SF is becoming fashionable for Chinese home buyers
San Francisco’s housing market is booming and according to one local agent, a major cause for the double-digit growth in home prices are Chinese buyers putting down cash for local homes.
In an interview this week with California TV station KPIX, Mark McLaughlin, CEO of prominent San Francisco real estate firm Pacific Union International attributed much of the renewed investment demand to Chinese buyers.
Asked about the trend towards all cash sales, the veteran realtor said, “Some of it is being driven by the liquidity in the Silicon Valley and the city of San Francisco but also, at Pacific Union, we’re seeing a large influx of foreign capital — particularly coming from China.”
Across San Francisco, properties are now commanding an average of 10.7 percent more than asking price, according to another local realtor, with some areas averaging more than 21 percent over asking prices. While the Bay Area’s real estate market hasn’t seen a real slump in some time, the current rates are up considerably from this time in 2012, when homes were selling for an average of 3.5 percent over asking.
What’s Bringing the Chinese to SF
According to McLaughlin, Chinese buyers have a number of interests in buying property in the city by the bay.
“I think we’re seeing three different phenomena,” he said in the television interview. “One is asset diversification, people trying to move money out of China. Two would be education for their families. And three would be lifestyle, this is a beautiful place to live.”
In general, both wealthy Chinese individuals and corporate interests have so far shown a preference thus far for buying property in “gateway cities,” whether in the US or other foreign countries.
Besides a luxury condo project in San Francisco co-invested by China Vanke with US developer Tishman Speyer, Shanghai’s Greenland Group has residential developments underway in Brooklyn and Los Angeles, and Vanke has a second project in Manhattan.
Low Maintenance Condos Preferred
Echoing the experience of developers in Vancouver and Sydney, San Francisco property sellers are finding that a big backyard may not be a major attraction for Chinese buyers.
To McLaughlin, Chinese buyers are looking for high-rise homes similar to what they know back home. “What Pacific Union is seeing is the condo is very attractive because it’s low maintenance,” he remarked. “There’s no yard to clean.”
And for California property owners, demand from Chinese buyers means that many of them may have an opportunity to make a tidy profit.
Late last month a little-known Chinese investor bought the former Standard Oil Building at 225 Bush Street in San Francisco at a value of $350 million – nearly 40 percent more than what the previous owner had paid in 2012.
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