RICH CHINESE ABROAD
Jiayang Fan wrote in The New Yorker: “A study by the Bank of China and the Hurun Report found that sixty per cent of the country’s rich people were either in the process of moving abroad or considering doing so. (“Rich” was defined as being worth more than ten million yuan — around $1.5 million, a considerable fortune in China, though not stratospheric.) The Chinese are currently transferring money out of the country at a rate of around four hundred and fifty billion dollars a year. Most of that money has gone into real estate. According to the National Association of Realtors, Chinese buyers have become the largest source of foreign cash in the U.S. residential real-estate market. [Source: Jiayang Fan. The New Yorker . February 22, 2016]
“Moneyed people leave China for various reasons. Some are worried about pollution. Others want to secure a good education for their children. Zhou Xueguang, a sociology professor at Stanford who received his bachelor’s degree in China, told me, “The competition in the Chinese school system is known to be brutal.” He went on, “There are only so many slots in good schools, and, at a certain level, it doesn’t matter how much money you have — you won’t be able to get in.” But, for affluent Chinese, the most basic reason to move abroad is that fortunes in China are precarious. The concerns go deeper than anxiety about the country’s slowing growth and turbulent stock market; it is very difficult to progress above a certain level in business without cultivating, and sometimes buying, the support of government officials, who are often ousted in anti-corruption sweeps instigated by rivals.
“This is the first time that China’s rich have sought to emigrate in significant numbers. For thousands of years, the ruling class was proudly isolationist. “People now refer to China as an emerging economy, but it was the world’s dominant economy for two millennia, until 1810, ” Shamus Khan, a sociology professor at Columbia who specializes in élites, told me. “Before that, the Chinese élite were very reserved and almost snobbish in their view of foreigners. They thought of the European élite as backward people who wanted to acquire culture from China.” Westerners made hazardous journeys to obtain prized commodities — porcelain, tea, silk — from the Middle Kingdom, which considered itself the center of the world.
Many of the rich Chinese living abroad are children or university students. According to the Hurun Research Academy, an astonishing 80 percent of China’s upper-class are sending their kids abroad to attend school, the highest rate in the world by far. Ten percent of Germany’s rich send their children away for school, while only five percent of the French upper-class do the same. In Japan, this figure stands at one percent.Hurun said in its report that millionaires usually send their kids abroad at 18, while multi-millionaires do it when they are 16. The top choice for an overseas education is the U.S., followed by Australia, Canada, Switzerland, New Zealand, Singapore, France, Japan, and Germany. [Source: Charles Liu, The Nanfang Insider, November 25, 2014]
Hurun Report hurun.net/richlisten ; Forbes Rich Chinese List forbes.com ; Forbes Lists forbes.com ; Expert: Huang Yasheng, who teaches at the Sloan School of Management at the Massachusetts Institute of Technology, is an expert on Chinese entrepreneurs.
Many Rich Chinese Want to Emigrate
A survey released by the Hurun Report in January 2014 found that 64 percent of rich Chinese want to emigrate, up from 60 percent in 2013. This finding was echoed by survey released in April 2011 by China Merchants Bank and Bain & Co showeding that almost 60 percent of wealthy Chinese were considering emigrating, had begun taking steps to do so or had emigrated already. The U.S. is the destination of choice, followed by Europe and Canada. Chinese investors are also buying up homes abroad. The Guardian reported that demand from Chinese buyers has helped drive prices of British country estates and farmland to a record high of $11,400 an acre. [Source: Washington Post, Julie Makinen, Los Angeles Times, January 28, 2014]
Barbara Demick wrote in the Los Angeles Times, “At 49, Wang Zeqiang has achieved the Chinese equivalent of the American dream. Raised in the cornfields of eastern China's Shandong province, he founded an auto parts business that today has several dozen employees. He has two houses, two cars and, because he's rich enough to pay the fines for defying the country's family planning policy, two children. Now, all that is missing — what he covets most — is a foreign passport. "In China, there is so much pressure," said Wang, who recently hired a consulting firm to advise him on his first choice, Australia. He hasn't been there yet, but he's been surfing the Internet and likes what he sees: blue skies, open spaces. "I want to live a relaxed, happy life." [Source: Barbara Demick, Los Angeles Times, November 2, 2012 ++]
“The new Chinese emigres have little in common with earlier waves of unskilled laborers or political exiles. They're not going abroad for economic opportunity — they're already wildly successful — or political activism, but for a quality of life that money can't buy in China. A recent poll of Chinese with a net worth of more than 10 million yuan ($1.6 million) found that 16 percent had obtained foreign residency and that an additional 44 percent were planning to emigrate. Many cite a polluted atmosphere, and not just in the air they breathe: endemic corruption, a shaky political system, tainted products and poor medical care, among other problems. The exodus of the middle and upper classes is an embarrassment to the government, with possibly serious economic implications because the emigres are taking with them money and skills. In an attempt to prevent capital flight, Chinese laws limit people from taking more than $50,000 a year out of the country, but it is easy enough to get around the restrictions. ++
