Everybody reads about the large supply of Chinese buyers who are buying homes here along the Peninsula. There are many agents, one prominent one who we all know and now has a plane to fly his Chinese buyers around, who target the Chinese buyers very heavily. Buy, why are there so many Chinese buyers and why are they buying here?
We all marvel at the prices being paid and the recent appreciation of 30% per year for the past couple years. For those of us who live along the Peninsula, you may be surprised to know that real estate in Palo Alto, Atherton and Menlo Park may be a bargain when compared with other international locales. Heck, we aren’t even as expensive as New York. Who would have thought 10 years ago that an investor from Shanghai might find a Manhattan penthouse affordable? Of the 10 most expensive cities in the world, New York is the only one from the U.S., said a recent report from England-based real estate consultancy Knight Frank and researcher WealthInsight. Monaco, Hong Kong, London, Singapore and Geneva all outranked New York. Sydney, Paris, Moscow and Shanghai rounded out the list. San Francisco, Palo Alto and Atherton, not even on the list.
In Hong Kong, which saw double-digit real estate price increases from 2009 to 2012, the average luxury home was valued at around $11,000 per square foot, the global real estate firm Savills said in a 2012 report. Yes, $11,000 per square foot! London, with its own booming real estate market, averaged $5,300 per square foot, while New York checked in at $4,100. Atherton and Palo Alto generally sells for $1,500 to $2,000 per square foot, quite a deal compared to the big guys.
For the 12 months ended in February, 788 homes worth more than $10 million each were sold in the U.S., according to real estate website Zillow. Slightly more than half were in the Los Angeles and New York areas. San Francisco, south Florida and Colorado ski resorts Aspen and Vail also saw some of the most-expensive transactions. Chinese Buyers, in particular, Chinese homebuyers increasingly are buying up high-end property in the U.S., Realtors said. China’s strong economic growth has generated dozens of billionaires and thousands of millionaires in recent years. They are attracted to America’s stronger property rights and a relatively stable political and economic climate, according to the National Association of Realtors.
So, why are so many Chinese buyers scooping up luxury properties? Because they are rich and prices here are a deal and they have property rights that might be hard to come by in their own country. Hard to blame them.
With the worldwide economy getting better, I can’t see much of a slowdown to the pace of buying from our overseas friends. Gary Kurtz of Alain Pinel in Menlo Park has Chinese buyers that he has never met but converse with on a regular basis and are looking for investment homes here in the Atherton area. I find lots of Atherton and Palo Alto off market homes and I know they will make a relatively quick decision and buy without seeing as they trust my word and insight into the market. It seems to be a win-win situation for sellers, Chinese buyers, agents and all in the luxury real estate industry.