.

Bingo!
Finally someone who gets it.

I think we got it... and if you are selling already overpriced crap in some Trump building... GREAT! Now you can get an additional 25% from some connected Chinese crooks (who just happen to be more scared about their wealth than the Europeana and American crooks).

The whole point isn't that the Chinese are willing to overpay (2009 Bordeaux ring a bell?) , but that somehow such overpaying is going to be a "positive" if China falls apart...

Memito, who are the "good developers" that are not crap?