The Growing Asian Buyer PoolAugust 23, 2013
The Authors just completed their second trip to Asia in the past seven months, this time to Hong Kong, Taiwan, and Macau. Much like our earlier trip in January, which included visits to Beijing, Shanghai, and Hangzhou, this recent trip reinforced the reasons why we are seeing the number of Asian buyers, most notably from China, significantly increase in Silicon Valley.
It is very well documented that political and economic changes in Mainland China have contributed to the desirability of real estate in Silicon Valley. Whether it is because of the Chinese government’s recent attempt to curve inflation in Mainland China by restricting the number of properties a Chinese National can own, or a more general desire for diversification, there is no denying the Chinese buyer pool is a significant and growing portion of the local real estate market.
Although Hong Kong and Taiwan are both under a completely separate regulatory regime than Mainland China, our most recent trip illustrated a number of elements that contribute to the desirability of Silicon Valley Real Estate. First, Silicon Valley prices actually seem a relative bargain when compared to the remarkably high prices in desirable sections of Hong Kong and Taiwan. We had the opportunity to tour a number of developments and meet with top real estate agents who explained that the real estate prices typically run well beyond $ 2,000 dollars per square foot, even for condos, which comprise the vast majority of real property in Hong Kong and Taiwan. Thus when buyers from Hong Kong or Taiwan look at prices in Silicon Valley, they feel they get a lot for their money. Even the more desirable sections of Palo Alto are still available for $1200- $1300 dollars per square foot; this price includes a standalone home and a backyard. Thus it is easy to understand why someone coming from such an expensive environment is willing to step up in price an extra $50,000-$100,000 to get the exact home they want.
Our meeting with a very successful Real Estate Agent of Hong Kong revealed interesting information about Hong Kong’s desire to maintain relatively stable appreciation in house prices. As one would imagine, the Hong Kong real estate market has directly been impacted by the remarkable economic success of Mainland China over the past 15 years or so. Most recently a number of Chinese Nationals have developed an interest in purchasing Hong Kong Real Estate and this new demand has pushed the prices up significantly. In an effort to limit this upper pressure on prices Hong Kong has enacted a 15 percent surtax in the purchase of homes by non-Hong Kong residents.
When one considers these various factors and a desire for diversification, not to mention the universal desirability of the culture, topography, weather and business opportunity of Silicon Valley, it is easy to understand why people from Asia are interested in purchasing here.
Kim Heng is DeLeon Realty’s Director of Asian Operation and liaison for marketing Ken’s listings to the Asian community.The Growing Asian Buyer Pool