Asian investors, especially Chinese immigrants, are buying up real estate in Millbrae and Foster City faster than local brokers and agents can remember.
For a yearly chart of the number of Chinese yuan that can be bought with the U.S. dollar since 2001, click on the photo to the right.
“There’s more Asian money flooding in than I’ve ever seen before,” said Donald Kung, owner of San Mateo’s Remax Investments and a broker with 25 years of experience. “They look at the U.S. as kind of on sale, but we still have a AAA-rating appearance.”
Stanley Lo, an agent for Green Banker in Burlingame, said he’s seen a quadrupling of overseas investors into the real estate market over the past two years, with “no sign of slowdown.”
Lo said his open houses typically attract some 50 families, “all of them Asian.” But Korean and Japanese buyers are in short supply. Most visitors are Chinese, he said, and their preference is for $1 million to $1.5 million homes.
Several factors are driving this influx. The value of the Chinese yuan compared to the U.S. dollar has climbed by 30 percent over the past decade. And Chinese property values continued to rise even after the U.S. real estate bubble burst. Overseas buyers also are attracted by immigration rules that allow people who invest more than a million dollars and create or maintain at least 10 U.S. jobs to obtain a visa and start down the road to citizenship.
Mary Bee, an agent for Sotheby’s in San Carlos, has observed this trend firsthand. And unlike most U.S. homebuyers, she said, her Chinese customers aren’t hindered by more stringent U.S. lending requirements because they tend to buy in cash.
Observers say this foreign money is helping prop up Peninsula property values.
“The Bay Area did not go to hell because of foreign money,” Lo said.
While Millbrae and Foster City are popular among Asians, properties in Hillsborough, Palo Alto and Cupertino are also top sellers.
What makes those communities attractive are large Asian communities and convenient access to airports, shopping malls, good private schools and world-class universities such as Stanford and UC Berkeley, said Andy Gan, a real estate agent at Prudential in San Bruno.
Kung said Foster City’s Bayside canals have a unique appeal for Chinese buyers because they look like two dragons when viewed from above. In China, he said, dragons and water both symbolize prosperity.
While no Asian investors agreed to comment for this article, agents say their privacy-conscious clients typically come from China and Hong Kong, where an urban real estate boom has increased the value of some properties by tenfold over the past decade. In fact, cost per square footage is now higher in many Chinese cities than it is on the Peninsula, Gan said.
But investors are not only attracted by a weak dollar or the fact that a three-bedroom home in Millbrae costs less than an apartment in Taiwan.
They also come for the stable political climate and the opportunity to actually own property — a stark difference from China, where, Gan said, property can only be leased from the government.
Many buyers simply want to diversify their investments to resell homes when the market picks back up, but others have pooled family resources to buy a single-family home with the hope of one day getting their kids into top area schools, agents say.
Getting money out of China a challenge for investors
Although Chinese money is rushing into Peninsula real estate, investors must nonetheless overcome one major hurdle.
Since Chinese law permits citizens of that country to export no more than $50,000 per year, it should theoretically take investors 20 years to accumulate enough money to buy a million-dollar home with cash.
“Some Chinese people came here trying to invest in the real estate area but … they have big trouble in getting the money from China to the U.S.,” said Mark Kang, CEO of Cross Culture Exchange, which takes Chinese business leaders on tours of U.S. businesses.
Yet clearly the law isn’t stopping some investors.
Chinese nationals get around that rule in a host of ways, said Andrew Young, owner of California Energy Investment Center, a regional center for immigrant investors.
One popular method is to have numerous family members wire money into separate accounts that are consolidated in the U.S., something that even middle-class families can now afford, Young said.
Private business owners with U.S. contracts also get around the rule by channeling profits into American accounts, Young added.
But however investors get their money out of China, they’re keeping quiet about it. Of four brokers or real estate agents who work with Chinese investors, all said their clients were too “private” to speak with the press.
“They don’t want to show off,” said Mary Bee, an agent for Sotheby’s in San Carlos.
Stanley Lo, an agent for Green Banker in Burlingame, said his clients don’t want to tell him about their secrets.
“I never asked how they moved their money because the moment I ask, they leave,” Lo said.