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Foreign Buyers Used Real Estate As A Bank Account, They Are Now Making Withdrawals

A report from CBC in Canada. “Since the spring, sentiment around real estate has improved. Interest rates have been dropping and prices have adjusted downwards. Those buying in the luxury market in 2017 were often foreign buyers and that market has completely dried up. Many have suggested that foreign buyers used our real estate market as a bank account. Well, instead of making deposits, they are now making withdrawals.”

“For the first time in decades, the Chinese have become net sellers of global assets, which includes Vancouver real estate. As a result of this behavioural change, the areas of our market that were popular with foreign investors are now struggling. The luxury market has been the hardest hit with price drops, in some areas, of 40 per cent.”

From Forbes on the UK. “A new report by online real estate platform Zoopla confirmed the street in Kensington as the priciest in the country despite a slump in house prices due to the political and economic uncertainty. Prices in the half mile strip fell 7.24% over the past year–a £2.8 million price cut.”

From Dublin Live in Ireland. “House prices in Dublin city have been falling by thousands of euro over the last three months, a new Real Estate Alliance report has found. The price of a three-bedroom, semi detached house in Dublin’s postal zones fell by an average of €1,500 a month since June.”

“A spokesman for REA, Barry McDonald said: ‘It is now taking nine weeks to reach sale agreed in Dublin city compared to six a year ago, and these increases are reflected around the country as agents report a quarter heavily influenced by Brexit indecision. We are also seeing greater numbers of small investors leaving the rental market nationally, which is increasing supply but will have a further upward pressure on rents in some areas. This, combined with new homes coming on stream, is increasing choice, but we still have a limited amount of buyers due to the Central Bank rules.'”

The Daily Trust in Nigeria. “Many completed estates in Abuja remain half or totally unoccupied despite improvements in the real estate sector and Nigeria’s economy in general, Daily Trust reports. As more estates are being built, some of the ones that have been completed are either yet to be occupied many years after their completion or are mostly half-empty.”

“Our reporter visited Mikasa Residences at KM 10 along Airport Road and saw a large signboard announcing the African University of Science and Technology as its owner. Seven blocks of completed duplexes were counted and basic residential facilities like street lights and access roads have been completed. However, the estate looked deserted, thick grasses compete with the fence and have begun to sprout on the interlocks, while reptiles like lizards roam freely within the compound.”

“Speaking on reasons some estates in Abuja are empty, the President of Housing Development Advocacy Network (HDAN), Festus Adebayo, said most of the houses are not within the affordability of those that need them. Adebayo said, ‘Some of those houses are for money laundering. The owners have only put the prices that will prevent buyers from coming.'”

The South China Morning Post. “Hong Kong’s home prices have fallen at the fastest rate this year, as the world’s least affordable housing market finds itself under increasing pressure from social unrest and the effects of the US-China trade war.”

“Derek Chan, head of research at Ricacorp Properties said the disappointing sale on Friday at Upper Riverbank in Kai Tak, where fewer than half of 218 new flats priced higher than neighbouring secondary-market units found buyers, signalled pressure on developers to keep prices down. That could translate to even lower prices in the secondary market.”

“‘Secondary market homeowners need to adjust prices down when new flats are cheaper,’ Chan said.”

From The Guardian on Australia. “The future of a $550m apartment and hotel project on one of Sydney’s most coveted plots of land is under a cloud after the Australian Taxation Office hit the developer’s founder, the controversial businessman and political donor Huang Xiangmo, with a mammoth tax bill.”

“Adding to the uncertainty, no one answered the telephone at the project developer Yuhu Group’s Sydney office on Thursday and calls to One Circular Quay’s apartment sales line went to a message bank, which was full. The project is also encumbered by a mortgage to a mysterious company in the tax haven the British Virgin Islands that has previously told Australian authorities it has no assets. It is among more than $1bn in assets linked to Huang and his family that he has left behind in Australia after leaving the country in December.”

“According to the ATO, Huang’s wife, Huang Jiefang, and his son, Yuhu’s current chairman Jimmy Huang, have also left Australia, flying from Sydney to Hong Kong this month. In federal court proceedings last week the ATO froze Huang’s assets after hitting him with a $140m tax bill and accused the billionaire, who has close links with both sides of politics, of intentionally setting up complicated business structures in Australia to frustrate efforts to recover money from him.”

“Speaking from Tokyo, the development’s selling agent, Justin Brown, of CBRE, said some would-be buyers have put down deposits on apartments but all the money was held in a trust account run by the real estate agency. He declined to say how many buyers there were or how much money CBRE was holding.”

“‘Reservation deposits have been put down over a period of time but there has been no settlement of contracts,’ he said. He said Yuhu could restart selling apartments now but was instead rejigging the project and ‘taking their time to get the right product.'”

The Cora Courier in New Zealand. “Stanley Group director Kevin Stanley said he takes full responsibility for what‘s happened. Six Stanley construction group companies were put into liquidation earlier this month, alongside four associated Tallwood companies. Creditors and liquidators met for the first time in Matamata yesterday in a four hour quest for answers. Up to 100 of them gathered at the town‘s racing club where a visibly emotional Kevin Stanley, whose grandfather started Stanley Group more than 90 years ago, read a short statement alongside fellow director Craig Davison.”

“‘As a director, a CEO, and barer of the Stanley name, I take full responsibility for what‘s happened and has drawn us all here today,’ he said. ‘The harm has been far reaching and we‘ve let down over 100 staff, our local and national supply network, our subcontracted partners, the community of Matamata, the New Zealand construction industry, and our families. May I extend on behalf of Craig and I my sincere apologies to you all.'”

