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Wealthy Chinese hunting for US homes
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As US home prices continue their downward spiral, wealthy Chinese are starting to think it's time to invest their money in cheap US properties.

The first group of potential home buyers, compromising 40 affluent Chinese from around the country whose assets amount to more than 400 million yuan (US$58.5 million) in total, leaves today for the US to see for themselves how the house market over there appeals to them.

They hope to get to know the US house market through this trip as well as the procedures and regulations for home buying, and they will set their eyes on residential homes whose prices have bottomed out, rather than non-residential property.

According to a news release by Soufun.com, a Chinese property website which has organized the trip, more than 400 people applied to join the trip, and most of them are senior managers in real estate, retail or multinational companies, aged 35 to 50, each with 10 million yuan or above in assets. Two thirds of the applicants plan to buy US homes either for their own use or for investment.

Among the first group, one third hope to buy a home where they can live to take care of children who are studying in the US. Homes worth between US$300,000 to $800,000, particularly US court-auctioned homes which are well below market prices, and homes close to well-known US schools and universities, will be their primary choices, according to Soufun.com.

All members of the first group have over one million US dollars in cash and most of them have professional backgrounds related to the real estate and investment sectors, said Mo Tianquan, chairman of Soufun.com.

The 11-day US trip will take them to Los Angeles, Las Vegas, San Francisco, Boston and New York, which all have large populations of Chinese immigrants and boast rich educational resources.

Latest figures from the US National Association of Realtors show that home prices dropped a record 12.4% in the final quarter of 2008 - the biggest decline in 30 years. The number of unsold homes on the market reached 3.67 million units by December 2008, an investment opportunity that wealthy Chinese won't allow to go begging.

Local governments' response to Chinese purchasers

US local governments await the arrival of these first Chinese home purchasers with high expectations, and will provide, together with local industry associations and realtors, all-round information regarding available homes, purchase procedures, and legal services. They've done plenty of research on what kinds of homes to recommend to those potential buyers.

Like the US, other flat markets are also keen on attracting plentiful Chinese capital. According to Soufun.com, the governments of Spain, Italy, Portugal and Australia also say they are ready to welcome Chinese purchasers.

According to the 2008 World Wealth Report, compiled by Merrill Lynch & Co. and consulting firm Cap Gemini Group, China ranked fifth in the world for US dollar millionaires. Wealthy Chinese are contributing more to global consumer sales figures and they will be more sought-after amid the current global economic downturn.

For those millionaires or even billionaires, one million US dollars is just a small dip into their coffers, so house prices will not be a decisive factor, said Mo. Most of them are purchasing homes as an investment where their children will live while studying abroad, even though some of their kids are still in kindergarten.

Right time to buy?

Ren Zhiqiang, President of housing developer Beijing Huayuan Group, returned from the US in early February. He is cautious about the outcome of the first Chinese homes purchasing group, saying that US properties still have room for further price falls.

Ren wrote in his blog: "It is true that home prices in many US cities have undergone big falls, some even by a dramatic 60%. However, Chinese purchasers may be disappointed to find that homes priced at 'one dollar' (referring to cheap homes) are not worth buying, and those with pleasant settings and facilities are still much higher compared with several years ago."

Ren's opinion may be supported by a Reuters' survey of twenty-five analysts, which says that the US home market is not due to bottom out any time soon, and that it may be several years before it stabilizes. The survey predicts a decline of 10 percent this year.

To buy or not to buy? This remains the question for Chinese home buyers.

For the Chinese story, please visit http://www.dfdaily.com/node2/node27/node119/userobject1ai154728.shtml.

(China.org.cn by Yuan Fang February 24, 2009) 


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