Boroughs & Burbs, the National Real Estate Conversation

Boroughs & Burbs 186 || The Chinese Market

• Season 5 • Episode 186

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In this episode, we dive into the dynamics of the Chinese real estate market with industry experts Julia Jiang and Charles Hawkins from Douglas Elliman. Julia and Charles share their insights into the growing interest from Chinese buyers in U.S. real estate, trends in cross-border investments, and the factors driving this demand. We’ll also explore the nuances of navigating the Chinese market, both in terms of cultural understanding and practical strategies for working with international buyers. Whether you’re a seasoned investor or just starting, this conversation will shed light on the latest developments and opportunities in the Chinese market for U.S. real estate.

SPEAKER_00:

The Burroughs are New York City. The Burbs are everywhere else. Real estate is the ultimate game of risk and reward. It's the biggest investment most people ever make. Fortunes are made over a lifetime and lost in a day. And we're not playing with monopoly money. How do you stay ahead? Who's buying? Who's selling? And why? What do they know? We want the truth. You need an edge. Burroughs& Burbs is your secret weapon, giving you the insider knowledge and strategies you need to succeed in the high Welcome everybody, Burrows and Burbs, Season 5,

SPEAKER_06:

Episode 186, The Chinese Market. Roberto, five years it's taken us to do a show on the Chinese market. What's wrong with us? Everybody wants to know when are the Chinese, what are they buying? Are they buying more? Are they buying less? Where are the Chinese? And it's taken us five years to get here. Roberto, I think you're on mute.

SPEAKER_02:

I agree with you. And it's a huge sector of our marketplace or has been notoriously.

SPEAKER_06:

All right, let me do a little bit of housekeeping first. I'm going to hit the share button and show you that Burrs and Burbs, you can find it at burrsandburbs.com. You can see last week's episode 185 on apartment complex investing. And before that, Boca Raton new development. I want to thank our sponsor at Grace Farms. You'll find them at gracefarms.org, 80 acres, New Canaan. Go and have a cup of tea with Frank, and you can bring some of the famous Grace Farms teas and coffees home with you, and you can give them to your clients. Our guest today, Charles Hawkins, Julia Jong Hawkins, in New York, experts in coffee. the Chinese buyer, and we have a lot of questions for them. I want to call your attention to therobertocabrera.com. You'll find their Roberto Cabrera market report. Are you positioned for the turn? In order to learn more about the turn, you've got to go to robertocabrera.com. I'm John Engel of the Engel team in Connecticut, and you'll find me at theengelteam.com. And without further ado, I'm going to hit. Welcome, Julia. Welcome, Charles. So glad to have you on the show.

SPEAKER_01:

For having us,

SPEAKER_03:

John. Thank you. Thank you for inviting us.

SPEAKER_06:

So I guess let's start at the beginning. How long have you been focused on what we're calling the Chinese market? And by that, I mean Chinese buyers in America. How long have you been focused on that? And how did you come to focus on it in the first place?

SPEAKER_01:

So Charles and I, we have started at Halstead. And at that time I started, well, Charles already a broker for like 10 years, over 10 years, I was a new broker. So we started learning the local market, Manhattan market, learning all these common mediums, co-ops, you know, at that time that was, 20 years ago. 20

SPEAKER_03:

years

SPEAKER_01:

ago.

SPEAKER_03:

We've been focused for 20 years on

SPEAKER_01:

the

SPEAKER_03:

Asian market.

SPEAKER_01:

But that time was not really the ultra wealthy rich Chinese come to Manhattan to purchase. That was local Chinese customers started buying small properties.

SPEAKER_03:

We were doing advertising in something called the World Journal. And it was a very... effective way to get Chinese buyers back in the early aughts.

SPEAKER_01:

That was earlier how we started to work at the two individual brokers, two individual agents. But that time also how the knowledge has been learned through the process. We work with buyers buying co-ops, we work with the sellers selling co-ops. So not only economy, not only new developments, not only new constructions,

SPEAKER_06:

so 20 years ago you relied on the world press but now you've got to reach out you've got to reach across the ocean and find them in china that's changed right

SPEAKER_01:

so yes we either find them or they found a way finding us

SPEAKER_02:

can i can i show in the early 2000s i was working with a chinese buyer and they bought a condominium here and she said to me she's a very sweet woman she's like We're coming and we're gonna come hard. You wait, China is on the rise. And sure enough, the influx of Chinese buyers really expanded.

