The Napa Valley is on the radar of the Chinese, not only for the love of wine, but also for the investment in income-producing real estate. With the popularity of Napa Valley wines amongst the Chinese and the opportunity of purchasing real estate come the prestige and ability to gain residency in the U.S.
Many real estate brokerages have agents who focus on people from China looking for both homes and investment property. Several larger brokerages have entire divisions focused on this ethnic group. About 40 percent of Chinese buyers purchase property in the U.S. as an investment. Sixty percent are buying in anticipation of their children going to school here, or for business or immigration purposes, said Steven Lawson, chief executive of Windham China.
According to National Association of Realtors, Chinese buyers spent $1.71 billion on commercial property in 2011 representing a 400 percent increase from previous years and $7.4 billion on residential representing a 24 percent increase.
The reasons for the interest are several. “China is now seriously polluted, we even can't see the blue sky and white clouds,” stated an immigration attorney I am working with who asked to remain anonymous. “So many people want to have a better living environment and wealthy people can run a business of their own so a winery can meet both of the needs,” stated the attorney.
Pollution levels are 40 times the recommended levels in Beijing and other cities. Parents are taking steps to raise their children with a higher quality of life.
“Wine is very ‘hot’ right now and people who would own a winery are admired,” said the attorney with offices in Xi’an. Many of the attorney’s clients are very wealthy making their wealth in industry in Xi’an, a large city in China. Xi’an was a part of the China Western Development Policy for targeted growth by their government growing the economy from $8 billion to $26 billion from 1997 to 2006, according to the China Research Center. Those with businesses in industry became very rich.
Another reason is overcrowding. To give you an idea, according to the Beijing Statistical Information Net, the population of Xi’an is 8,467,837 in an area of 2,200 square miles. The population of Beijing is 20,693,000 in 3,200 square miles. In comparison, according to the U.S. Census, the population of New York is 8,336,697 in just over 27,550 square miles. Two and a half times the population in about one-eighth the area.
Beijing is the most developed city of China and is the hub of the financial industry as well as a cultural Mecca. Real estate prices are high and only affordable by the wealthy. A 1,500 sq. ft. apartment can average $1 million. One retail complex in Hong Kong is known for the most expensive rent in the world. At $4,328 per square foot/year this beats Manhattan in New York by 50 percent and the highest price in Napa at about $54 per square foot/year.
In searching for commercial real estate a winery fits well. By purchasing a business with employees, a foreign national, through the EB5 visa for Immigrant Investors could be granted conditional permanent residency for two year increments provided the investment and job creation continues.
Burt M. Polson, CCIM, is a commercial real estate adviser with Strong & Hayden Commercial Real Estate. Reach him at 254-8000 or firstname.lastname@example.org. His blog, Real Estate in the Napa Valley, is BurtPolson.com.