“After just over two minutes there were no angry outbursts, only a probing shout of ‘what did you hope to achieve by saying that?’ which was quickly shut down by liquidator Damien Grant as the two directors left the room.”

“As Mr Grant went through his report into the companies finances the audience became more vocal. A group sat at the front interrupted him frequently, questioning his decisions, how he would hold the directors to account, and some fought for the meeting to be adjourned. The companies owe creditors about $10 million, many of whom are subcontractors who were not paid in August and have more long-term debts.”

This Post Has 34 Comments
  1. ‘After just over two minutes there were no angry outbursts, only a probing shout of ‘what did you hope to achieve by saying that?’ which was quickly shut down by liquidator Damien Grant as the two directors left the room’

    It gave him time to leave dummy.

    1. “Just over two minutes”

      Did anyone else immediately think of the Two Minutes Hate from “1984?”

        1. “Am I correct to assume it’s based on a true story?”

          Not sure. I wouldn’t spend anything to see it, but if you have a monthly plan…go for it!

  2. The circle of life or the circle of implosion…

    “The companies owe creditors about $10 million, many of whom are subcontractors who were not paid in August and have more long-term debts.”

  3. “‘Secondary market homeowners need to adjust prices down when new flats are cheaper,’ Chan said.”

    You’re fooked Chan.

  4. “Chinese have become net sellers of global assets, which includes Vancouver real estate. As a result of this behavioural change, the areas of our market that were popular with foreign investors are now struggling“

    This is when these money launderers eat there shorts. All rushing to the exits at once. Remember this you POS money laundering specuvestor, buyers don’t have to buy, we can wait until your on your knees begging and perhaps even wait past that when you lose your piggy bank of a shack to foreclosure, then we casually stroll to the courthouse auction and snap it up for pennies on the dollar. Comes a point when sellers have to sell or they lose there “investments”. Us buyers can wait as long as necessary with popcorn in hand.

    1. I thought these foreign house purchases were part of a prepper plan just in case the forced marches to the mass grave site while wearing sandwich boards start happening.

      1. I thought so too, rms. I admitted I was wrong a couple years ago. Most of it was money laundering and getting money out of the country to chase yield. But this seems to be generally limited to condos and apartments — you can move lots of money in one transaction and there’s no upkeep. Now I guess they’ve turned to bitcoin, which they are welcome to.

        But single-family+yard home purchases in flyover, mail order brides, birth tourism, grad-school anchor babies, and mansions for the crazy rich asian kids going to Stanford are all prepper plans.

    2. I wonder if the disappearance of Chinese investors could be a factor in California as well? I can say that the Chinese next door neighbors, who outbid the comps by $50,000 when they purchased, vanished without a trace virtually overnight last year.

      1. Key-rash…

        Chinese buyers pull back from U.S. housing market, hurting home sales
        Yan Zhang | USA TODAY Updated 9:38 a.m. PDT
        Aug. 26, 2019

        Home sales are hurting. Even with lower mortgages rates and a sales pick-up in July, purchases of homes are still down significantly compared with 2018.

        But while analysts typically blame high prices and growing worries about a possible recession, another factor is also playing a prominent role: Foreign buyers, particularly the Chinese, have pulled back sharply from the U.S. real estate market.

        Foreign investors purchased $77.9 billion in residential property in the 12 months ending in March, down 36% from the previous 12-month period, the National Association of Realtors said in a recent report.

        China, meanwhile, topped all other countries for the seventh consecutive year, with $13.4 billion in home purchases, but that was down a whopping 56% from the prior year, NAR said. About half those sales were all cash, down from 58% a year earlier. The next largest international buyers – Canada, India and the United Kingdom – also had big drops, but they represent smaller shares of the market.

    3. The Chinese specuvestors didn’t buy with their own money…it was printed, or a p2p scam, so whatever price they get is a profit.

    4. we casually stroll to the courthouse auction and snap it up for pennies on the dollar.

      That’s what we expected last time, too.

    1. They’re the ones who created the property bubble so when the bubble burst, they will burst too.

      1. BTW, is a 40% Vancouver drop enough to say it was a mania? Wait til you see what just happened in New York.

    1. Some Countries charge a up front tax to foreigners who purchase real estate.

      The USA never seems to be very protective about foreign buyers driving up markets.

      1. “The USA never seems to be very protective about foreign buyers driving up markets.”

        You use what works. If driving up the price of real estate produces wealth and foreign buyers are the ones driving up the prices then it makes sense to act very protective toward these foreign buyers.

  5. I always thought since china has about a Trillion in us debt they would exchange that for say a million foreclosed houses and a green card.

    1. The American people would be up in arms over a deal like that. They’re struggling mightily trying to make ends meet due to overpriced housing, and to see their own government give millions of houses away to the Chinese in exchange for millions of green cards would never fly.

      1. The last president would have no problem forcing that on the american public. he was the anointed one and could do nothing wrong.

        1. The Globalists verses the anti Globalist.

          Isn’t Globalism a little like the open borders concept?

          The majority of USA Citizens haven’t benefitted by globalism , especially when it came to the job gutting and out sourcing of jobs.

          You don’t take away people’s means of survival.

          Globalism weaken the USA in every way. So they told us we would get cheap Chinese crap in return. The stuff that ends up in the landfields quicker. Bad idea from day one .

          What kind of a Government would allow such a thing?

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