Chinese currency flows
Everyone wants a piece of the new Chinese wealth.
A flood of Chinese money into the U.S. residential market has local Realtors wondering if Las Vegas will get its share.
“The Chinese are still learning about us,” said Candi Liumai, a top selling Realtor for Berkshire Hathaway HomeServices Nevada Properties. “I am so very confident about this market.”
Liumai, who immigrated as a child from Guangzhou, which is near Hong Kong, works with Chinese investors, mostly from Hong Kong. The Asian-American grew up in San Francisco and moved to the Las Vegas Valley in 2004.
One of the things she tries to convey to her customers, who purchase homes from $200,000 to $400,000 in Southern Nevada, is the Las Vegas lifestyle.
“I tell them is not just about gambling,” Liumai said. “We have more here than casinos.”
Last weekend about 1,000 Realtors attended the Asian Real Estate Association of America’s conference at the Bellagio. It featured workshops by Realtors, national lenders, investors and a professor from mainland China. They all agreed that many Chinese seeking to escape political and economic uncertainty will continue to invest in U.S. real estate, which they consider to be safe.
In June, the National Association of Realtors reported that China is the No. 1 foreign buyer of single-family homes in the U.S. ranked by sales, and Canada is No. 2. Although the Chinese purchased fewer homes, they pumped $22 billion into the U.S. residential market in the past 12 months ending in March. Chinese buyers paid a median price of $523,148 compared with the median price of $212,500 per residence that Canadians paid for a total of $13.8 billion.
A survey of 3,547 Realtors said China is the fastest growing segment of foreign buyers. California is the top market for the Chinese buyer, representing 35 percent of the market. Other states favored by the Chinese are Washington and New York. The survey, which cited Realtor.com reporting, found that the cities most searched by the Chinese buyer are Los Angeles, San Francisco and New York. The Realtor association’s study showed the Asian buyer is usually affluent, and 76 percent of the purchases are in cash.
In comparison, Las Vegas has a tiny sliver of the Asian market. The association’s report showed it gets only about 1 percent of the entire foreign market. Local and state trade groups do not report information on how much the Chinese are buying in Las Vegas. However, John Burns Real Estate Consulting reports that Asian home shoppers represent about 10 percent of the metropolitan market, behind 41.9 percent for non-Hispanic whites and 31 percent for Hispanics.
EXPERTS SAY CHINESE MARKET IN LAS VEGAS WILL GROW
Most of the Realtors at the Asian Real Estate Association conference and those working with Chinese buyers in Las Vegas expect that market will increase.
Steve Hawks, owner of Platinum, said he works with Chinese investors who are looking for bargains in the residential market. Political and financial concerns are driving Chinese to “park their money in safer U. S. real estate investments,” he said.
He is working with an investment group that plans to spend $650 million in the U.S., Hawks said. “I’m trying to find a place for much of it in Las Vegas.”
Hawks said Chinese banks were loosening their cash restrictions and letting more money reach the U.S.
Asian Real Estate Association co-founder John Wong, a San Francisco Realtor, told a group at the conference that Chinese currency regulations have become less restrictive. In the past, Chinese residents were allowed to remove only $50,000 per person from the country.
Hawks said for the past 18 months, Chinese investors have replaced hedge-fund buyers in his business. His revenue has not fallen, but has remained steady because one type of business has replaced the other.
He said it’s getting harder and harder for the Chinese to find homes in California and Vancouver, British Columbia, where the markets are overpriced. San Francisco median home prices are nearly $1 million. Vancouver’s median price was more than $670,000 earlier this year.
Last week, the Greater Las Vegas Association of Realtors reported that the median existing-home price in Las Vegas was hovering at $200,000, a milestone achieved in July. That’s up 9.9 percent from a year ago. Sales were down in August to 3,120 from 3,314 in July and 3,539 a year ago.
Hawks moved to Las Vegas in 1998 to work for a large commercial real estate company and planned to stay for a year. He was living in Huntington Beach, Calif., but decided to stay in Southern Nevada because he saw an opportunity in the residential real estate market.
He sees more opportunity in cashing in on the Asian buyer, he said. He estimates there are 10 times more Asian buyers in this market than two years ago. And, he said that will grow, being fueled by newly minted Chinese millionaires and a rising upper-middle class looking to buy single-family homes.
Recently, he sold a house with an estimated value of $150,000 to $160,000 to a Chinese investor who paid more than $190,000, Hawks said.
The National Association of Realtors’ survey said a full half of the Chinese buyers purchased homes for vacation spots and rentals. Hawks said many are bypassing the Multiple Listing Service and working with private sellers and homebuilders, so accurate local figures are not easy to obtain.
“They are going after everything: the luxury market, midmarket and low-end for investment,” he said. “The money is already here.”
Still, the Greater Las Vegas Association of Realtors reported a decline in cash buyers for existing homes in August, suggesting fewer investment buyers. The trade group, which has 11,000 members, said 32.1 percent of resale homes were purchased with cash, down from 35.6 percent in July. In February 2013, the group reported 59.5 percent of existing homes were purchased in cash. It uses Multiple Listing Service statistics.
