No end to Chinese demand for Western property

Blind Freddy can see that if you don’t police this properly then politics will fracture. From Hurun:

YUAN’S DEPRECIATION KEY WORRY FOR OVER HALF OF RICH CHINESE

60% OF CHINESE HNWI PLAN TO BUY OVERSEAS PROPERTY OVER NEXT 3 YEARS

USA WEST COAST DESTINATION OF CHOICES. SEATTLE OVERTAKES NEWYORK FOR THIRD PLACE. LA AND SAN FRANCISCO LEAD

HURUN RESEARCH INSTITUTE AND VISAS CONSULTING GROUP JOIN FORCES TO RELEASE ‘IMMIGRATION AND THE CHINESE HNWI 2016’FOR THIRD YEAR

KEY FINDINGS

Chinese Immigrants Index:

  • Rupert Hoogewerf, chairman and chief researcher of Hurun Report, said “This bespoke index is designed to guide China’s HNWIs on the most suitable emigration destinations, taking into account education, ease of investment, immigration policy, property investment rules, taxation, medical care, visas and ease of adaptation for Chinese emigrants.”
  • The USA led for the second year of the index, followed by the UK, which held onto second place despite Brexit.
  • Canada was third, followed by Australia and Singapore.
  • The Republic of Ireland broke into the Top 10 for the first time, shooting straight into sixth place. Six of the Top 10 are European countries.

Overseas property:

  • The West Coast of America is the most attractive destination for Chinese HNWI to settle in, particularly Los Angeles, San Francisco and Seattle. Rupert Hoogewerf said, “Seattle has been shooting up the rankings of Preferred Destinations for Chinese HNWI for the second year in a row, even surpassing New York to break into the top three this year.”
  • Over the next three years, 60% of HNWIs intend to invest in overseas property. Rupert Hoogewerf said: “China currently has 1,340,000 high net worth individuals, defined as individuals with US$1.5m, so that means we are looking at a massive 800,000 individuals who want to buy property overseas over the next three years.”
  • Overseas property purchases are most popular form of overseas investment.
  • Value for money is the primary consideration when buying a house overseas, followed by high rates of return and the immigration status it confers. Rupert Hoogewerf said, “Prices in major Chinese cities have risen so fast in the past year that an overseas house seems to offer good bang for your buck.”
  • Where to buy? Being close to a good school led for 52%, followed by downtown (23%) and close to Chinese communities (17%).
  • Main reasons for buying. 43% for living in or renting out, followed by asset allocation and children’s education
  • Demand for related services is also on the rise, with investment advice (53%) the most sought-after service, followed by the provision of information about overseas property markets (43%) and overseas property brokerage (32%).

International Asset Allocation:

  • More than half of the HNWI are concerned about the depreciation of the yuan, with other prominent concerns including the US dollar exchange rate and overseas asset management. Rupert Hoogewerf said, “The trend this year goes beyond emigration to global asset allocation. For rich Chinese today, the target is to have one third of their wealth overseas.  Buying houses and foreign exchange deposits lead the way.”
  • Overseas financial investment accounted for 15% of the wealth of the individuals surveyed.  Rupert Hoogewerf said, “The main reasons for investing overseas are to spread their investment risk, children’s education and with emigration in the back of their minds.”
  • When investing overseas, asset safety is the top priority. 64% chose ‘risk control’ as their foremost consideration. Foreign exchange deposits are the investment of choice, at 31%, followed by funds with 15 and insurance accounting for more than 10%. Rupert Hoogewerf said, “For Chinese HNWIs today, their investments overseas are conservative nest eggs, not risk capital.”
  • Eight out of ten HNWIs have ‘passion investments’, with the two most popular ones, paintings and watches, accounting for 24% and 16%.  Stamps (7%), wine (4%) and classic cars (2%) are other popular options. Compared with last year, the proportion investing in painting showed a considerable increase, up 33%, while wine investments fell by 2%.

(28 October 2016, Beijing) The Hurun Research Institute and Visas Consulting Group today jointly published a 28-page report on Immigration and the Chinese HNWI 2016. This report highlights the trends arising from this often controversial topic, featuring a bespoke index on the Most Suitable Countries for Emigration and a bespoke list of the Preferred Cities to Buy Houses and Emigrate to. The report draws on a survey of around 300 Chinese high net worth individuals (HNWIs), carried out between August and October 2016, with average wealth of 27 million yuan, who have either emigrated or considered emigrating. This is the third year of the report. A Chinese high net worth is defined as a family with net wealth of 10 million CNY, equivalent to US$1.5 million.

Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher said, “Worries about the depreciation of the yuan and housing bubbles in major Chinese cities are pushing Chinese HNWIs to invest their money overseas. I am delighted to be working again with leading immigration agency Visas Consulting Group, who share similar values to us in wanting to research and understand the trends behind this boom in overseas Chinese investments.”

David Chen, Visas Consulting Group partner lawyer, said “Continuing interest among Chinese for investment migration is largely attributed to clearer application processes for countries such as the US and Canada, as well as networks already set up by migrant friends and relatives. I am delighted to be putting out this milestone paper for the third year running with Hurun Report, the world’s leading authority when it comes to researching the Chinese high net worth individual.”

Table: Chinese Immigrants Index

This index considers the most suitable countries for Chinese high net worth individuals to emigrate to, taking into consideration a basket of eight factors, including education, ease of investment, immigration policy, property investment rules, taxation, medical care, visas and ease of adaptation for Chinese emigrants.

  Country Score (change)
1 – USA 9.2 (+0.1)
2 – UK 8.6 (-0.1)
3 – Canada 8.2 (-0.1)
4 – Australia 7.5 (-0.3)
5 – Singapore 7.2 (-0.4)
6 * Ireland 7.1
7↓ Germany 6.7 (-0.7)
8 * Spain 5.8
9 – Hungary 4.0 (-1.7)
10 – Portugal 3.9 (-1.8)

Source: Immigration & the Chinese HNWI 2016, by Visas Consulting Group and Hurun Report

– same as last year ↓down *new to top 10

Table: Preferred Destinations for Emigration and Overseas Property Purchases

The West Coast of the USA led the way.

Rupert Hoogewerf said, “Vancouver and Toronto both dropped down the rankings, on the back of changes to the housing investment rules and the fast growth in house prices.”

  City % (Change)
1 – LA 17.8% (+0.4%)
2 – San Francisco 13.2% (-2.8%)
3 ↑ Seattle 12.8% (+3.9%)
4 ↓ New York 11.6% (-1.9%)
5 ↑ Boston 7.2% (+1.6%)
6 ↓ Vancouver 7.1% (-1.7%)
7 ↑ Melbourne 3.9% (+1.1%)
8 ↑ New Zealand 3.8% (+1.2%)
8 ↓ Sydney 3.8% (-0.2%)
10 ↓ Toronto 2.7% (-0.3%)
11 ↓ Singapore 2.2% (-0.6%)
12 – Chicago 1.9% (-0.3%)
13 ↑ Malta 1.8% (+1.4%)
14 – London 1.4% (-0.6%)
15 – Japan 1.2% (-0.2%)
16 ↓ HK 1.1% (-1.1%)
17 ↓ France 1.0% (-0.4%)
18 – Spain 0.9% (-0.1%)
19 ↑ Antigua & Bermuda 0.8% (+0.4%)
20 ↓ Portugal 0.6% (-0.6%)
20 – St Kitts & Nevis 0.6% (0)
22 ↓ Italy 0.5% (-0.1%)
23 ↑ Hungary 0.4% (+0.2%)
23 ↑ Cyprus 0.4% (+0.2%)
25 ↓ Canberra 0.2% (-0.6%)

Source: Immigration & the Chinese HNWI 2016, by Visas Consulting Group and Hurun Report

 

Comments

  1. Imagine how good it is going to be if Melbourne and Sydney can overtake Vancouver in the destination stakes – double the current demand level!!!!! Whoohooo! You bloody liddle bewdy!!!!` We’re all gunna be rich!!!!!

    • Not inconceivable given we have a few piddly foreign investment taxes now (circa 5%), still none in places like Canberra – thus surprised to see investment went down on that table for the ACT. But US seems to be the most open to Chinese “investment” right now.

    • Strange Economics

      Yea – already 10 % or 134,000 HNWIs looking for another property in Australia each year ! Only 40 000 auctions a year in Sydney – they can buy them all easilty !. Once Canada discourages them, another 100K potential buyers coming. Property boom !

      • Yes SE. Also I’m not sure if modern economics recognises the fact that the Chinese still have about USD2.4 T, or some such figure, a large part of which they will want to get rid of in exchange for real assets. I doubt any of us, including the U.S., are quite prepared for the problem we have created

    • I’ve thought about this and I wonder how much is leveraged speculation and how much is hot money? What is going to happen to the properties bought with hot money?
      Honestly, I can’t fathom China with its size and internal opaqueness. The Japanese crash seemed to run in a business as usual kind of way, and the rules of the game were different back in the late 80s, early 90s. How a Chinese crash (if/when) pans out in the Too Big Too Fail world will be very interesting.

