Are you surprised both small and large Chinese investors and builders are looking to build in the United States? You shouldn’t be.
It is well known that for quite some time that the Chinese real estate market has slowed dramatically which has created a void that the United States market is filling, including the Bay Area and Palo Alto in particular. We are not talking about just the large Chinese builders, but the small ones as well as they have followed suit and began to look across the globe to seek opportunities. In many parts of China developers are sitting on many empty finished units, undeveloped lots, and no improved economic conditions in site. Moreover because the market has slowed profits have been narrowed and companies are finding it difficult to stay in business – sound familiar? In fact, homes prices dipped approximately 1% in August 2014 according to the China Real Estate Index System.
Chinese Developers are looking to the Bay Area and Palo Alto in Particular
We understand the empirical data that shows Chinese buyers purchased real property in the United States in excess of $22 billion from March 2013 to March 2014 which represents a 19% increase year-over-year. Chinese purchases now are in excess of 7% of all foreign investment in the United States. Chinese developers who have been hit hard in Mainland China are buying properties, unfinished developments, and scouring the Bay Area for opportunities. Local developers now have additional competitors to deal with when vying for a piece of dirt or a development opportunity. The reasons are simple: the US economy is fairly stable, the high-tech industry on the West Coast is growing and the US has a very stable government when compared to China’s. Without oversimplifying things these are very important issues for Chinese investors and developers. They believe that the stability that exists in the US is a long-term solid investment which they can’t find within their own borders.
The Stability that Palo Alto and Surrounding Communities Offer is Desirable to Chinese Investors
Palo Alto and surrounding communities like Menlo Park, Los Altos, Atherton, and Portola Valley have that certain desirous feeling of stability, wealth, intelligence and long-term growth which foreign nationals including Chinese are seeking. Moreover the most notable high-tech firms like Apple Computer, Facebook, Google, and LinkedIn are all within several miles of Palo Alto. Importantly, the largest employer in Palo Alto, Stanford University with over 10,000 employees, is one of the most famous educational hubs in the world – this is also a big draw to Chinese investors as it suggests long-term stability and continued growth.
Construction Starts on the Peninsula are Everywhere
If you drive down the El Camino Real from South San Francisco to San Jose you will see dozens upon dozens of construction cranes working to erect structures. It feels as if there is a race on to get the buildings up faster and faster and the Chinese builders are trying to get into the game. It won’t be long before we start seeing buildings and developments for sale that are wholly Chinese-owned. The amazing thing is that these builders are small companies, and not the typical large conglomerate company making their way across the Pacific Ocean. Obviously there are endless opportunities in the development world but now developers are having to compete with a new competitor – competition is good for business. Let’s see what happens over the next few years. What do you think?
Contact Silicon Valley Property Management Group for property management services in Palo Alto or to discuss any questions or investment property strategies in Palo Alto or any surrounding Bay Area community. Palo Alto is a long-term home run investment – take time now to see how you can get involved.
David currently is the broker/owner of Silicon Valley Property Management Group (SVPMG) which manages 150+ client properties on the San Francisco Peninsula.Trust, transparency, and performance guarantees are the foundation of SVPMG. David challenges anyone to find a PM company that offers services similar to the extensive education, customer service, and performance guarantees provided by SVPMG.
David also provides consulting for his clients on property development feasibility, construction, and complex real estate transactions.
David has authored a published law review article, two real estate books, and over 120 real estate blog articles.