“In effect, the wealthy emigres are buying their new residencies, in what they hope is the first step toward new passports. Many of the foreign programs involve a substantial investment by the prospective expatriates, either in real estate or businesses. The recently renewed U.S. EB-5 visa” (see Below). “Dozens of consulting firms with names such as Royal Way Ahead Exit and Entry Service Co. have sprung up in recent years, their websites beckoning with photographs of swimming pools and world landmarks, with the Statue of Liberty and Sydney Opera House being among the most popular. Prospective immigrants troll the Internet, browsing real estate listings and schools, examining rankings of the "World's Most Livable Places." ++
Reasons Chinese Rich Want Emigrate
Barbara Demick wrote in the Los Angeles Times, “To a large extent, the flight reflects pessimism about China's future. The spectacular downfall this year of Politburo member Bo Xilai and his cronies, including many businessmen still in jail, proved that shifting political winds can put anybody in jeopardy, and highlighted the instability of the system. More immediate, there is the competition for spots in good universities, for housing, for space, for land. "Scarcity is a very compelling reason," said Leon Zhong, president of Xinhaowei Consulting, one of the largest companies advising prospective migrants, gesturing out the oversize windows of his 30th-floor corner office at the pea soup obscuring what would otherwise be a stunning view of the Beijing skyline. "And to be frank, the environmental hazard is a factor: the air, the poisoned foods." [Source: Barbara Demick, Los Angeles Times, November 2, 2012 ++]
“Zhong, who has been in the emigration business since 1995, says that each of the hundreds of families he's helped have its own reasons. "At some point something will happen, and they say to themselves, 'I have to go now.'" Zhong decided he would retire in Australia after a health scare a few years back, when he discovered how difficult it is to get an appointment with a specialist at the top Beijing hospitals. "I had to send an assistant at 4 a.m. to stand in line so I could get in," said Zhong, who has an Australian passport, having studied business in Melbourne in the 1980s, and travels frequently back and forth. "In Melbourne, I just telephone the doctor and get an appointment." ++
“Wang, the Shandong businessman, said the deciding factor for him has been corruption in the business world. "I have to give out gifts, cash, gift certificates. If I don't give, business won't happen. I'm tired of that." Tony Du, 33, a consultant at Xinhaowei, says he, like most of his clients, worries most about education. He has secured permanent residency in Canada, thanks to having studied in Paris and speaking fluent French, a prerequisite for a program sponsored by Quebec province. "My daughter is only 1 1/2 now, but in five or six years we will move for her education," Du said.” ++
“At Xinhaowei Consulting, the typical client is older, often somebody who has made money in real estate or pharmaceuticals or has taken a company public. The applicant must show how the money was earned; in short, corrupt government officials need not apply. (The company also steers clear of programs that send pregnant women to the United States to give birth in order to obtain citizenship for their children.) The most important qualification, Du said, is to be rich: "You need to have that $500,000 in cash." Du said most of the clients investing in the United States send their spouses and children ahead of them, remaining in China themselves. Why? To make more money, of course. "China's economic development is still strong," Du said. "It's the best place to make money, but just not to live." ++
Children of China’s Wealthy in the West
Jiayang Fan wrote in The New Yorker: “The West is the plan for many of China’s new rich. In the past decade, they have swept into cities like New York, London, and Los Angeles, snapping up real estate and provoking anxieties about inequality and globalized wealth. Rich Chinese have become a fixture in the public imagination, the way rich Russians were in the nineteen-nineties and rich people from the Gulf states were in the decades before that. The Chinese presence in Vancouver is particularly pronounced, thanks to the city’s position on the Pacific Rim, its pleasant climate, and its easy pace of life. China’s newly minted millionaires see the city as a haven in which to place not only their money but, increasingly, their offspring, who come there to get an education, to start businesses, and to socialize. [Source: Jiayang Fan. The New Yorker . February 22, 2016]
“The children of wealthy Chinese are known as fuerdai, which means “rich second generation.” In a culture where poverty and thrift were long the norm, their extravagances have become notorious. Last year, the son of China’s richest man posted pictures online of his dog wearing two gold-plated Apple Watches, one on each front paw. On Web forums, citizens complain that fuerdai are “flaunting what they haven’t earned” and that “their grotesque displays are a poison to the work ethic of Chinese society.” President Xi Jinping has spoken of the need to “guide the younger generation of private-enterprise owners to think where their money comes from and live a positive life, ” and the government recently held an educational retreat for seventy children of billionaires, who were given a crash course in traditional Chinese values and social responsibility.