SPEAKER_06:

When,

SPEAKER_02:

what years? 2002 to 2005, six is when this was happening. And what I'm curious if Julia and Charles can kind of give me a sense, how did that, just from a standpoint of volume, where did it peak and where did it come off and where are we now? Just before we get a little bit more granular.

SPEAKER_01:

That's a really good question. You want me to answer that?

SPEAKER_03:

Sure. I mean, I think that when it, I think that, yes, go ahead, please.

SPEAKER_01:

So that's earlier 2000, when your clientele tell you they are coming. That's a perfect timing. I can, you know, in both countries, New wealthy Chinese buyers, they were ready to start to diversify their portfolio, their investment overseas. And United States have the EB-5 program at that time. So when she's telling there are more coming, so she's the pioneer, she's the earlier adventurers. She realized it is sooner than other people. When later, when the scouting peak actually was 2010, 2009, 2010, 2011, 12 until 2016. Yeah,

SPEAKER_03:

2016 would be.

SPEAKER_01:

That period is like the peak of the wealthy, super wealthy Chinese customers come over. So to answer your question, there's three phases. That was a peak. And later there was like after peak. and then there's after pandemic so there's three phases so we can you know relating to our whole conversation

SPEAKER_06:

characterize after pandemic so we had peak peak pandemic and then what happened

SPEAKER_03:

i would characterize it as the f20 crowd the the a lot of the um children of these wealthy Chinese families were getting into Ivy League schools and looking to go to Stanford, to MIT, to Harvard, out to UCLA. Anywhere there was a great school, we got very wealthy Chinese families buying homes for their children to live in and for the family to come meet and have holidays.

SPEAKER_06:

For four years? Are they intending to buy it, use it for four years and flip it?

SPEAKER_03:

Yes, they're parking money for at least four years and they're using that as a place for their child to stay during those four years. And perhaps renting it or selling it at the end of that period, yes.

SPEAKER_01:

It's all individual, different families' decision. But we all have experienced 2010 to 2016, 2017, 2018, 2019, that period of time, we see that Chinese buyers, they were accounting for 20 to 25% as international buyers in New York City, in Manhattan. We're not even looking at the data for California. That's another huge data. That was a peak of that season. So after pandemic, there was three years restriction between the two countries. Nobody can travel. Even right now, there are limited flights, right? So after pandemic, immediately, of course, shutting down for three years. And then after that three years, the door opened in Shanghai. We all know that a few months, that six months, that one year, that got more people come in. to US start purchasing because they realized they want a more stable policy, more open-minded environment to live in. Before they were hesitating, are we going to buy in Europe? Are we going to buy in New York? Are we buying in California? It doesn't matter. As long as we can get out, we have the funds ready, let's buy it. So that was the post-pandemic realization or awakening

SPEAKER_06:

Does the door to America start in New York City? I'm Chinese. My child is applying to colleges and universities in the US. They could end up in any number of places. Do I actually start calling real estate agents in Philadelphia because my child might go to Penn? Do I call people in New Haven because they might go to Yale? Or do I start with a relationship in New York and start with a New Yorker and then branch out into the rest of the country?

SPEAKER_03:

We've experienced both.

SPEAKER_01:

Every day, like for the past decade, we experience this all the time. Right. So it depends on each family's decision. Families, Chinese families like to... go to the city where they have their friends there to be closer to them, either to rent or to purchase. But some families, they like to stationed in the center city like Manhattan because there's direct flight come over here. And then from here, they can go to Connecticut to private boarding schools. And they can take train to Boston or they can fly to Boston, but be positioned in the city. And they want to experience the city well during their visit. And during holiday season, their boarding school kids have a home to come back to in the city.

SPEAKER_03:

Yeah, and it's interesting. The decision-making in the families is generational. So you have the grandparents concerned about this set of issues. The parents are concerned about this set. And then the children are concerned about lifestyle. So it's a family decision. It's

SPEAKER_01:

a

SPEAKER_02:

family decision.

SPEAKER_01:

Yes.

SPEAKER_02:

Can we go back, just go back to deal flow? Over the last year leading up to say April, when we've just had this, now the new tariff situation is really kind of a dust up that's happening. Up until that point, was the deal volume growing? or was it contracting? And then now, I mean, even as of three hours ago, Marco Rubio is saying that the US is gonna revoke Chinese visas aggressively. And have you heard any just initial thoughts from people of, wait a minute, should we be going or not? Or should we be buying there or not?

