Chinese investors have targeted three Southern California submarkets for investment in industrial product. According to a new study from Investorist, Chino, Portola Hills and Irvine are the top Southern California markets for single-family home investment. Single-family home developers say that 98% of the occupancy in these communities is from Chinese buyers. We sat down with Josh Cunningham, VP of Sales for Americas at Investorist, to talk about the increase in single-family investment from Chinese buyers and why they have targeted these three communities.

GlobeSt.com: Why have Irvine, Chino and Portola Hills been pinpointed as the top markets for foreign investors?

Josh Cunningham: For Irvine, there have been two main factors: One, the large existing Chinese population. Two, the area's excellent University offerings – based on a survey we conducted in China earlier this year with over 120 Chinese-based agents advising their Chinese clientele on where to invest in the US, education was ranked the number one motivators for Chinese investment, following asset safety and lifestyle.

For Portola Hills, it's been the value versus Irvine in terms of what you get for your buck. There are bigger blocks of land, which offer bigger houses, extra bedrooms, etc., without the Irvine taxes.

With regards to Chino, the pricing is not too cheap and not too expensive, offering a “just right” great middle ground for Chinese who want the SoCal lifestyle with more affordability over Orange County. We've also seen a general increase of property views from our Chino/Inland Empire-based listings from Chinese investors browsing our site over the last year, and we consider it a region to watch in 2018.

GlobeSt.com: What has foreign investment activity been like this year in these markets?

Cunningham: Every conversation we've had with developers in Southern California always leads back to China – they're the top demographic interested in the geographic and cultural region, snatching up real estate at a rapid pace and pouring tons of dollars into the area's single-family home communities with no signs of slowing, possibly reacting to China's recent relaxed capital controls where they dropped two rules designed to bolster the renminbi (RMB).

Some single-family home community developers in SoCal have already seen an upwards of 98% occupancy from China buyers. The percentages of sales have been impressive.

GlobeSt.com: What types of investors (ex: types of capital sources) are most active in these markets?

Cunningham: Depending on the location, many of the buyers would be cash buyers, however we are starting to see a trend of buyers that are looking to mortgage – not because they don't have the money to purchase outright, but because they are wanting to purchase a number of homes, with some serving as a second/third home and others serving as an investment property. International buyers are becoming very savvy about their purchasing and how to stretch their money. Their buyer's agent educates them on areas in terms of best lenders and growth rates, and ultimately know how to maximize their spend to produce the best returns.

GlobeSt.com: What is competition like in these markets for other foreign investors?

Cunningham: I think that there is always going to be a high level of competition in many of the Californian markets because California markets itself are so well on the international scale, but why these areas are succeeding is they are marketing heavily and offer different key selling points.

Chino area is low entry level with high potential growth, some great schools in the area (7 – 9 ratings and above). Irvine and Portola Hills is more geared towards the 'university' purchases – it has great growth, are considered some of America's fastest growing cities and offer an amazing employment hub with a number of Fortune 500 companies around these areas. Add all of this with some of the top schools in the country and yearlong ripe weather, and it's a great selling point for foreign markets.

GlobeSt.com: What asset classes are Chinese investors focusing on in these markets, and why?

Cunningham: Investorist is only focused on B2B residential investment transactions at the moment, so we can only comment on these types of assets; although we have seen and tracked the impressive interest over the years in Orange County's commercial real estate market with Chinese investors who tend to focus on investments in the technology sectors and hospitality sectors nationwide, and we're impressed by the sector's record growth.

GlobeSt.com: Why have Irvine, Chino and Portola Hills been pinpointed as the top markets for foreign investors?

GlobeSt.com: What has foreign investment activity been like this year in these markets?

Some single-family home community developers in SoCal have already seen an upwards of 98% occupancy from China buyers. The percentages of sales have been impressive.

GlobeSt.com: What types of investors (ex: types of capital sources) are most active in these markets?

GlobeSt.com: What is competition like in these markets for other foreign investors?

GlobeSt.com: What asset classes are Chinese investors focusing on in these markets, and why?

Instant Insights /

Chinese Investors Have Targeted These Three Submarkets

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