“Yet fuerdai continue to fascinate. Some of the most popular Chinese TV dramas in recent years — such as “Noble Bride: Regretless Love” and “Ice and Fire of Youth” — have plots centering on fuerdai, whose love lives enhance or endanger the family fortune.There is also a fuerdai reality show: “Ultra Rich Asian Girls of Vancouver.” “Contempt for the nouveau riche is hardly limited to China, but the Chinese version is distinctive. Thanks to the legacy of Communism, almost all wealth is new wealth. There are no old aristocracies to emulate, no templates for how to spend.
“There is a common conception that the fuerdai are being groomed to inherit their parents’ businesses, but this isn’t necessarily the case. One of the women on the show told me, “My daddy doesn’t want me to kill the company he has worked so hard to build. He told me, ‘If you don’t have the ability to take over, it’s better for you to collect a monthly income and give the reins to someone else.’ ” Parents often provide their children with money to start a small venture, to test their business acumen." The parents of Weymi Cho "promised her half a million dollars to launch a bilingual luxury-life-style magazine, which will be distributed free at high-end stores, in order to foster a sense of exclusivity. “I don’t plan on making a huge fortune from it, ” Weymi said. “But my friends all agree: this project is so Weymi.” Ray’s boyfriend, who has yet to graduate from college, is going to open a conveyor-belt sushi restaurant in downtown Vancouver, with a sizable parental stake. “I plan to have menus on iPads, and there will be a video-game component to the ordering, ” he told me.
Destinations Rich Chinese Emigrants
The United States is probably the most popular destination for rich Chinese. The U.S. EB-5 visa requires $1 million ($500,000 for poor or rural areas) in businesses that create at least 10 jobs. Barbara Demick wrote in the Los Angeles Times, “For the rich Chinese craving an American lifestyle, the way to go is the EB-5 visa. In September 2012, the program was extended for three years. In fiscal 2011, Chinese made up three-quarters of the applicants. The successful applicants don't need to speak English or have particular business expertise, just the cash. Consulting firms in China put together investment vehicles.” [Source: Barbara Demick, Los Angeles Times, November 2, 2012 ++]
"The United States is still everybody's dream, but they worry about crime," Zhong, told the Los Angeles Times, "All in all, though, the people who want business opportunities prefer the United States. The young professionals prefer Australia." "I like agricultural projects, manufacturing. Real estate and hotels used to be popular, but they're too risky," Du told the Los Angeles Times. The big disadvantage of the U.S. program from the standpoint of Chinese investors is that their immigration status is contingent on the business succeeding. "If the business fails, you lose your green card too." ++
Canada, particularly Vancouver, is another popular destination. But, Demick wrote, “doors open and close. A Canadian program that was wildly popular is no longer accepting applicants, but Australia is still taking in rich Chinese by the thousands for ever larger sums of money. The newest program offers residency for the purchase of $5.2 million in treasury bonds. Last year, Chinese surpassed Britons as Australia's largest source of permanent migrants, with 29,547 arriving. "The number of people is growing," said Ivy Wang, a breathless real estate broker in Melbourne selling suburban homes at an average price of $600,000 to Chinese newbies. "Australia is pretty easy: There is not much living pressure and the workload isn't too heavy, not like in China." ++
Wealthy Chinese in Vancouver
Paul Oei, a well-known entrepreneur in Vancouver, told The New Yorker that so many Chinese want to move to Vancouver that popular apartment complexes have more potential customers than they can accommodate. “They buy properties without hesitation, ” he said. “It’s very cheap in comparison to, let’s say, New York, L.A., Hong Kong, or Japan. First, it’s very economical to buy properties, and then, second, these folks have so much money, they want to diversify and put it in a country that is safe.” [Source: Jiayang Fan. The New Yorker . February 22, 2016]
Jiayang Fan wrote in The New Yorker: ““I asked him if the people he works with could be considered China’s one per cent. “I wouldn’t say that they are the one per cent, ” Oei replied. “More like between the one and two per cent.” His clients tend to have prospered in regional manufacturing cities, whereas the very wealthiest people are from Beijing, Shanghai, and Shenzhen. “The tippy top of the pyramid have political backing or connections, ” he said. “They don’t need to export the wealth.” Oei’ said because "his clients aren’t the richest or the best-connected people in China; they want their children to have access to the cultural and political capital that is unavailable to them.
