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Chinese investors flock to Bellevue
Mei Young, president of Era Young International, a consulting company for foreign investors, recalls one recent client. Having spent $5 million in cash on a home in Vancouver the young Chinese couple decided that they wanted instead to come to Bellevue.
“The boyfriend came for one day to look while the [girlfriend] was still in China. She didn’t have to come over. They were looking for a [luxury] house to buy, without seeing them,” says Young. “I would personally spend weeks looking, but in this case, this is what they want.”
Bellevue’s growing role as a global city is evidenced by the speed at which foreign – in particular Chinese – investors are flocking to the Eastside, purchasing real estate, developing commercial plots and expanding their companies. Though Bellevue has been cultivating relations with Asia for some time, the rate of investment is accelerating, says Young.
“Business activity started as a cultural exchange, mostly symbolic,” said Young, who has been in contact with China at a government level for the past 10 years. “It was visiting the Seattle-Bellevue area, for a tour, or the scenery. But the real investment activity started the latter part of last year.”
Bellevue’s record sale of a downtown site for $31 million to Chinese investors; stories of real estate being snatched for lump sums of cash and a bilingual site launched by the city of Bellevue last year all suggest the changing business climate.
Young points also to a pipeline of 20 projects downtown, spearheaded largely by Chinese investors. One client she says hopes to buy the commercial zoning along light rail and Bel-Red Road. A several decades-long development that could reach from 120th to 140th, he has plans also to build residential neighborhoods catering to Chinese nationals. In Newcastle a 125-unit Asian retirement community expected to break ground in 2014, is also indicative of demand.
“What we’re also seeing [is] more corporations, much larger and well organized corporations coming over and looking at investing in our properties,” says Tom Chang, director of the Pacific Northwest region for East West Bank, one of the largest independent banks focusing on U.S. and China markets, with two branches in Bellevue.
Bellevue’s obvious role as a tech hub and a platform for prominent Asian-American figures like Mayor Conrad Lee offer one reason for the attraction. But other factors, like the Eastside’s low crime rate, top-ranked schools and recovering economy also contribute. China’s own real estate value has risen as financial policy tightens, and many want a safe place to invest their fortunes.
“The diversity is another [reason]. We know close to 30 percent of the population in Bellevue is Asian. You want to go where you belong,” says Young. “[The Eastside] they can see as their home.”
The surge in investors and new neighbors has led to industry offshoots. A certified real estate agent, Young says Chinese nationals often look for homes with positive feng shui, which may mean a second kitchen (one for deep frying and stir frying, another for aesthetic purposes), views of the water and mountains. And quite a few are paying for those luxury homes with cash.
“I understand where the concern is coming from,” admits Young. “When cash buyers move to the region, they create competition in the market.”
Chinese nationals paying in cash easily beat out other bidders who have to apply for mortgages. Concerned residents note that these purchases often operate as secondary homes, threatening to turn some pockets of Bellevue into “zombie neighborhoods” with absentee homeowners.
But Young is quick to point out the silver-lining. Whereas Vancouver, British Columbia, and San Francisco used to be magnets for Asian investors, now Bellevue has become a destination, a financial boost the Eastside should welcome, says Young. Fifty percent of the real estate recovery on the Eastside is due to cash buyers. And, she adds, when Chinese travel they spend an average of $6,000 per person, the highest of any nationality while abroad.
“To speak frankly,” says Young. “When a visitor comes over now, we take them straight to Bellevue and the Eastside to look at the projects here.”
Chinese policy limits the wiring of more than $50,000 by individuals out of the country, annually. That can make investing in places like Bellevue difficult. But where there is a will, there is a way. East West Bank offers services catered specifically to foreigners, featuring for instance offshore collatoral loan programs, with platforms in both the U.S. and China. Investor visas offer another conduit.
“Personal relationships are very important in the [Chinese] business community,” says Young from an outpost in China where she is on a three-week-long business trip. “I could probably talk to [my clients] over the phone…But I think it’s important to be there with them and to go visit their project and sit down with them for dinner…that’s important to attract Chinese investors.”
Being able to anticipate the needs and questions of investors – ranging from how to file taxes, to how to form an LLC – is equally critical.
She adds: “This time next year, we will see a lot of Chinese nationals with a lot of cash and financial product. They’re coming this way.”