ORANGE COUNTY, CA—In California—the number-one US state for Chinese real estate buyers—population, tech, schools, lifestyle and short flight time attract these buyers, Juwai.com's co-founder Simon Henry tells GlobeSt.com. We spoke exclusively with Henry, who recently spoke at the National Association of Realtors' Annual Conference in San Diego to kick off its "Global Opportunities Day," about Chinese investors' interest in US real estate and where he sees this trend going as the Chinese economy appears to falter.

GlobeSt.com: Why did Chinese buyers—more than any other group—spend $28.6 billion on US property last year?

Henry: There are two reasons the Chinese like to invest in US real estate above that of every other country. They think it's a good investment, and many Chinese have a certain fascination for the US. The Chinese name for America is "Meiguo," which literally means "beautiful country." The US leads the world in cultural power, business and innovation. That draws not only Chinese, but investors and immigrants from every part of the globe.

In California, which is the number one US state for Chinese real estate buyers, the large existing Chinese American population, tech industry and good schools, attractive lifestyle and relatively short flight time to China are all attractive.

In New York State, the big draw is the Big Apple. The city's diverse, global economy has always attracted overseas investors. It is also the US city with the most Chinese American residents. While the wealthy Chinese buying $50-million apartments in Manhattan get the most headlines, the biggest destination for Chinese buyers in New York is actually the borough of Queens. There, a middle-class Chinese family can purchase a new, one-bedroom apartment for $550,000. They can rent it out, install their children who are studying in New York or use it themselves.

Florida is a fast-rising state with Chinese buyers. Hot spots like Miami haven't always attracted as many buyers from China as from Latin America. The Chinese who are venturing to Miami now like the high-quality, new waterfront buildings, where they can find renters for their apartments at an attractive yield. In large part, the Chinese interest in Florida is due to the proactive marketing efforts of the state's MLS, which has been aggressively courting Chinese buyers. After all, if you live in China, why go all the way to Florida when you can go to Hawaii, which is closer? There is some resort home-buying in Florida, but it's not the biggest part of the Chinese buyer market. Interestingly, Florida is the second most-popular state for buyers from Beijing, but only sixth with buyers from Shanghai.

GlobeSt.com: Has China's economy slowed, and is this impacting their local real estate purchases?

Henry: From our base in Shanghai, we have seen less a slowdown than a shift in China's economy. Old and dirty industries that were necessary for the big infrastructure and construction wave of the past decade, like manufacturing and steel, aren't doing well. At the same time, consumer demand is strong, and those businesses that serve the consumer market are booming.

Here are examples: Nike, IKEA and IMAX are doing great business in China; Starbucks is opening 1.5 stores a day in China during the third quarter and planning on opening 900 Chinese stores in 2016. H&M is posting record profits in China, as is Apple, whose operating income from greater China more than doubled in the most recent quarter. 

Overall, retail sales are up 10.8%, outbound tourism is at record levels, cinema ticket sales are up 48.5% and flights are up 12% from a year earlier. A recent McKinsey survey of 1,200 Chinese consumers found that 71% expect wages to increase this year, and 84% expect to spend more.

When we look into the crystal ball, we see future ups and downs, but an unmistakable long-term trend of significant growth over the next five years in Chinese offshore real estate purchases. Remember, even though the Chinese economy is growing at a slower rate than its historic pace of the last decade, it is still growing in absolute terms faster than ever. Wealth creation in actual dollar terms is greater now than in the past, and China just passed the US in the number of billionaires.

Besides new wealth creation, the biggest contributor to this growth in real estate purchases is the government's firm intent to reduce its strict limits on moving money overseas. Right now, the government is considering removing all limits by 2020. The Bank of England has estimated that such a change will cause Chinese ownership of foreign assets to increase by 600%.

GlobeSt.com: In which states, cities and neighborhoods do they buy?

Henry: The top US states for Chinese buyers in the USA are California, Florida, New York, Texas and Washington. Interestingly, while the traditional destinations are still the most popular, buyers are increasingly spreading their wings and seeking out new destinations.
The push factor here is that Chinese buyers have been active in the US for half a decade now, and many are comfortable enough to buy anywhere. The pull factor is that real estate agents and developers from all over the country have woken up to the size of this buyer group and are beginning to market to them directly. That brings Chinese buyers to places that might not have seen them before."

GlobeSt.com: What properties do they look for and in what price range?

Henry: Every buyer is different, and price range plays a big role in determining property type, but some things are more likely to appeal to Chinese buyers. The big draws include proximity to urban amenities, great schools and universities, water views, feng shui-compliant property and nearby established Chinese communities.

GlobeSt.com: What's the forecast for this buyer group?

Henry: Chinese real estate buyers spent $52 billion on international property in 2014, and that number is expected by reach $220 billion by 2020. So, we are seeing 440% growth over the next five years alone.