Tuesday, May 19, 2015

Southern California, Attracting Investors

7/18/14 - While it is common knowledge that China, as a country, controls a large portion of American debt, it may come as a surprise that Chinese citizens, individually, are having their own significant effect on the American economy. According to an article by Tim Logan, of the L.A. Times, there has recently been a dramatic influx of Chinese investment in Southern Californian real estate.

While this interest has been mostly focused in such areas as Los Angeles, San Francisco, Irvine, and the San Gabriel Valley, statistics show that real estate sales to foreign investors have reached $92 billion, approximately 7% of total national sales — quite a hefty sum given the considerable crash in real estate sales that has accompanied the Great Recession.

According to the sources quoted in the article, there are a few explanations for this drastic increase in foreign investment. From California's coastal location and moderate climate to its world-class universities and global renown, such investors view the Californian market as a safer bet than the currently “overheated” Chinese market.

This interest in California, as well as the United States in general, is helping to improve the real estate market, especially in areas that have historically been popular with foreign buyers. Investors are looking for real estate in Los Angeles, Irvine, and San Francisco — cities they know.

Since this trend of foreign investment first began, businesses have been changing their game plan. Real estate companies have been opening offices in other countries, expanding their outreach, and incorporating design elements in new buildings popular with a more “international clientele.”

Although this article mainly discusses Chinese investment in Californian real estate, it also mentions how California's weather, economic stability, and fame have been attracting investors from all over the globe: from Europe, Russia, and even Latin America. In concluding the article, Logan states that although this new interest of wealthy investors is helping to improve the market and drive up prices in select areas, foreign investment will have little effect on the average American home-buyer in an average American neighborhood.

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