  2. Why do we even allow this? What is the benefit of turning locals into serfs who must submit to a landed class? What right do they have as non local tax payers who don’t form part of the local community? Who don’t pay tax at local rates or to local improvements? Why give these fuckers a free ride.

    I foresee massive anti Chinese sentiment coming. I for 1 hate them already. Not as individuals but as a selfish collective screwing locals in each jurisdiction they buy into.

    Why should we care about their ability to grow their wealth or any foreign investor. It should be a mutual benefit situation. They should be paying high taxes just like in Vancouver. That way the uncreative is to invest for the long term and lease that property not flip houses like chips in a Casino.

    I’ll vote Hanson next time. Don’t even care if I get branded racist. I’ll even get an Australian flag tattoo haha.

    • “What is the benefit of turning locals into serfs who must submit to a landed class?”

      It’s made a lot of people smart enough (or lucky enough) to buy property in the areas the Chinese wanted very very rich. End of story.

      You have every right to be angry. I don’t know if that will help or not.

    • Our government could stop this, but by not stopping or discouraging it, it is effectively encouraging it. In that sense your anger is misdirected, and it should be directed at our leadership, not the Chinese. However, I predict that since our government does not see this as a bad thing in toto, then sentiment like you’ve expressed here will continue to rise…

      • Absolutely, we should be rioting against the Government, but maybe Australian’s are too apathetic and therefore just wait until they can vote. I don’t see Turnbull lasting another election. I see Hanson rising though!

      • Agree, although I think Hanson isn’t our Trump – we’re not ready. It’s a bit too early yet in Australia, things have only turned down relatively recently and many are still sitting pretty. So Hanson rises on the early adopters of discontent. I suspect there will be something/someone else that rises when that discontent grows more widespread. I wonder if that will be better or worse than Hanson!

      • Is there enough people worried about this to make a difference? This issue isn’t new and had already reached critical mass before the last election. Most still voted liblab even though they both actively suppressed any discussion of this issue.

      • No, that’s kinda my point. Those who are worried about it now may or may not vote for Hanson because her goals might align with their views – regardless of whether they agree with her motivations or not – or they might find her distasteful and vote for someone else. But there aren’t enough people who are angry enough to vote for a real change – at least not yet. Labor and Liberal are two sides of the same coin, the electorate flips the coin from time to time but nothing really changes. Discontent is rising – which is why Hanson is re-emerging – but these things take time. We’re not ready for change, not yet. So in that sense it hasn’t reached critical mass – not by a long shot.

      • Our sovereign debt(1.2 T) when viewed per capita and private deb to 139% of GDP is outstandingly bad enough to trigger real problems.. sovereign debt crises are coming globally. People are losing confidence in govt allover and it seems every day every week we have more to disrespect with ours. Forced to something different. Pauline’s offering that and she has been correct. Correct with us being over run with chinese and correct re being Full Up. Thats more than greens lib and lab have been and got us signed up with TPP. Inconceivable betrayal.

    • PessimistMEMBER

      If you leave your front door open and go shopping and someone comes along to clean you out,who do you blame?

      • The people who stole everything.

        The situation you are describing is something like: while you went shopping, the real estate agent opened the door, and suggested to the people who took your stuff that they were legally entitled to do so. In that case, one would blame the real estate agent.

      • You blame the thief.
        We try to lock doors and make it harder for criminals, but when criminals commit a crime, we blame the criminals.

      • “If you leave your front door open and go shopping and someone comes along to clean you out,who do you blame?”

        If the police, not only turn a blind eye, but encourages the thief, who do you blame?

    • Don’t blame Chinese. Blame the government. Remember Rudd in 2009? Only the assetless middle class who wants the same suburbs as the Chinese will feel angry, the top tier are laughing and the bottom have given up ;).

      • No Joe, wrong! I was the only white face left in my street for the whole many blocks of it. So had to sell my lovely home with views and every amenity close by.

    • Gavin

      We HAVE TO SELL to the Chinese or crash the economy. This is not a choice but is the logical necessary result of 60 years of economic national myopic stupidity.

      • Correct. If you to sit on your ass and keep borrowing money, then you need to keep selling off the farm.
        Currently at the rate of $80b a year.

    • Already there with you Gavin, Hanson is right, were fucking selling this country out from under its citizens. How long before serious backlash? I’m sick of seeing sports cars in my area and the only drivers are fucking Chinese kids,…… were already Vancouver.

  3. It won’t stop as they have an insatiable appetite for property and willing to circumvent rules to get it.

    A Chinese colleague has enlightened me on how they get money quickly, first they get a loan in China, then get multiple loans in Australia through local lenders and do not declare any loans they have in China or here as the banks can’t check. They also use dodgy mortgage brokers here who tell them to ‘make up’ their payslips to get bigger loans. Truly worrying.

