HONG KONG OF THE WEST – SOUTH FLORIDA REAL ESTATE MARKET STILL CHINA FRIENDLY
Hong Kong of the West - South Florida Real Estate Market Still China Friendly
- For more than a decade, South Florida - including Fort Lauderdale - has been a more attractive and affordable investment destination for both commercial and luxury residential properties for Chinese buyers than Beijing or Shanghai.
- Even with macroeconomic issues affecting Chinese buyers, realty professionals remain bullish on Chinese investment impact on the long-term prospects for the South Florida real estate marketplace.
- South Florida has woven its way into the Chinese investor culture, with some people calling Miami and Fort Lauderdale the “Hong Kong of the West.”
In 2013, we explored how Chinese investors hoping to diversify their investments were looking at the South Florida luxury single family housing and condominium markets. We noted how the Chinese were attracted by many state and regional attributes, from the growing inventory of high-value real estate rising in value, and the lack of a state income tax. These features and others appealed to this global audience and transformed the region into a hub for international investment in real estate, both commercial and luxury residential.
Even with news of the coronavirus coming out of China, realty professionals remain bullish on the long-term prospects for the South Florida real estate market.
“May you live in interesting times,” goes the Chinese proverb. These are interesting times.
But first, let’s explore the market’s history. At that time of our first story, the number of Chinese buyers in Florida had grown from 0.05 percent in 2008 to 3.7 percent in 2018. Asian buyers were about seven percent of those deals. This was on the heels of strong growth from Europeans, like French investors, as well as Brazilians and especially Canadians. In fact, Canadians remain among the strongest, most influential investors in the greater Fort Lauderdale market. Just look at places like Pompano Beach, Hollywood, and other destinations to see their impact.
Fast forward seven years and the international influence remains strong. Today, Chinese investors make up a fifth of all foreign buyers of U.S. real estate, notes MarketWatch. As recently as January, stats proved how interested the Chinese remained in South Florida real estate. Some say it’s about four percent; others suspect the figure might be higher.
Northeasterners remain among the strongest single buyer market, accounting for half of all buyers. Foreign buyers still are mostly coming from Canada, Latin America, and Europe.
The Chinese influence has remained strong, though current events could cause some change. Many have called "South Florida and Miami the Hong Kong of the West.” Luxury condominiums in a cosmopolitan, global city bathed in year-round warmth continue to attract their attention - and investment. As speculators, many of them flush with cash, Chinese investors see properties here as a portfolio play. Buy relatively low, and sell higher later.
That’s not unique. But for investors whose alternatives had been Shanghai and Beijing, it’s a valuable proposition. To be sure, their money is strong here. Prices are a quarter what comparable condominiums might fetch in China or other global markets.
Moreover, political uncertainty in China and especially Hong Kong means an investment in the U.S. can be a smart move. To be sure, the market is in flux. Chinese buyers have slowed their investments, and as of January, Chinese investors for the third straight quarter sold more commercial U.S. property than they purchased, according to the Wall Street Journal. This comes as the news reported that the Chinese economy grew at its slowest pace since 1990, tagged in large part to the U.S.-Chinese trade conflict.
“May you live in interesting times,” goes the Chinese proverb. We are in those interesting times. How global markets and international investors, including the Chinese, navigate these times will help decide how bullish the residential real estate market continues.
From its founding by early pioneers to developers building high-rise luxury to the beachfront and breathtaking single-family residences, these interesting times will drive the South Florida real estate market for years to come
WRITTEN BY GARY LANHAM
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