A study by Andy Yan, a planner in Vancouver,found that about seventy per cent of the single-family homes sold in three high-end west-side neighborhoods were bought by Chinese. Many occupants of these properties described themselves as housewives or students — twenty-seven per cent of the respondents in homes with an average value of $3.05 million. The finding led Yan to speak of so-called “astronaut” family arrangements. The home buyer, typically the husband, lives and works in Asia, where cash can be made fast, while establishing his family members in Canada in order to move the money to a place of social and political stability. Yan has coined the term “hedge city” for places like Vancouver: they are a hedge against volatility at home.
“In the past six years, the value of single-family homes in Vancouver has risen seventy-five per cent, to an average of $1.9 million. At the same time, the median household income has barely budged. The disparity is not lost on locals. Last year, an indignant twenty-nine-year-old woman tweeted a selfie with the hashtag #don’thave1million. Hundreds of other Vancouver residents followed suit. Bing Thom, an architect in Vancouver, said the property boom has, of course, been good for the architectural profession, but Thom, who is now in his early seventies, is troubled by what is happening to his home town. “By all accounts, I have done pretty well in my business, but I made more money from sitting on my Vancouver property than I made by working an entire lifetime, ” he said. “That tells you something.”
“I had dinner one night” with her friend Weymi “at a no-frills Chinese restaurant called Little Sichuan, in Richmond, an enclave of Canadian-born Chinese, not unlike Flushing, Queens. Little Sichuan was bigger than its name suggested. Almost everyone there was Chinese., and Weymi waved to a table of rowdy young men as we entered. “In this town, everyone knows each other, ” she said absently. After we ordered, she asked, “Do you want to see my pic with Justin Trudeau?” She scrolled through her phone. “He wasn’t the Prime Minister then, and I just asked him for a photo. I like Justin. I like most Canadian politicians, actually.” But she said that Westerners were too liberal on issues like marijuana and the death penalty. (China executes more people than any other country, more than a thousand people each year.)
“Ultra Rich Asian Girls of Vancouver”
“Ultra Rich Asian Girls of Vancouver” is a reality show that chronicles the lives of a wealthy group of friends, including Weymi Cho mentioned above. Jiayang Fan wrote in The New Yorker: “The show, filmed in Mandarin and English, is broadcast online and is watched avidly by Chinese people worldwide. It follows the lives of half a dozen young women in disorienting, whip-fast edits of bling and scornful gazes. The women spend wildly to prove their status, but affect disdain for the ostentation of others. Season 1 ends with a woman being accused of ghastly crimes — attempting to pass off fake Hermès bags and wearing non-designer attire. Season 2 picks up in L.A., where two of the women are scoping out luxury houses. I asked some of the women on “Ultra Rich Asian Girls” about being the objects of both envy and censure. “In Web forums about the show, people are always, like, Why do they have to show off like that?” Weymi said with a shrug. “I don’t think I’m showing off. I’m just living my life.”[Source: Jiayang Fan. The New Yorker . February 22, 2016]
“After shopping, Weymi and I went to the filming of the show’s second-season finale, in an upscale Thai restaurant that had been cleared for the occasion. We arrived early, and I chatted with the show’s creator, Kevin K. Li. Kevin, who is thirty-seven, was born in Vancouver to a Cantonese-speaking family and has worked for various broadcast networks in the city. He told me that he had envisaged the show as a mashup of “Lifestyles of the Rich and Famous, ” his favorite program growing up, and the “Real Housewives” franchise. He said, “I figured, if I wanted to know the kind of deluxe lives these kids led, so would people in Canada and the U.S. and Asia.”
“Casting the show was easy. Kevin shot a short promotional video in which a friend of a friend displayed a collection of bags and rode around in a Lamborghini. “It just went viral after a local media outlet picked it up, ” he told me. People began bombarding him with requests for interviews. “The subject of fuerdai was just ripe for the time. Everyone is curious and everyone has something to say.”
“Gradually, other members of the cast arrived at the restaurant — a parade of Helmut Lang, Alexander McQueen, and rose-gold iPhones. There was Diana, an economics and Asian-studies major at the University of British Columbia, who is twenty-three and has lived in Japan, Korea, the Philippines, and Hong Kong. A friend of hers from the university, Chelsea, was the only married woman in the cast. She had recently had her first child but seemed remarkably slender, and wore a pink baby-doll dress so elaborately feathered that, in combination with her towering Gucci heels, it gave her the appearance of a tottering baby ostrich. Ray, a finance student at U.B.C., had brought her boyfriend, who is also a fuerdai. Pam, at twenty-six, was the oldest of the group and the most reflective. As the women waited for the filming to start, they inspected one another’s outfits and accessories in forensic detail, but there was warmth as well as competitiveness in their manner, as if a life of continual consumption had fostered a kind of intimacy.
