Will Chinese Investors Desert U.S. Real Estate Market After Election?

In a survey of more than 500 mainland Chinese, No. 1 international Chinese real estate website Juwai.com discovered whether they are likely to desert the U.S. real estate market after the presidential election. Juwai.com also surveyed more than 400 U.S. real estate agents who work with Chinese buyers on the election’s impact on Chinese real estate investors.

Chinese Consumers Are With Her

On the question of who is most likely to implement policies that benefit Chinese investors in United States real estate, 54% choose Hillary Clinton, while only 46% select Donald Trump.

Mr. Trump is apparently also bad for investment. On the question of whether Chinese investment would decrease with one or the other as president, 36% feel that Chinese investment would decrease under Mr. Trump compared to 31% who believe it will decrease under Mrs. Clinton.

On a lighter note, Chinese investors also say they would much rather have dinner with Mrs. Clinton than Mr. Trump, by a ratio of 54% to 46%, respectively.

When asked how they personally feel about the candidates, however, the spread is much smaller. Some 35% “like” Hillary Clinton and 34% “like” Donald Trump. Thirty-seven percent dislike Mrs. Clinton, while 30% dislike Mr. Trump. And 38% are ambivalent about Mrs. Clinton, compared to 36% who are ambivalent about Mr. Trump.

Mrs. Clinton has not gone on the record with any specific policies on international real estate investment. Economically, she is campaigning as a continuation of President Obama’s two terms in office, suggesting she will favor international investment. President Obama’s signature effort regarding foreign real estate investment was to support and sign legislation that removed special taxes on foreign real estate investors, such as foreign pension funds. Experts believe this change will result in hundreds of billions of dollars of new investment by offshore groups. The U.S. real estate market has remained attractive to foreign buyers because of relatively high yield and its perceived safety.

Real Estate Agents for Trump

The U.S. real estate agents surveyed, all of whom focus at least to some degree on Chinese buyers, believe by a ratio of 55% to 45% that Mr. Trump is more likely to implement policies that benefit Chinese investors.

They are also much more likely to believe that Chinese investment would increase under Mr. Trump (54%) than Mrs. Clinton (33%).

However, there were also negatives from Mr. Trump on this question. Only 34% feel investment would decrease under Mrs. Clinton. A larger share, 40%, feel it would decrease under Mr. Trump.

When it came to personal feelings about the candidates, Mr. Trump again won with internationally focused real estate agents. Forty-one percent of the agents say they “like” him and 62% named him their preferred dinner partner. Meanwhile, Mrs. Clinton is liked by only 28% of the surveyed agents and was chosen as dinner partner by only 38%.

Like Mrs. Clinton, Mr. Trump has not elucidated a policy regarding international real estate investment. Through the Trump Organization, he has deep international business ties and ongoing contracts with international financiers and developers, which suggests he will favor cross-border investment.ii

He also is involved with projects in the United States that rely on EB-5 investor visa fundraising, from which one can infer he will not implement anti-immigrant policies that affect wealthy immigrants participating in that program. His son-in-law, Jared Kushner is developing 50-story Trump Bay Street, a luxury rental apartment in Jersey City, New Jersey, that has raised $50 million, about a quarter of its funding, from loans obtained through EB-5 visa applicants.iii

About Chinese Investment in United States

Property Chinese investors favor real estate as an asset class. They acquired at least US$350 billion of U.S. real estate between 2010 and 2015.iv 69 percent of Chinese purchasers do so on an all-cash basis.v Between 2009 and 2015, Chinese buyers went from accounting for 10 percent to 28 percent of all foreign residential real estate acquisitions in the U.S. In the same period, its annual investment level increased more than nine-fold.vi

Looking forward, Chinese buyers are expected to continue their U.S. real estate purchasing spree. The best estimate is that they will spend at least US $218 billion on existing U.S. real estate between 2016 and 2020vii.

Matthew Moore, Juwai.com’s President of the Americas, said:

“Will Chinese buyers desert the US market after the election? It looks like they will not. American politics fascinate Chinese because our system is so different than theirs. They are watching our election closely. They say you should never talk about politics at work, and this survey shows why. More agents prefer Mr. Trump, and more buyers prefer Mrs. Clinton, so you could imagine a political discussion between them going badly.

The investors believe Hillary will be best for the market, while the agents believe Donald will have a bigger positive impact. Most Chinese surveyed believe the current leader in the polls, Mrs. Clinton, would be most likely to implement policies that support foreign investment. About two out of five of the Chinese surveyed believe that Chinese investment will increase under either candidate, and another quarter of the people say there will be no change.

The fact that so many investors and agents believe investment could decrease significantly under either candidate reveals that the vitriol of this election has created uncertainty in everyone’s mind. “I was really surprised that so many Chinese investors picked Hillary as their preferred dinner partner. I thought China’s fascination with successful business people would make them more interested in sitting down with Donald Trump. Probably, because he was not well known in China before the campaign, few Chinese know much about his business career.

Whatever happens, this election will be closely watched on both sides of the Pacific.

If you look beyond the real estate markets to global politics, most Chinese think Clinton would be a continuation of Obama’s two terms. They like that they is consistent and predictable, even when they don’t agree with her. They don’t like that she criticizes China on human rights, nor that she believes America should stand up to China in the Pacific.

While Trump has made many anti-China statements and promised to tax Chinese goods, most Chinese observers feel that with him there are no ideologies, only interests, and interests can be negotiated. They also feel he is more likely to let China have its own way in the Pacific, given his statements about Japan and Korea. They consider it extremely unlikely that Trump would ever criticize them on human rights grounds”.

About the Survey

The survey was conducted in October 2016. Out of a total of 504 Chinese respondents, 26% self-identified as individual buyers, 9% as corporate investors, 15% identified as Chinese real estate agents or financial advisors and 39% as other. In the U.S., 416 real estate agents and other real estate professionals took the survey, including Juwai.com customers and subscribers.

About Juwai.com

Juwai.com is the No. 1 Chinese international property portal, with more than 2 million monthly visitors from China and around the world, and showcasing 2.5 million listings from 89 countries. Juwai.com was named the top international real estate website in China in both 2014 and 2015 by the country’s peak e-commerce body and won the prestigious Red Herring Global Top 100 award in 2015. The company is headquartered in Shanghai and Hong Kong and has regional teams in the U.K., the U.S., Canada and Australia. Juwai.com plans to seek a listing on the ASX within the next 12 months. For info or to advertise: https://list.juwai.com

Sources

i Bloomberg, December 19, 2015, http://bloom.bg/2epvqPk

ii Newsweek, September 14, 2016, http://bit.ly/2cUWAPg

iii Bloomberg, March 7, 2016, http://bloom.bg/2epthD9

iv Asia Society, Breaking Ground: Chinese Investment in U.S. Real Estate

v National Association of Realtors (USA), 2015 Profile of Home Buying Activity of International Clients

vi National Association of Realtors, International Buyer Report for years 2011 to 2016.

vii Asia Society, Breaking Ground: Chinese Investment in U.S. Real Estate

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