Global property deals stall as China money stays home

Markets from S'pore to New York hit as travel curbs keep out Chinese buyers

Residential buildings in the CityPlace development in Toronto, Canada. The global real estate market is hurting from the absence of Chinese buyers, as many of them are quarantined or facing travel restrictions.
Residential buildings in the CityPlace development in Toronto, Canada. The global real estate market is hurting from the absence of Chinese buyers, as many of them are quarantined or facing travel restrictions. PHOTO: BLOOMBERG

NEW YORK • Mr Eric Marrus, a real estate broker at Compass in New York, walked through a US$7.5 million (S$10.4 million) townhouse in Manhattan's Lenox Hill neighbourhood last week, pointing his phone into every corner of the property.

He was conducting a virtual tour via WhatsApp for a Chinese couple unable to visit the home together because of coronavirus travel restrictions.

"Logistically, it's a nightmare," said Mr Marrus, who gets about a quarter of his business from China.

As the outbreak spreads, snarling travel across the world, real estate markets in the United States and other countries that rely on Chinese buyers face a looming crisis as deals languish and potential purchases are delayed indefinitely.

Chinese buyers spent US$13.4 billion on US homes last year. That was the most from any foreign country, even as purchases plunged amid an escalating trade war and a crackdown on taking cash out of China.

Elsewhere, from Vancouver to Singapore, realtors are facing the same problems as their counterparts in the US that rely on Chinese buyers - with hundreds of millions of Chinese effectively quarantined, it is hard to sell real estate.

In California, where 34 per cent of foreign purchases were from China last year, Keller Williams broker associate Coco Tan has taken to wearing a surgical mask to open houses and greeting clients with a wave rather than a handshake.

Ms Tan, who was born in China, said that normally about 25 per cent of her clients are Chinese.

With flights cancelled, most have postponed visiting until after the summer, she said. "I tell them I have some nice properties that I saved for them," she added.

Half a world away in Sydney, the virus has boosted demand for luxury property, according to Ms Monika Tu, founder of Black Diamondz, an Australian real estate firm that caters to wealthy Chinese.

Many of her clients, who run businesses in China, have family in Australia. Some came to town for Chinese New Year and have extended their stays because of the outbreak.

  • 34%

    Percentage of foreign purchases in California last year that were from China.

Now, they are buying homes, Ms Tu said, adding that the weakness of the Australian dollar is another selling point.

How long this surge of interest lasts may depend on the extent of the outbreak.

Closed embassies are gumming up the processing of new "significant investor" visas - the main route for ultra-rich Chinese to gain permanent residency in Australia and the right to purchase existing real estate.

Singapore is being hit especially hard - Chinese nationals are the top foreign home buyers in that market, especially for luxury properties.

Mr Clarence Foo, a Singapore-based agent, had one Chinese couple looking to buy a $6 million apartment near the Marina Bay Sands casino and shopping mall. They also wanted to scout for schools for their children because they plan to settle in Singapore.

They were set to visit in late January, but right after they booked their flight, Singapore banned Chinese nationals to prevent the virus from spreading.

"They've had to shelve their purchase until a later date," said Mr Foo, who estimates sales involving Chinese clients have dropped by 20 per cent.

Back in California, Toll Brothers, a builder that focuses on luxury homes, said last week that 11 closings were delayed in recent months because of the coronavirus.

California and the Seattle area reported new cases on Sunday. In New York, the second-biggest region for Chinese buyers, the city announced its first positive virus case as the global death toll surged past 3,000.

BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on March 04, 2020, with the headline Global property deals stall as China money stays home. Subscribe