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Updated over 6 years ago, 07/26/2018

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Matt K.
  • Walnut Creek, CA
2,919
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Is China on the Retreat?

Matt K.
  • Walnut Creek, CA
Posted

Will be interesting to see how this plays out as the trade wars heat up, snippet of the article below:

Chinese investors have become net sellers of U.S. commercial property for the first time in a decade, reflecting China’s crackdown on foreign investment and growing tensions between the U.S. and Chinese governments.

After years of binge-buying trophy real estate, Chinese investors sold $1.29 billion worth of property in the second quarter of 2018, according to data firm Real Capital Analytics. During the quarter, Chinese investors purchased only $126.2 million in commercial real estate.

https://www.wsj.com/articles/chinese-real-estate-i...

Account Closed
  • Specialist
  • Paradise Valley, AZ
2,931
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3,447
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Account Closed
  • Specialist
  • Paradise Valley, AZ
Replied
Originally posted by @Matt K.:

Will be interesting to see how this plays out as the trade wars heat up, snippet of the article below:

Chinese investors have become net sellers of U.S. commercial property for the first time in a decade, reflecting China’s crackdown on foreign investment and growing tensions between the U.S. and Chinese governments.

After years of binge-buying trophy real estate, Chinese investors sold $1.29 billion worth of property in the second quarter of 2018, according to data firm Real Capital Analytics. During the quarter, Chinese investors purchased only $126.2 million in commercial real estate.

https://www.wsj.com/articles/chinese-real-estate-i...

 China is headed for a correction on all fronts. It will affect Australia, New Zealand, Vancouver, Seattle, San Francisco, Toronto the most. China uses a method of "hiding" actual numbers to reflect a  better economy than actually exists. Many Chinese invest in real estate in "empty" cities in China that inflate the value of those properties. It will be a domino effect. 

https://www.zerohedge.com/news/2018-07-24/china-ca...

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1,517
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811
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Hadar Orkibi
Pro Member
  • Rental Property Investor
  • USA / NZ
811
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1,517
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Hadar Orkibi
Pro Member
  • Rental Property Investor
  • USA / NZ
Replied

Don't take much note of the NZ news papers @Account Closed, Correction in China will affect the entire world not only theses countries.

  • Hadar Orkibi
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    Account Closed
    • Specialist
    • Paradise Valley, AZ
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    Account Closed
    • Specialist
    • Paradise Valley, AZ
    Replied
    Originally posted by @Hadar Orkibi:

    Don't take much note of the NZ news papers @Account Closed, Correction in China will affect the entire world not only theses countries.

     Nice to meet you Hadar. Actually, it is Zerohedge.com that compiles and integrates the information. I also keep track of Marty Armstrong and Neil Howe who track demographics and birth rates and the velocity of money. They believe things will go well (world wide) for the next year or so and then turn around to a negative. I buy property with the intent of surviving a serious down turn by buying Subject To and selling to Tenant Buyers which protects my long position.

    User Stats

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    Matt K.
    • Walnut Creek, CA
    2,919
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    Matt K.
    • Walnut Creek, CA
    Replied

    Zerohedge is interesting site... lots of data there.

    User Stats

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    Replied

    China in Freefall.... 🤔. Talk about a house of cards. 

    Behind the scenes Chinese are wondering where it all went wrong?  Hillary was supposed to win. 

    User Stats

    21
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    6
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    Nathan Chase
    • Engineer
    • Vancouver, Canada
    6
    Votes |
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    Nathan Chase
    • Engineer
    • Vancouver, Canada
    Replied

    @Mike M what do you mean by buying Subject To? 

    I live in Vancouver and there is a fair amount to Chinese investing. it'll be interesting to see how the market corrects if that inflow of cash slows or stops...

    User Stats

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    Matt K.
    • Walnut Creek, CA
    2,919
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    Matt K.
    • Walnut Creek, CA
    Replied
    Originally posted by @Nathan Chase:

    @Mike M what do you mean by buying Subject To? 

    I live in Vancouver and there is a fair amount to Chinese investing. it'll be interesting to see how the market corrects if that inflow of cash slows or stops...

     Subject to is using the existing loan....