“In this episode, Kevin would be onscreen, leading a roundtable discussion of the women’s experiences during the season. Contention arose about whether an actual round table was desirable. Chelsea was concerned that it covered up too much of the clothes — “We could just be wearing p.j.s underneath” — but Kevin’s eye was on the composition. “I know what look you are going for, ” he said, nodding sympathetically. “But we have six pairs of legs, and it’s just going to look messy.” The episode began with a champagne toast, after which Kevin posed a series of softball questions: How did Diana’s experiment living on a low-income budget for one day go? (Not well.) How was house-hunting in L.A.? (Nice mansions but all in the wrong areas.) Kevin asked the women about the potential difficulties of dating outside their class. There was a slight pause before Diana ventured, “It can be hard. I’ve done it before and it’s just” — she took a second to smooth out her bangs — “just awkward and uncomfortable for everyone.”
“It was one of the few discordant moments in the discussion, but off-camera exchanges were more revealing. At one point, Diana announced, to no one in particular, “I am going to fix my face.” She’d heard about a recent Korean innovation in plastic surgery called 3-D molding. It was noninvasive, and involved a variety of braces and other devices designed to give the face the oval shape valued in Asian culture. “Weymi chimed in, saying, “Last time, when I went to Korea with my parents and my sister, I wanted to do it but my parents wouldn’t let me.” “It’s a high-tech thing, ” Diana said nonchalantly. “And very natural. Recovery can take only eight months.” When I asked why she would endure such a process so young, Diana looked at me with a perplexity that bordered on pity. “For a more beautiful face, of course, ” she said. A party followed the filming, and went on until the early hours of the morning."
Wealthy Chinese Buy Up U.S. Houses
E. Scott Reckard and Andrew Khouri wrote in the Los Angeles Times, “Chinese buyers bought 12 percent of all U.S. homes purchased by foreign citizens last year, up from 5 percent in 2007, according to the National Assn. of Realtors. More than half their home purchases were in California. And more than two-thirds of them paid cash, the trade group said. The trend appears unlikely to unwind soon. More than 60 percent of China's wealthy have left or plan to leave the country, at least part time, and their No. 1 destination is the United States, according to the Hurun Report, a Shanghai publishing firm focused on recently minted millionaires and billionaires. [Source: E. Scott Reckard and Andrew Khouri, Los Angeles Times, March 24, 2014 ***]
“Despite dizzying ups and downs in U.S. home prices, the market can seem more stable than in China, where fears of a property bubble have added to the economic and political worries of the burgeoning middle and upper classes. Unwary buyers accustomed to urban China's $1-million-plus luxury flats take "housing tours" and snap up homes east of Riverside or in Arizona without considering the cost of property taxes (China has none) or maintenance of homes with pools and yards. "They look at the dinky little apartment in Shanghai or Beijing — you know, like one-fifth the size — and they say this is affordable," said Ng, who fears prices will appreciate less than the buyers expect. "They are buying for speculative purposes." ***
“William Chen, a 25-year veteran of the mortgage business, opened an office three years ago inside the San Gabriel Hilton, where Chinese-language magazines near the front desk advertise local homes for sale, alongside pamphlets for theme parks. A flier for his Home Loan Mortgage Co., also in Chinese, promises to help foreign buyers find their "dream home." Most guests of the hotel, he said, are there to scout real estate investments. And the hotel, Chen said, is "very busy." ***
Lifestyle of the Children of China’s Rich in Vancouver
Jiayang Fan wrote in The New Yorker: ““On a crisp Sunday morning in November, Weymi Cho picked me up at my hotel, in downtown Vancouver, in her new car, a white Maserati GranTurismo with a red leather interior. She had slept only two hours the night before. A new karaoke machine had been installed in her apartment, a four-million-dollar condo with a view of the city’s harbor, and she and some friends had spent the night singing and drinking Veuve Clicquot. Weymi is twenty years old and slim, with large eyes and waist-length hair that cascaded, on this occasion, over a silk Dior blouse. She has a reserved, almost aristocratic air. It was a little past ten, and we were going shopping. [Source: Jiayang Fan. The New Yorker . February 22, 2016]
“Holt Renfrew, Vancouver’s equivalent of Barneys, is one of Weymi’s customary weekend haunts, though she is aware of its limitations. “It doesn’t compare to Vegas, where there is obviously a better selection, ” she explained as we drove there. Weymi speaks English with a subtle but noticeable accent, and was relieved when I switched to Mandarin. Her speech was punctuated by European brand names, which functioned as a kind of currency. A maid’s monthly wages, she said, were probably the price of a pair of Roger Vivier satin pumps. A night out can cost half a suède Birkin bag. On Weymi’s last birthday, in March, she’d spent more than two Fendi totes — around four thousand dollars — on drinks in less than an hour.
