Finance & Mortgage

The Chinese to Flood U.S. Real Estate Market

Affluent Chinese investors make tough decision following a sharp fall in stocks in Asia according to a news report in The Walls Street Journal.

According to Chinese officials and advisers to the central bank, the sell off in Chinese stocks has undoubtedly added pressure on Beijing, which is actually 'planning to flood its banking system with new liquidity to offset effects of its recent surprise currency devaluation'.

Based on a report from The Wall Street Journal, the Shanghai Composite Index, which dropped to 8.5%, has brought its losses 'since its mid-June peak to roughly 38%' and has sparked another selloff in stocks and commodities across the globe.

As a result to Beijing's struggles, a lot of investors as well as real estate agents have been spooked out and have come to view China as a threat to, rather than a rescuer of, global growth. Daniel Chang is one of them. In a news article from The Real Deal, Daniel Chang, a real real-estate agent, was on a business trip in Shanghai; and when he was actually mid-bite during a dinner, he saw his phone light up from a message on his WeChat app. The message came from one of his Chinese clients. The client was actually 'concerned over a $6 million property she was about to buy in New York City as she was visiting New York at the time.' She asked Chang to give her enough time to think it over and because 'she had already lost as much on the stock market.' Chang's client actually closed the deal.

In a series of interviews, Chang, who was once a vice president at HSBC's private bank, told Business Insider: "Lots of my clients have been hit heavily by the equity market; but that only makes them more determined to diversify out of China."

Head of Savills Research in China, James MacDonald, wrote via email to Business Insider: "[Chinese] Investors who were looking at investing overseas may bring forward their purchases. While some of those that may not have been considering the purchase of property in the U.S. may now look at doing so."

A broker for Douglas Elliman who specializes in Chinese clients, Emma Hao, told Business Insider that she has already felt 'an increase in urgency among her buyers to purchase property in the US before the yuan devalues further.'

"Because they are insecure about the economy and the politics, with the RMB devaluation, the stock market got mashed, and the real estate in China is a big bubble - there is nowhere to go."

According to Hao, 'the US is also seen as more politically and socially stable. Many of China's rich have ties to the political figures, and many will look for somewhere to stay away from government scrutiny.'

Hao concluded her statements after she said that "Because of the crackdown, many people got thrown into prison, and the political people are always connected to the rich people - they do business. They need their help. People worry about their own position."


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