    • Interesting. It does make a big difference if they are buying with the proceeds of crime, graft, work or borrowing.
      In the case of borrowing, it could end suddenly.

      • If it’s borrowing, it will end in the largest synchronised housing crash in history. If it’s their foreign reserves, they can keep it up until their reserves are exhausted, at which time they’ll be limited by the CAD’ of the countries they’re buying in.

  4. Does the number of prospective real estate purchasers, in Melbourne especially, change MB’s view on house prices UE?

  5. When I play with my beautiful 3 kids, I don’t let them see how sad I feel when my attention turns to their future prospects of housing affordability in the land they were born.
    I think of what is driving property beyond the reach of locals and I feel anger on behalf of my children.
    To the boomers who have bought up and sold at a massive profit to predominantly Chinese pricks….thank you for confirming what we always thought.
    To the Chinese who opportunistically buy up our land, thank you for exploiting us.
    To our beloved politicians who want my children and their generation to live below the poverty line, thank you.

    To all those that have sat on their fat asses and let what will unfold for future generations happen, thank you.

    Anger, hatred, war, racism….all words that will have their day in Australia.

    Make no mistake.

    Bring on a bust like no other so that we can balance the score for OUR CHILDREN.

  6. ….So keep buying, keep selling, keep turning a blind eye to the growing disengagement of our youth, our children. Keep thinking everything is brilliant in a land of “prosperity” while our youth jump off buildings courtesy of futurelessness etc.
    Keep believing there are no problems in dumb fuck Australia and that all is fine and dandy.
    Yes anger to Chinese will rise.
    Yes anger to the wealthy silent will rise.
    And yes our youth deserve better.
    But it won’t come from the boomers, the Chinese, the rich end of town to help out kids. Nor will it be the 2 major fuckwit parties to address it.
    There is growing sentiment that things are skewed with such bias and toxicity that it’s inevitable that the branch snaps.
    It cannot happen too soon.

  7. how can you blame the Chinese ?
    Is it not the Govt that sets the rules
    is it not YOU that vote for the Govt ?

    YOU vote for the Govt which promises you instant benefits.
    YOU reject any politician which offers you short term pain for long term gain.
    YOU keep your cash in a bank and have a credit card yet whinge about the fees
    Get off the couch and protest the corruption., its the only way

    • I know this may be a stretch for you, but we will go gently so you have at least an attempt to get it.
      Err…actually, come to think of it, you can’t make it simpler for morons.
      Take care.

      • The branch is not going to snap by itself. Its not about asians – they are simply a result.
        its about the intelligence ( or lack ) of the generally population to keep voting for the main two parties.

    • PessimistMEMBER

      Tamash1 most on here can not see the wood for the trees and keep blaming the chinese. One of the parties was willing to modify the negative gearing tax and we failed to vote them into power and we still keep blaming the chinese!

  8. Andrew WilliamMEMBER

    My son was considering joining the armed forces – not anymore. Why? He said ‘why should I put my life on the line for an overcrowded city and country that the Asians now own? There is no longer land to fight for – to protect and to die for – it has all been sold to the Chinese

  9. Bear in mind that many of the median-multiple-3 housing cities in the USA also have strong in-migration of Chinese property buyers and investors. The interesting question is, what is the motivation of these migrants / investors to choose these cities instead of ones where there are potential Ponzi capital gains to be made?

    I suggest that to some extent, these cities are getting the best migrants and investors – the ones who appreciate honest opportunity and “real economy” growth. This goes along with the great internal “within the US” self-sorting of people and businesses. One day it will become clear which model was the right one. It is already becoming clear, but the mainstream economics and punditry have blinkers on.

    Of course the cities with a median multiple of 3 simply get on and build more houses, which has a similar effect on the local economy, of all the immigrants buying a locally-made car, appliances, etc. It seems to be easy to wish for stronger “local manufacturing”, but there is the stupidest opposition to simply getting on and doing it in housing.

  10. I just wanna say it’s refreshing seeing this forum here and not having everyone branded as ‘racist’. The festering boil needs to be lanced in the open, and our stinking politicians certainly aren’t helping with their blatant lies and cover-ups. The ways in which Trump plays the media to deflect attack are exactly the same strategies used by Turnbullsh*t’s government.

    The worst is the lack of data and statistics – no other country in the world would let such a sell-off of our real estate to illegitimate purchasers (mostly Chinese) and not INSIST that data is kept and records checked on purchase. It’s a total rort, and total insanity. The Chinese think our country is totally stupid, and I’m not disagreeing at present.