Passion among Chinese investors for acquiring foreign properties has been on the upswing. Currently, Chinese investors represent a small segment of the Oahu real estate market. However, increasing transactions involving Chinese investors, as well as their penchant for purchasing luxury properties, are receiving more and more attention.
Steady growth in Hawaii visitor arrivals from China is also an indicator of growth in potential real estate buyers. The Hawaii Tourism Authority projects that 235,778 visitors from China will visit Hawaii in 2019.
Why would Chinese real estate buyers want to invest on Oahu?
Currency devaluation has led to Chinese investment in real estate abroad in order to maintain asset value. Meanwhile, housing prices in China have risen so people are also still investing in the domestic real estate market as well. Still, many domestic investors in China remain cautious of a potential real estate bubble. Chinese investment abroad is also the result of buyer awareness of risk diversification and asset allocation.
Chinese buyers of overseas residential properties are primarily seeking a second home or investment opportunities.
Oahu is a world-class destination with clean air, natural beauty and a multi-ethnic population, all of which make the island an ideal place to invest in a second home for vacations. Homes with good views, such as an oceanfront property, are what some Chinese buyers are looking for. With the launch of direct flights between Beijing, Shanghai and Honolulu, Oahu is expected to be even more attractive to Chinese investors.
Investment in Oahu real estate is considered safe and offers potentially big returns. Housing prices on Oahu are predicted to continue to increase as a result of low inventory and consistent high demand. Another highlight is Oahu's high rental rates, which mean bigger returns for investors.
What kind of real estate do Chinese buyers invest in on O‘ahu?
On Oahu, Chinese investors purchase more condominiums than single-family homes. In 2016, condominium purchases by Chinese buyers accounted for 81 percent of total real estate transactions, while single-family homes accounted for 19 percent.
The two most popular major Oahu market areas among Chinese condominium buyers are Ala Moana-Kaka‘ako and Waikiki. Between 2015 and 2016, the number of annual transactions in these two areas doubled. As Kaka‘ako has developed into a new hot spot for luxury condos in recent years, Chinese investment in the area has grown in turn. In 2016, nearly half of Chinese condominium transactions in the Ala Moana-Kaka‘ako area were for units priced at more than $3 million.
Chinese investment in Oahu’s luxury home market has especially boomed in the Hawaii Loa Ridge community. Two out of three single-family home transactions by Chinese buyers in the first quarter of 2017 were made in this gated East Oahu community at prices between $2.6 million and $6.8 million. According to a 2016 market report from Locations, China’s investor market has grown consistently and currently accounts for 27 percent of transactions. Additionally, Hong Kong buyers accounted for 10 percent of transactions.
The data above is based on transaction records with China indicated as their tax-bill country.