    Also, what's Vancouver like for job market? I know here in Bay Area (CA) while there's definitely foreign money.... there's also plenty of domestic money being thrown at houses and low supply. I in a sense wonder if it'll help more homes sale and prices remain similar...

    User Stats

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    Nathan Chase
    • Engineer
    • Vancouver, Canada
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    Nathan Chase
    • Engineer
    • Vancouver, Canada
    Replied

    no one knows exactly the extent of Chinese money on the vancouver housing market. The job market is stable but wages have largely stagnated and not kept up with cost of living. The housing affordability crisis means that lower paying jobs are having a hard time keeping employees. Restraurants and retail can't attract employees and keep them in vancouver. This spells difficulty as either wages will increase, further pushing up cost of living for everyone or these businesses will have to close or move. 

    in my humble opinion.

    User Stats

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    George Lay
    • Rental Property Investor
    • Vancouver, British Columbia
    18
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    George Lay
    • Rental Property Investor
    • Vancouver, British Columbia
    Replied

    I think @Nathan Chase is right in his observations. There's always added pressure on businesses to want to pay less but the market will dictate who is going to work those jobs. I would imagine being understaffed is the new normal if businesses want to stay in Vancouver proper. The extent of Chinese money is also unknown because we don't actually track the flow of money coming into the country. Having said that, I would place more of the blame on the real estate market self-reinforcing the current environment where property values increased and banks were willing to lend on higher values which led people suddenly being able to access more money which in turn led to more money being spent on buying real estate. Money from Asia was just the catalyst. 

    Although there is concern about China's economy, I don't know know if there is a free fall scenario because the average consumer in China uses a lot less credit that the average US/Canada consumer. It seems to be merely 1 billion people finally having cash to catch up on consumer spending habits that we've been accustomed to for the last 50+ years in North America. I think there's still quite a gap for China to make up in terms of consumerism before they finally catch up us. 

    User Stats

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    Matt K.
    • Walnut Creek, CA
    2,919
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    Matt K.
    • Walnut Creek, CA
    Replied
    Originally posted by @Nathan Chase:

    no one knows exactly the extent of Chinese money on the vancouver housing market. The job market is stable but wages have largely stagnated and not kept up with cost of living. The housing affordability crisis means that lower paying jobs are having a hard time keeping employees. Restraurants and retail can't attract employees and keep them in vancouver. This spells difficulty as either wages will increase, further pushing up cost of living for everyone or these businesses will have to close or move. 

    in my humble opinion.

     Are there not cheaper areas that are commutable? In the SF Bay Area it's expensive so lower wage earners typically commute into the city and can spend up to a few hours each way doing so. It's also in other areas of the states as well.

    https://www.apartmentlist.com/rentonomics/increase-in-long-super-commutes/

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    Devin Garrett
    • Modesto, CA
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    Devin Garrett
    • Modesto, CA
    Replied

    Due to all the tariffs and government sanctions it may be more cost effective for these foreign investors to use their properties for production and assembly.  If anything commercial properties may see an increase in prices , it's still a bit too early to tell.

    Anyone else thinking the trade war could spark an early correction in some markets?

    https://www.cbsnews.com/news/how-u-s-tariffs-may-r...

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    Troy Williams
    • Rental Property Investor
    • Florida & Shanghai
    68
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    192
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    Troy Williams
    • Rental Property Investor
    • Florida & Shanghai
    Replied

    Many good points here.  While the trade war could escalate to unprecedented heights, I have seen little else to show that China will have any sort of free fall.   I've heard similar fears and predictions for over 15 years...including the global recession almost 10 years ago, yet all the while living here, I've experienced quite the opposite.   I'm convinced the economy that continues to plow it's way forward is a completely different animal than the economy we know and understand back home in the states.   Stay tuned for more of the unexpected...

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    Sam Shueh
    • Real Estate Agent
    • Cupertino, CA
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    Sam Shueh
    • Real Estate Agent
    • Cupertino, CA
    Replied

    Most likely a mis- interpretation in financial sources. If there is a slowing in US commercial transaction it is likely these US commercial properties are over valued. These llc can be Chinese government investment under a faux US firms. About 1/3 Chinese millionaires will eventually pack and migrate overseas to metropolitans to US or Canada coasts.