The phenomenon of escalating home buying and home prices continues in China. According to recent publications, the real estate sector now accounts for one-third of China’s GDP compared to 10% just a decade ago. Household debt has increased significantly during the last decade (now 42%). However, since it is only as a share of new loans, it is still far less than the 78% factor encountered in the United States. Home prices have dramatically risen in the major cities in China compared to other major cities in the world. Intensified government restrictions have apparently created an accelerated effect on home buying. Sources indicate that at the end of 2016, real estate accounted for approximately 69% of household assets compared to less than 60% in the U.S.
The implications of these trends support the ability of Chinese nationals to more readily leverage these real estate assets in an effort to obtain financing to invest in the EB-5 Program and have a clear source of funds to meet USCIS guidelines. Any change in the ability of Chinese nationals to be able to finance or refinance their real estate assets could result in a serious problem for their respective EB-5 related source of funds. Of course, even if the real estate market continues to prove favorable for sourcing EB-5 related funds, we still need to resolve the severe effects that retrogression has on investors from Mainland China in order to continue attracting Chinese EB-5 investors.
An interesting Dow Jones article, “China’s Bid to Curb Its Booming Housing Market Has Only Made It Hotter,” about China’s housing increases can be viewed by clicking here.