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 the Chinese real estate market has slowed dramatically, creating a void that the United States market is filling, including the SF 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 sight. Moreover, because the market has slowed, profits have been narrowed and companies are finding it difficult to stay in business – sound familiar? In fact, home prices dipped approximately 1% in August 2014 according to the China Real Estate Index System. The trend of Chinese building in the United States, especially the expanding trend of Chinese Building United States, is emerging as a significant factor in the market, highlighting the shift in investment strategies.

As the focus on Chinese Building United States grows, it’s important to understand the motivations driving these investments. The increasing interest in U.S. real estate by Chinese investors reflects a strategic move to diversify portfolios and capitalize on growing markets.

 

Furthermore, the trend of Chinese Building United States highlights a proactive approach by investors to secure their future in a reliable market.

Chinese Building United States encompasses not just large corporations, but also emerging small developers aiming for success in a competitive landscape.

Small companies are increasingly entering the scene, contributing to the overall trend of Chinese Building United States.

The enthusiasm for Chinese Building United States is evident in the numerous projects sprouting across the Peninsula.

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, representing a 19% increase year-over-year. Chinese purchases now account for 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, 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 investors, 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, 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?

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Contact Esquire 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 Roberson
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