“In the store, Weymi spotted a former classmate from a Vancouver fashion institute, who was now working as a salesgirl there. She talked about the attitude of Chinese customers. “They treat this place like a supermarket, ” she said. “A three-thousand-dollar outfit is like a carton of milk.” Another salesgirl joined in and lamented that such profligacy negated any sense of exclusivity. Weymi agreed. “I can’t even look at Chanel bags anymore, ” she said at one point. “Everyone and their auntie now has a boy bag.”
“Weymi moved to Vancouver at the age of fourteen, to attend boarding school. Her family owns a successful semiconductor business in Taiwan, where she grew up, but her parents are from the mainland. She and her sister attended an international school, which prepared them for studies abroad, and she spent summers travelling in America or Australia. “My dad always wanted our English to be strong, ” she told me. “The plan was always to send us out West.”
Wealthy Chinese Boost L.A. Housing Markets
E. Scott Reckard and Andrew Khouri wrote in the Los Angeles Times, “Affluent Chinese home buyers are driving prices past boom-era peaks, spawning a subset of property brokers and mortgage lenders that cater to their distinct needs — and even dictate design details in new subdivisions. The strongest magnet is the San Gabriel Valley, where Monterey Park became known as the "first suburban Chinatown" in the 1970s. Selling real estate there now requires familiarity with feng shui, the ancient Chinese principles of harmonious design. "People are getting money out of mainland China and sticking it here," said Mel Wong, president of the West San Gabriel Valley Assn. of Realtors. [Source: E. Scott Reckard and Andrew Khouri, Los Angeles Times, March 24, 2014 ***]
“The trend has spilled over into other areas, including San Bernardino and Orange counties and even Las Vegas, with more acculturated Chinese Americans seeking homes big enough to host lengthy visits from overseas relatives. Motivations vary by location. Luxury estates in San Marino are bargains by Chinese standards; inexpensive Inland Empire homes are purchased as investments; top-shelf schools draw throngs to Irvine. ***
“Eva Chen and her husband travel between their homes in Shanghai and Arcadia, where they purchased a property near Santa Anita Park in October. They scooped up the second home as an escape from pollution and a shot at better schools for their two infants. Compared with housing prices in China, the $1.27-million Arcadia property didn't seem expensive. "The Arcadia house is cheaper," Chen said. But it's getting more expensive quickly. Heavy demand pushed the median home sales price past $1.32 million last quarter in Arcadia's 91007 ZIP Code — 30.5 percent above its peak in 2007, during the housing bubble, according to researcher DataQuick. *** “Next door in the 91006 ZIP Code, prices are up 23.7 percent. Other areas with prices exceeding their peaks include Walnut, Temple City, San Marino and parts of San Gabriel and East San Gabriel, all hubs for Chinese investment. The Chinese buying spree sometimes borders on recklessness, said Dominic Ng, chairman of Pasadena's East West Bank, the largest Chinese-American bank. East West specializes in home loans for Chinese buyers with no U.S. credit histories, but often enormous down payments.” ***
Some “want the prestige of a San Marino or Pasadena mansion, even if paying for it means working in China and rarely visiting. One of Ng's neighbors bought a Pasadena estate, then lived there for just two days out of the two years that followed. "He was not renting it out," Ng said. "People have so much money, they just say, 'What the heck. It's a nice neighborhood. I might as well just buy one.'" It's a story echoed by Patti Hahn of Arcadia, gesturing to the house next door, which sold for $2.45 million last year, up from $1.55 million in 2006, the last time it changed hands. "No one lives there," Hahn said. The buyers pay for twice-weekly maintenance work, she said. They live overseas but plan to start splitting time between the U.S. and China this year, said Johnny Lam, the buyers' agent. ***
U.S. Houses Built with Chinese Buyers in Mind
E. Scott Reckard and Andrew Khouri wrote in the Los Angeles Times, “Home builders have taken note of the surging interest from Chinese buyers, as well as Chinese Americans who have lived in the U.S. for years but still favor neighborhoods and amenities that reflect their native culture. At Lambert Ranch — an Irvine development of $1-million-and-up homes that quickly sold out last year — Chinese benches and figurines decorated the downstairs of model homes. At one model, would-be buyers climbed stairs decorated with large photos of the Great Wall and a Chinese farmer cradling a basket of rice. [Source: E. Scott Reckard and Andrew Khouri, Los Angeles Times, March 24, 2014 ***]
“Downstairs, the New Home Co. houses were designed with separate master bedrooms and baths that sales staffers said were intended for relatives from foreign countries. The most expensive homes have detached studio apartments for visitors. Builder Lennar Corp. took a similar strategy. It had initially created a home design in response to job losses from the recession — a small apartment, built within a house, so extended families could live together. But it has since modified the plans to accommodate the tastes of Asian families, who also often live with elder relatives. ***
