Investments made in the U.S. residential real estate market by Hong Kong nationals have surpassed $300 billion and the number is expected to grow, even though Hong Kong is suffering from economic weaknesses and increased currency control.

Hong Kong nationals have displayed a unique interest in the U.S. residential real estate market for a variety of distinct reasons and motives – some nationals are purchasing second homes in the U.S., others are purchasing homes as they move to the United States on EB-5 investor visas, and then there are those who are purchasing for the sake of renting out and reselling. In addition to these prevailing reasons, the lack of trust exhibited in the domestic stock market in Hong Kong has also led to a drastic interest in US properties. Simply put, Hong Kong buyers have come to recognize the U.S. residential real estate market as a far safer bet, compared to stocks or other riskier means of investments. Considering the fact that Hong Kong nationals view the U.S. residential real estate market as a relatively safe investment, more and more nationals have moved out of the stock market in favor of the residential real estate market in order to grow and preserve their wealth. The U.S. in particular has thus become a favorable area for investment, considering the fact that the U.S. has very few restrictions when it comes to foreign investment, compared to other countries.

This increased interest in U.S. residential properties has been well documented by large realtors throughout the United States, evident by the fact that realtors have stated that the interest of Hong Kong buyers has increased by 45 per cent from just a year earlier with respect to high end property purchases.

The main areas and regions of interest to Hong Kong buyers are California and Miami. The average Hong Kong buyer is interested in purchasing grandiose and elegant properties that are new or have been very recently built. Homes older than a few years are not new enough, evident by the fact that more and more Hong Kong buyers are purchasing properties that are merely 60% complete rather than homes that are a few years old. This appears to be a very much of a cultural thing because unlike American investors, Hong Kong buyers want to be the first person to live in a home – therefore existing residential property that has been around for awhile, including state of the arc, historic estates that are known for their glamor and prestige aren’t of any interest to Hong Kong buyers. Instead of purchasing opulent European-style homes that are characterized with prestigious molding, high caliber leaf, and marble floors – Hong Kong buyers have expressed greater interest in high end-luxury homes that are built using a modern day architectural approach.

The properties most sought after by Hong Kong investors are in the US$10 million to US$25 million range – majority of properties purchased are characterized with glass walled homes and equipped with modern day architectural design.

Therefore, it is apparent that amongst Hong Kong investors, there has been a shift away from large, breathtaking mansions in favor of modern day styled housing due to the fact that the Hong Kong investors are characterized with a much younger demographic who crave to experience the modern-day American lifestyle. These investors have thus struck a strong liking to smart homes in particular that are composed of premium luxury and high end technology.

Going forward, the number of Hong Kong investors is expected to grow drastically, leading to a further increase of investments made into the U.S. residential real estate market.

Source: Asia Society, a not-for-profit group

By: Amtej Dosanjh