Dennis Smith, founder of Home Builders Research Inc., said Chinese buyers are drawn to below-construction-cost deals, “which are fewer to find these days.” Still, he says Las Vegas has half-off prices compared with some California markets that the Asian buyers have traditionally purchased in.
In the past few years, Smith said he has gotten fewer calls from Asian investors and Chinese developers asking to research the local market.
Smith can see the demand for Asian buyers rising in the future as the sellers expand their marketing efforts to attract more of them, he said. However, that doesn’t appear to be a factor that will overheat local housing prices, he added.
IT’S ABOUT THE LIFESTYLE
Heidi Kasama said in addition to the wealthy Chinese rushing to safeguard their cash, she works with Japanese clients who “envy the retirement lifestyle with the golf courses and amenities” in Las Vegas.
Kasama is the 2014 president of the local Realtors’ association and branch manager of Berkshire Hathaway’s Summerlin office, which houses 150 agents.
Some Japanese buyers purchase homes early and plan on living in them during their retirement years, Kasama said.
Kasama and her husband, a native of Japan, hosted a small party of conventioneers at a China Town restaurant. She said she thinks the Asian community in Las Vegas is getting as large as Seattle’s, where she grew up after her Norwegian family moved there from New York. She and her husband use to fly to Seattle to get favorite foods.
“Now we can find everything we want right here,” she said.
Half of her business, Kasama said, is in the luxury market, with homes listed at $8 million or more.
Although most of the Asian groups she works with have their own translators, her agents often don’t need the help. Most of her 150 agents are fluent in another language including Cantonese, Mandarin, Vietnamese, Japanese, Greek, Hebrew, Dutch, German and Spanish. It was something she did on purpose to position herself for the global buyer, she said.
“I speak fluent Norwegian, but that hasn’t helped too much,” she said.
Las Vegas’ entertainment and sunshine as selling points, Kasama said. And that’s something Randy Char of One Queensridge Place echoed.
Char, co-chairman of the Asian Real Estate Association, said Las Vegas’ lifestyle is a drawing card for his wealthy customers at the high-rise in the western valley.
“The Vegas lifestyle affords more amenities in shopping, dining, spas and hotels than most Western cities,” he said. And it’s still affordable.
He believes the prices will go up, and when they do Queensridge plans to start building the second phase of its high-rise project, he said.
Most of Char’s Asian customers are not from mainland China, Hong Kong or Taiwan, but come from California, Vancouver and the East Coast, he said. Except for iconic properties such as One Queensridge Place’s Crown penthouse, the Chinese are more likely to invest first, then send their children to school and then purchase a luxury home, Char said.
Char and Kasama agreed that wealthy clients are less concerned with the public school system ratings since they usually place their children in local private schools, which do well in the national rankings. Kasama points out that the public schools also have magnet campuses that are respected and ranked high nationwide.
“They have exceptional opportunities,” she said.
Education is also a concern for Liumai’s clients. Liumai, who speaks Cantonese and Mandarin, is hoping to break into the luxury market. Her clients point to the low-ranked education system, lack of high-tech jobs, shortage of family community amenities and hot weather as negatives for Las Vegas.
“They always complain about the weather. They say it’s so damn hot here,” she said and laughs.
On the other hand, lower housing costs and no income tax are positive selling points. Liumai’s clients, who are mostly from the Hong Kong area, like Summerlin, Henderson and Seven Hills because they have some community and are greener. They don’t like the desert landscaping, she said.
The clients also favor Rhodes Ranch, not so much because of its feng shui, but because of its lush green landscaping, golf course, family amenities and low homeowner association fees, she said. A few years ago Rhodes Ranch attracted a large number of Hawaiian buyers because they found the homes adhere to the basic principals of feng shui.
Smith said the builders did not intentionally design the community that way.
“They didn’t know what they had,” he said. “They do now.”
DESIGN DOES MATTER
In some California communities, homebuilders are catering to the Asian market with feng shui design and blessings before construction.
Although Char said he doesn’t see a demand for that consideration among his wealthy Asian clients, Liumai does.
“They don’t want anything to destroy their feng shui,” she said.
Even if the investors are not going to live in the house, they do not want to purchase homes that are constructed with the stairs facing the front door, or the sliding-glass back door aligned to the front door, Liumai said.
“That means money goes out right away,” she said.
Although she sees it as part of the Chinese culture, feng shui master Michael White-Ryan, who studied for 10 years, says it is a way of life and it’s scientific.
“It’s fluid, changing,” he said. “It’s about connection, energy, design, environment and people.”
The former luxury home and high-rise builder from Australia said he has business clients from around the globe pay him to advise them on their offices, resorts and homes. He said a simple thing such as people entering the wrong door can hurt the company’s bottom line.
His California-based company, Language of Space, helps residential clients, too. For example, a Chinese homeowner had recently inherited a family home and asked for its services.
“There were just some simple solutions, we gave her to help sell the home,” said Pamela Edwards, White-Ryan’s wife and business partner.
Edwards, a design consultant, and White-Ryan lecture to local and national business groups on their style of feng shui. They also do personality profiles for the homeowners to make sure all is in alignment.
Many non-Asians over the years have adopted feng shui and are applying it to their business and work life.
“When people are happy, they thrive in their business and home life,” he said.
