China's stock market is falling. The yuan is weakening. And the government is opening up its capital accounts to allow for the locals to ship more money overseas. Where is it going? Real estate. China's favorite market? LA, baby!
The recent 15% correction in Chinese equities has the rich feeling like they need to put their money elsewhere. Housing in China has been stagnant for years. The government popped that bubble in 2013. What's a Chinese one-percenter to do? Well, from Shanghai, the Malibu Barbie life is only 11 hours and 6,480 miles away!
China's slowing economy is driving a surge of interest into California real estate, according to stats from Juwai.com, a Chinese real estate services firm. They are looking to stash large amounts of cash into multi-million dollar estates priced at around $10 million, said Aaron Kirman, President of the John Aaroe Real Estate Brokerage in Los Angeles.
“I’ve seen a 45 percent increase in inquiries from Chinese buyers for my highest-priced properties in the last quarter of this year compared to 2014," Kirman said. “I have more than a dozen properties priced from $15 million to $135 million and every single one of them has a Chinese buyer interested. They love Los Angeles. They love the lifestyle here and the long-term safety of property."
Someone please tell the Chinese that California real estate, especially south California real estate, is notorious for declining long and hard during downturns in the U.S. housing market.
Regardless, the California coastline is the closest thing to China in the U.S. that has an already sizable Chinese population. Other cities, including Vancouver in Canada, are also expected to see an influx.
Juwai released a survey of 127 real estate agents last week, mostly all of them from the U.S., Australia and China. Here's what they found.
Some 59% of those agents located outside of China believe that the country’s January stock market plunge will cause more Chinese international property market investment. That's more bullish than the locals. Of the real estate agents in mainland China, 48% believe the impact of the weaker economy will mean more investment in global real estate.
Simon Henry, co-Founder of Juwai.com, said the website has had a 30% bump in search traffic for premium U.S. real estate over the last six months.
“California is the single most popular state in the world for luxury real estate with Chinese buyers," he said about the Chinese that are in the market for homes selling for over $5 million.
The John Aaroe Group said they received calls from Chinese buyers looking at the former home of comedian Danny Thomas, an 18,000 square foot property on the outskirts of LA selling for a cool $135 million.
For Malibu Beach Barbie wannabe's, there's the $60 million La Villa Contenta. This thing has been on the market now for four years. With such little movement in price, it might require an uber rich Chinese national looking to stash a few million away for the grandkids.