SPEAKER_01:

Sure. It's ongoing with me, even on daily basis. I have a student who school visual art. We almost landed at a$2 million property deal. And overnight, the decision is still on hold right now. And then I have another customer. We're ready to put in a penthouse. Okay. They both are new construction, new developments. And then the moment Harvard situation happened last Thursday, last Friday, the whole family in Asia is watching TV every moment. What's going on? It's my problem. family, my children can go to Harvard or not. So I have two, at least two at this moment, big deals on holds just because those.

SPEAKER_06:

And how long do you think, I mean, we haven't been able to resolve this in the last few, if I was a seller and you were on the other side, I'd be nervous about how long are you going to ask me to hold that property for you? I'd

SPEAKER_01:

be nervous. yes of course we are not only seller nervous buyers themselves nervous i might be able to coming back after the summer right the school just off early may they were left they're gone but now they don't know can they come back or not and so both cases just happening for last month until i'm going every day this moment and as a broker we are worried too That's right there. It's about 10 plus million dollars deal. So we left on the table. But for the family, how bad they feel?

SPEAKER_03:

Oh, the uncertainty. The kids got into Harvard, which is amazingly difficult to do. And now they don't know if they're going to be able to actually attend. You know, it's

SPEAKER_01:

so much uncertainty. It's like everyone is worrying about

SPEAKER_03:

uncertainty is killing.

SPEAKER_06:

Let's say we solve that uncertainty. Do they show up with a bag of cash or is there ever financing involved? I mean, what's the level of international financing where they say, well,

SPEAKER_03:

I've got a mortgage contingency? It's family wealth and they transfer the family wealth.

SPEAKER_06:

Always? At the million dollar level and the$10 million level? Always? Not

SPEAKER_03:

always, but I would say most of the time it's a significant amount of their net worth that they're moving to the United States because they feel like it's a safe... investment it's a certain place but as uncertainty grows here it it meets those waters so they're less likely to grab all their generational wealth and put it here they're going to find another another

SPEAKER_02:

place for it so and what what other if if if the alternative is not to come here right the decision is not to come here do they go to london

SPEAKER_03:

I think it's UK, try to get into Cambridge or Oxford and try to go those angles. I think if it's this particular demographic we're talking about.

SPEAKER_01:

Also to answer Roberto's question, the transactions has been slowed up to April. Significantly? Has tremendously, yes. Significantly slowed, yes. So the tariff just started this year. There's more on hold. I had another customer actually in February, early March. She said, hey, I'm coming back. I'm buying another property, another property in my building because it's a new building. And I said, oh, two weeks earlier, I sent her a listing. I said, hey, something just came up in our building. Oh, my family had decided. We're going to withdraw our decision and buy another one. So we are, every day we're reflecting, you know, we are affected.

SPEAKER_03:

By our building, she means the developer's building, that 2775th, where she sold 40 apartments, okay? Some representing the buyers, some representing the developer.

SPEAKER_01:

But also a lot is from, you know, neighborhood, no developments. Manhattan, no developments.

SPEAKER_03:

Nomad is kind of

SPEAKER_01:

one of the areas we work very well. All those areas.

SPEAKER_06:

I have a question. I have a Chinese client here, and I want to tell you, because this is a different kind of client. This is a client who came to Queens, New York, because there's a significant Chinese population. And I'm going to say she came 10 years, 20 years ago. And she's decided to move out to New Canaan, Connecticut, because of the schools. And she wanted to provide a great school opportunity for her kids. And her kids became... And you know what? That's kind of risky. Because you move from a very Chinese... environment in queens out to connecticut and there's not that many chinese i say how do you connect with others and she showed me on her phone there's a great big whatsapp group and they all compare notes oh who do you use for real estate who do you use for banking who do you use for this so they still stay very connected out here she's gone and bought a house she's bought a condo she started a business she bought another business moved to business all in new canaan and asked me how do i get into the new canaan country Because my daughter is a phenomenal golf prodigy. I have to say, no moss grows under her feet. She is a go-getter. My question is, what is the tariff? What is the current policy decisions doing to people like that who are already here? Are they discouraged and going back? Are they doubling down in Manhattan?

UNKNOWN:

Yeah.

SPEAKER_01:

So another major force of purchasing right now, we have experienced from, you know, for last a few months, a lot of buyers, they already here.