“The Lennar home that Tom and Rebecca Chow bought last year in Chino's College Park area has not only this "home within a home" design, but also a second "wok" kitchen designed to accommodate Chinese cooking. The range has a 50,000 British thermal unit double burner for high-temperature recipes, a high-powered exhaust fan to carry off the smoke, and walls covered in white tile for easy cleanup of spatters. ***
“The home is aligned to avoid feng shui miscues: You can't see the back door or a staircase from the front door, both of which are thought to create imbalance. Lennar sales representative Michael Lua also noted that the sink and refrigerator in the main kitchen are not directly across from the oven and range, which would create friction between water and fire elements. The Chows, originally from Hong Kong, came to the U.S. more than two decades ago as students and stayed. They now have a son at a university and a daughter getting ready to go. The apartment enables them to host relatives from Hong Kong, Canada and Saudi Arabia, as well as their own returning children and a college-age niece, Tom Chow said. ***
“In Las Vegas, which has a long-established community of ethnic Chinese residents, as well as the allure of gambling and inexpensive housing, Lennar went a step further when it developed a 40-acre housing tract, Lantern Gardens, on the outskirts of town. In addition to applying feng shui design principles and interior apartments for relatives, Lennar designed a central park that is round instead of square and aligned most of the homes on a north-south axis, reflecting the preferences of many Chinese. "The traffic coming through was principally Asian, and mostly Chinese," said Jeremy Parness, the company's division president for the area. The company has even taken care to avoid putting the number four in any address, because it rhymes with the Chinese word for death, Parness said. ***
Chinese Nouveau Riche Buy Up Property in Australia
A. Odysseus Patrick wrote in the Washington Post, ““Credit Suisse estimates that 18 percent of all new houses and apartments in Sydney are bought by Chinese citizens. In Melbourne, the figure is 14 percent. These figures are likely to rise. To stimulate the economy, the Australian government recently expanded a program to grant permanent residency to foreigners prepared to invest at least 5 million Australian dollars (about $4.6 million) in Australian businesses. Ninety percent of the applicants so far are Chinese. [Source: A. Odysseus Patrick, Washington Post, June 17, 2014 ]
“Australia relies on China to buy much of its two main exports, coal and iron ore. But many say there’s a downside to Chinese investment: surging property prices. Concerns that Chinese buyers could be driving a property bubble are so widespread that the Australian Parliament recently began an investigation into the possibility. Research given to the inquiry by two academics found that people with Chinese surnames paid slightly less than other buyers for similar houses and apartments in Sydney, suggesting they are tough negotiators and aren’t pushing up prices.
“Many Australians aren’t convinced, according to submissions to the inquiry from the public. “Widespread injustice will continue with Australians being outbid by foreigners on an uneven playing field,” a woman named Pat Sutton wrote to the investigators. The concerns reflect a belief among many people that Chinese citizens are using cities such as Sydney — an 111/2-hour flight from Beijing — to protect their wealth from theft or seizure by the Chinese government.”
Politically-Connected Chinese Buy Famed Sydney Property
Reporting from Sydney, A. Odysseus Patrick wrote in the Washington Post, “ From London to midtown Manhattan to Hong Kong’s Victoria Peak, wealthy Chinese — often connected to powerful political figures — are buying up some of the world’s best real estate In recent weeks, wrecking crews have embarked on a job that symbolizes the international economic clout of the Chinese elite: razing an Australian mansion with stunning views of one of the world’s most picturesque harbors. Craig-y-Mor, an elegant 106-year-old home owned over the years by several prominent Sydney businessmen, was bought in 2008 by the son and daughter-in-law of a former senior member of the Chinese Politburo for 32.4 million Australian dollars (about $30 million). [Source: A. Odysseus Patrick, Washington Post, June 17, 2014 ]
“The new owners, Zeng Wei and Jiang Mei, sought permission to demolish the two-story brick house and replace it, at a cost of $4.5 million, with a five-level modern concrete structure with huge windows. The plan horrified some neighbors and government officials, who thought the new building would be too big and unattractive. After the municipality refused to allow the demolition, Zeng’s lawyers appealed to a state judge, who overruled that decision.
