Anxiety over coronavirus has reached the U.S. real estate market, but some agents claim rising tensions between the United States and China — not the virus — had already cast a cooling effect on demand from Chinese investors.
Xiang Jill Ji of Douglas Elliman Real Estate in New York City said she has had difficulty closing deals already set in motion with investors, including one with a Chinese student whose family was helping with a downpayment.
“I have a Chinese client working in the U.S. who’s from Wuhan where the epicenter of the outbreak was,” Ji told Inman. “His parents were going to give him a partial fund for a down payment, but they decided to hold off. He’s still going to buy, but at the moment, there’s still uncertainty. They want to wait and see.”
Traveling back and forth between China seems to pose the greatest barrier at the moment for Chinese investors looking to dip into U.S. real estate, Ji added, saying that a temporary travel ban has put real estate deals on hold.
Nonetheless, Ji and her clients — as well as her family and friends who still live in China — feel hopeful that the crisis will pass in a few months and that business will return to as it was before.
“Right now, people are very positive in the government to really control the virus from spreading, and that definitely poses a hope for the long term,” Ji said. “I talked to some [investor clients] yesterday, and they’re still planning to come in June. In the short term — in the next three months or so — people are watching out on the sidelines.”
However, other agents believe the coronavirus isn’t changing much for a demographic whose presence already appeared to be diminishing in U.S. markets. Sotheby’s International Realty broker Kevin Brown told the Real Deal that, “they weren’t here” in the first place. According to Brown, the trade war between the U.S. and China that revved up at the end of August had already deterred many Chinese buyers.
Additionally, restrictions placed by the Chinese government on overseas investments in 2016 — which limit outbound investments to the equivalent of $50,000 — made investing in U.S. real estate more difficult for Chinese buyers. Now they must secure a mortgage in order to purchase real estate in the U.S., a practice that goes against a general preference for paying in cash, Ji told Market Watch.
Brokerages that typically cater to international students have also expressed little concern about the pandemic affecting sales. Sunanne Zhu of Quanti Corp told the Real Deal that worries over coronavirus had been beneficial to business in some cases, spurring some students and their parents to extend stays in New York City, rather than return to China.
Some Chinese investors also have future goals for their families, an important part of which is owning U.S. real estate, that will not be overshadowed by the pandemic in the near future.
“I think the American lifestyle, owning a house,” is very important to Chinese investors, Ji told Inman.
“People think, ‘In the next few years, my kids will come to study, and they’ll need a place to live,'” she added. “I don’t think that’s going to change.”
