The influx of Chinese investors in the American real estate market is so glaring now that even singer Cher couldn't help but tweet about it.
Cher took to Twitter to share her angst and worry about the Chinese investor invasion in the country and how the Americans are surprisingly allowing a potential eastern monopoly that could take over if not restricted.
First posting about the record-breaking Waldorf Astoria Hotel sale, Cher tweeted:
"THE STATE DEPT IS FKNG NUTS.WE SOLD THE"WALDORF ASTORIA HOTEL"2 THE FKNG COMMUNIST CHINESE &"NOW"THE STATE DEPT.THINKS THE CHINESE WILL SPY"
And then she took aim at Zillow, which recently said it will make its listings available to the Chinese:
"#CHINA IS ON REAL ESTATE BUYING SPREE ALL OVER USA. #ZILLOW Has Agreed 2Make Their Listings Available 2 CHINESE CONSUMERS BOYCOTT #ZILLOW"
Cher is not wrong. According to the National Association of Realtors, China accounted for $22 billion of the $98 billion real estate market of the United States for the year ended March 2014. The Chinese purchasing power has also increased to 24 percent from last year 19 percent.
All told, China is the third largest foreign real estate buyer in America after Mexico and the Philippines, with a CBRE report predicting that, in the coming years, China may end up spending more than $178 billion on properties abroad.
There are several major reasons for this kind of an influx:
- The Chinese property market is declining
- The strength of Yuan is shaping investment decisions
- The Chinese are looking for a "safe haven" to stash their cash in
Even though the Chinese government only allows $50,000 per person per year in abroad investment, the "Middle Kingdom" is getting more creative about their investment portfolios. Also experts believe that the asset meltdown in China will accelerate the amount of Chinese money flowing into America.
"We expect Chinese interest in U.S. assets to remain strong in 2014 because of aggressive economic reforms in China, a more liberal policy environment for Chinese outbound investors, and a positive outlook for the U.S. economy," Thilo Hanemann and Cassie Gao, analysts for Rhodium Group, wrote in an outlook released early January.
But, Cher is not the only one worried about the possible monopoly. A feature at ZeroHedge.com asks some intriguing questions:
"So what happens when we get to the point when the Chinese government and/or Chinese citizens own 10 percent of all the real estate in the entire country? Will it be a problem then? What about if we get to 20 percent or 30 percent? At what point will we be forced to admit that we have a major problem on our hands?"
But economy leaders say it's inevitable.
"Attitudes in the U.S. are going to have to change, because the U.S. will not permanently be the global leader," James Bullard, president of Federal Reserve Board of St. Louis, was quoted by The Wall Street Journal.