Zeng and his wife may have had another reason to choose their new home apart from Australia’s strong defense of property rights and the 180-degree views of Sydney Harbor. Feng shui expert Gary Khor recently told the Sydney Morning Herald that Point Piper, the wealthy suburb where Craig-y-Mor is located, contains positive energy because it overlooks calm, moving water and has a hill to its rear. Powerful ties.
“Little is known about Zeng’s personal or professional life. His father is Zeng Qinghong, the vice president of China from 2003 to 2008 and a player in the leadership maneuvering over the past decade that led to the rise of President Xi Jinping. Foreign Policy magazine reported in 2012 that Zeng Wei was involved in the clandestine privatization of the state-owned Luneng power generating company, which had over $9 billion in net assets.
Workers began demolishing the home last month, an event that was front-page news here. “They are knocking down something that was modest and thoughtful and replacing it with something that doesn’t even have a thought in its head,” said Elizabeth Farrelly, Sydney’s most prominent architecture critic, in an interview. Bill Malouf, a veteran real estate agent whose firm brokered the sale of the house, said in an interview that Craig-y-Mor wasn’t in need of renovation. Chinese buyers prefer modern, symmetrical houses lacking the ornate detail common to many of Sydney’s grand older homes, he said. Views of the Sydney’s iconic Opera House and Harbor Bridge are important, he said. “He was always going to do a major renovation,” Malouf said of the buyer. “There was nothing wrong with the house.”
“The construction site at Craig-y-Mor has now turned into a regular stop on the Chinese tourist circuit, along with Bondi Beach and the Harbor Bridge. “We get minivans every day and private cars on weekends,” neighbor Bob Gilman, a California businessman who has lived in China, said in an interview. “A Greyhound bus came one day.” Recently, a vehicle carrying tourists blocked Gilman’s car. His Pennsylvania-born wife, Denise, asked the driver — in Mandarin — to move it, prompting embarrassed tittering from the group. “They all want to have their photos in front of the house that belongs to a famous Chinese official,” she said.”
Chinese Buy Houses in Cyprus to Gain E.U. Access
The real estate market in Cyprus, an EU member, is turning to Chinese investors seeking easier access to Europe. Reporting from Paphos on the island of Cyprus, Caroline-Nelly Perrot of AFP wrote: “Hundreds of Chinese nationals have purchased second homes on the island thanks to a Cypriot law revised last year granting permanent resident status to foreign buyers of homes costing at least 300,000 euros ($390,000). "The Chinese are not interested in houses as such in Cyprus. They are interested only in the permanent residency. They buy houses through visa firms," said leading real estate agent Antonis Loizou. While Cyprus has been a European Union member since 2004, it does not belong to the Schengen passport-free zone, meaning permanent residency does not guarantee free travel across the bloc. But "it is much easier to get a European visa" with Cyprus residency, stressed Wuang Hong, herself a longtime resident and telecoms employee who says she assists Chinese investors. [Source: Caroline-Nelly Perrot, AFP, March 6, 2013 ~~]
“She says most Chinese investors are businessmen who buy on the coast, especially in and around the western resort of Paphos."Some want to give a better future to their children — give them an opportunity to live in a cleaner environment and go to good international private schools, which are much more expensive in China," she said. But only few Chinese have so far opted to settle in Cyprus, where residency does not grant a work permit. ~~
“The investors, who are banking on a medium-term rise in house prices, have had to come up with methods to skirt Chinese law which in theory limits foreign currency exports to an annual $50,000 per person. Apart from opening up Europe as a destination, Cyprus can provide a political refuge, access to the Cypriot banking sector and a way to circumvent China's one-child policy. But the players in Cyprus, where billboards have sprung up in Mandarin advertising luxury homes, insist money-laundering is not a factor. "All this money has to come through a bank. No one can come with a suitcase full of cash and buy a house. It is all checked out," said Nick Antoniades, who runs a service company for Chinese investors. He said the buyer must show documentation to prove annual income of at least 30,000 euros. ~~
“In Paphos, previously the preserve of British pensioners before the world economic crisis kicked in, the carnival king in the countdown to Greek Orthodox Easter will have Chinese facial traits, adding an Oriental flavour to the event. "For us, it's a question of survival," explained Maximos Pantelides, a real estate agent just back from China. "Prices have gone down by at least a third in the past four years" and several agencies have gone out of business. Other countries, including Spain, are also offering residency in return for home buying, but Cyprus now has "the best immigration policy in Europe," according to Antoniades. And the island could join the Schengen zone. But, cautions Loizou, Cyprus could still, like Malta, toughen up the regulations once a certain quota of foreign investors has been met. "This policy is not forever," he said.
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Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Chinese government, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.
Last updated October 2021