Earlier this year, Seattlehomes.com reported that the Puget Sound real estate market, both residential and commercial, had caught the eye of Chinese investors and was likely to draw substantial dollars into the market in the near future. This prediction seems to be coming true, as recent transactions have poured almost $2 billion into the Puget Sound real estate market, and indications are strong that there will be much more coming.
This New York Times article claims that 64% of China’s billionaires are planning to emigrate in the next few years, and the destination for most of them is the American northwest. Why Seattle? Clean air, excellent education, wealth security, and food safety are major reasons for the choice, according to this study.
Good reasons to relocate to the area, but is this a good thing for Seattle? It certainly seems to be stimulating the economy, as new Chinese home owners have more than doubled the median home price, drawn by the factors stated above and also by the fact that in America, once you buy a property, it is yours until you sell it, whereas in China, you can only procure long-term leases on land. And since the Chinese tend to immigrate to areas that already have a Chinese population, there are bound to be more Mandarin speakers in Puget Sound in the near future, which means home values will increase and the demand for new home construction will grow.
Chinese investors can also have a profound effect on commercial real estate. It’s impressive that they have poured almost $2 BILLION into the market (both residential and commercial), but what is causing even more of a stir is that they are paying cash and closing the deals in record time – as little as 60 days in some cases, which is unusual for transactions in the millions (commercial deals can take up to 18 months because of negotiations, research, etc.). This will cause American investors to “step up their game” or risk losing coveted properties. In this market, also, more serious buyers increase property values and create the need for new construction.
The influx of Chinese immigrants and their wealth has few downsides. Since they are entering the country legally, they not only bring investment dollars but they pay taxes and contribute to the economy. They come seeking good educations for their children, which raises the bar for schools and universities. They bring many new business, large (multi-million dollar corporations) and small (native restaurants and markets). Unless the Chinese government shuts down the mass exodus of its citizens and their money, Seattle will become the next West Coast Chinatown.