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U.S. high-end real estate woes hurt China

U.S. high-end real estate woes hurt China

The super wealthy Chinese entrepreneurs who found the United States’ Great Recession an ideal solution to their need to protect their astronomical assets are now dealing with a burst real estate bubble.

Chinese investments helped U.S. economy

The U.S. economy can thank these investors for buying up high end homes during the Recession. Their money, along with home investments from the super rich in Russia, South America, and the Middle East, provided some of the capital the United States needed to pull out of the economic downturn of the 2000s.

But now the weak economy in those areas is limiting the ability of the uber-wealthy to store their money in U.S. real estate.

Global economy slows high-end home purchases

The world’s economic woes – from China to Russia to South America – are damping sales in the high-end real estate market. Haywire overseas stock markets and dropping currency values caused in part by plummeting oil prices are dulling demand for mansions, penthouses and winter escapes. In addition, China’s stock market is tanking and the country is cracking down on large sums of money leaving its borders.

“There’s volatility in China and Russia and there’s the oil issue in the Middle East – I have no doubt there’s an impact overall on the market,” said Dan Conn, chief executive officer of Christie’s International Real Estate, the luxury-property brand of the auction house. “You’re not going to see material price increases in most markets.”

Prices for the top 5 percent of U.S. real estate transactions remained flat in 2015 while all other houses gained 4.9 percent, according to data from Redfin Corp., a real estate brokerage and data provider.

Read the entire story at bloomberg.com