Trade uncertainties have weighed on property investors’ sentiments in Hong Kong, pushing some to consider residential properties as far-flung as the U.S. and the U.K., according to industry experts.
For six straight years, Chinese investors have been the top foreign buyers of U.S. residential properties — both in terms of the number of units, as well as the dollar value, according to the National Association of Realtors (NAR). In some cases, the buyers are willing to even purchase homes without first visiting the properties overseas.
That trend was readily apparent at a November sales event in Hong Kong.
Asia Bankers Club, a firm that specializes in investments in assets including global properties, has sold several units in 125 Greenwich Street — a yet-to-be-completed 88-story building in New York’s financial district — and was seeking to entice more buyers.
“Where the market is in Hong Kong in terms of prices, where the market is in the U.K. in terms of how expensive on a price-per-square-foot basis, it actually makes New York look like a bargain,” said Scott Allison, a real estate broker at Douglas Elliman, a listing partner of Asia Bankers Club. “Being a New Yorker, (it) is hard to comprehend our city being a bargain, but in comparison, it is.”
“There’s a lot of uncertainty in the market with the trade war and a lot of things going on,” said Kingston Lai, Asia Bankers Club’s founder and CEO. “Naturally, investors here are looking for, you know, safe haven assets where they can actually park their money.”
“It’s not about generating huge growth in their wealth, but it’s more about preserving their wealth,” he told CNBC. “That’s why they would look into New York and the U.S. — and U.S. dollar specifically.”
The event was aimed at educating potential buyers about the New York and U.S. real estate market, with units ranging from between $1.2 million to $4.6 million.
Less than half the audience raised their hands when Lai asked who had visited New York.
“You always have foreigners buying in New York. It’s a very important part of our market, primarily the condo market,” said Allison. “It’s one of the reasons that, whenever there’s been ups and downs in other parts of the U.S. real estate market, New York is usually able to weather it.”
“If you’re looking for a solid investment, you’re looking to a country where you know your money is safe. How can you do better than the United States?”
-Scott Allison, real estate broker at Douglas Elliman
In recent years, Beijing has been restricting the amount of money invested abroad by its citizens after an earlier exodus of capital that had partially contributed to surges in money flowing into places like the U.S., U.K., and Australia.
“What it’s impacting is really the very, very, very top, because the Chinese were buying the most expensive apartments,” Allison said. “We’re talking (about) the $30 million penthouses.”
However, more and more middle-class Chinese are getting in on the home-buying trend. The median price of a U.S. residential property sold to a Chinese buyer went from just under $530,000 in 2017 to $439,000 in 2018, according to the National Association of Realtors, a trade association for those working in the real estate industry.
In contrast, residential property prices in Hong Kong are down about 10 percent from their peak in August, fueled by trade tensions between U.S. and China, and potential rate hikes.
Asia Bankers Club told CNBC several of the units inside 125 Greenwich Street were sold during the weekend event. Other buyers, however, said they wanted to visit New York first.
“If you look over the past 10 or 20 years, while there have been some small dips, overall it’s been a straight upward trajectory,” Allison said referring to the U.S. housing market. “If you’re looking for a solid investment, you’re looking to a country where you know your money is safe. How can you do better than the United States?”
Source: CNBC – Uptin Saiidi
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