Chinese buyers are raising demand in the luxury real estate markets in several major world cities. From the bustling metropolis of Vancouver to cities in Australian, buyers from mainland China are looking to get into the luxury real estate market in droves. Their entry into the market, in fact, has been sizeable enough to have raised prices over 10% in some markets, proving that this economic juggernaut has enough interested buyers to influence markets across the globe.
Some of the numbers are truly staggering. In London, for instance, 28% of the prime property buyers were from China, according to an article in Forbes. The same article documents a 12% increase in the average price of homes in Vancouver in 2010, a climb that is due to the demand on the market introduced by buyers from mainland China.
Russia and China—one a former and the other ostensibly still a communist nation—has seen a huge increase in the number of billionaires over the last few years. Russian billionaires, according to the Forbes article, are also pushing up the value of London real estate. Chinese buyers may have more motivation to look elsewhere for luxury properties, however, as the Chinese government has implemented strict rules on how many homes an individual can own. Buying outside of mainland China has become a popular option for these individuals. According to the Forbes article, the lacking appeal of bank bonds and equities is motivating these Chinese buyers too look toward property as a way to invest, as well.
I recently traveled to Beijing on behalf of Concierge Auctions and participated in one of the largest real estate events of the year. The Luxury Properties Showcase, or LPS is designed for the ultra-wealthy and showcases some of the most prestigious properties in China. This show’s reach doesn’t end at the borders of mainland China, however. Properties from around the world are showcased, demonstrating how much desire there is among the attendees to move beyond the borders of their own nation and to buy in other luxury markets.
Chinese buyers may become a force to contend with in luxury and ultra-luxury real estate markets all over the world. Having so much money to invest but also having so many restrictions on how they are allowed to do so means that they may well be exhibiting more interest in purchasing assets in other nations all over the world, outside of the cities that have already seen how much demand they can introduce into the market.