SPEAKER_03:

Right. They already here. Some of them have citizenship, so they're not going anywhere. Some are green cards and some are in transition with some, with a visa or, you

SPEAKER_01:

know. Some are waiting. Some are waiting for permanent resident cards. Yes. But they are deciding they are not leaving. They already got partial of their assets here. They are not going to bring that back. And more because we have been working in this business for like two decades. So we have seen the rise of the moment and see the peak until now. So we have a really good customer data base. They already live in this country, live in the city. Doesn't matter, New York, California, they already get familiarized with the system. They already has been educated where they are, either they're working, they are stable environment. They feel more comfortable to purchase more, to invest more. That's why we have our customer space, not only by New York, Connecticut, Boston, but once the kids graduate, You know, they're going to stay over in U.S. or they are global citizens. They're going to expand to buy more. Peter Tare, Holmes, Pamptons, Florida.

SPEAKER_03:

Or

SPEAKER_01:

more investment, you know, diversify to different cities. Austin. All the different

SPEAKER_03:

places. One person, Jeff, Jeff is a great customer and he's bought several dollar generals all over the United States and he's getting a house in Boca Raton. He's got a place in Manhattan. He has a place out on Long Island. His daughter got married out on Long Island and they now live in the city. So it's like, it's tends to be this sort of outreach to good profit areas, good tax advantages, you know, like rational decision makers.

SPEAKER_02:

Yes. Just curious because in Manhattan, buying an investment property, like buying an apartment and renting it, the math doesn't work. So Are your buyers who are buying as investments in Manhattan, are they actually buying for investments? Are they buying for, you know, because if they're buying for an investment property, they're going to rent it out. They're actually, it would seem to me, they're actually just trying to preserve that capital and putting it somewhere, knowing that that's not going to net them any income, but it may give them some appreciation or they're buying it because they're actually going to live there.

SPEAKER_01:

Yeah, both. Yeah, Julia, go ahead. Yeah, that's both situations. Most of the time, when they come over initially, they don't tell you, I want to rent out. Most times, they say, hey, I'm buying, we're going to move in. You know, my daughter is coming in three years. Yeah, my son is coming in five years or my daughter already here going to college. So my second kid is coming over. We're going to use the house, use the apartment. But sometimes after closing, they just tell you, can you help me rent out? Because we're not coming back for a year or two. Can you just rent out? So we just keep renting out for them until... Either they come back to stay over or they're not. So it happens.

SPEAKER_03:

Yeah, the added value is...

SPEAKER_01:

Really added value

SPEAKER_03:

for... Managing four to five apartments that we've got that we initially sold to investors. And then we manage their places now. And they trust Julia. Because you almost... You have to be Asian to really pull it off at this slow.

SPEAKER_01:

Every deal, it doesn't happen that easy. There's just no easy deal. It doesn't matter today. Before, right, initially, 20 years ago, our people, customers were buying$350,000, one bedroom. That's expensive. But now, one bedroom could be$2,750,000. The buyers, they know not only you speak the language, but you understand the culture, and you know the local culture. And

SPEAKER_03:

they're not going to overpay using Julia. So they know that.

SPEAKER_01:

And they know they get the value, right? Not only today they closed with this beer. We handhold them through every process. Talk to me about

SPEAKER_06:

trust. You just said they know they're not going to overpay because they're working with Julia. How important is that trust? And how do you establish that trust? And can I establish that trust? Because I don't come from the culture I think I can't. It's very difficult. I'll never be trusted.

SPEAKER_03:

I have to delegate everything. Oh, not everything, but a lot, so much to her. I mean, the only way to develop trust is over a long period of time. So I've got several friends for 15 years that are Asian. We go to Tibet together. You know, he gets me into Tibet and we go to the World Cup down in you know, Rio or Sao Paulo or something. So you have to travel with them. They have to become your friends. You have to spend 10 years with them, 15 years, you know, of you handling their rental property or whatever. And you gain trust. So this is not a, there's not a quick path here.

SPEAKER_01:

But I have to say one thing. If they have never purchased from us, we'll never travel with them. Probably that's the... Right. It's the purchase

SPEAKER_03:

process. that sort of creates the bond.

SPEAKER_01:

It's throughout the process. They build the bond. The bond is not only Julia's here. Oh, I'm helping Mr. Who, Who, Who. It's about Charles and Julia as Eastern and Western culture combination. So we call it yin-yang. What Charles is good at, I'm not good at it. What I'm good at, Charles not good at, right? That's why we are the, you know, we can help our customers in many different layers, dimensions. But anyway, I'm talking too much.

SPEAKER_02:

That's exactly why you're here, exactly.

SPEAKER_01:

Because John asked the trust, where the trust comes from. It's not just one thing. It's from layers, layers of Eastern culture and Western culture, right? So they say both. That's the... bigger trust come from?

SPEAKER_03:

Well, one of the things that, one of the tricks, if it's a trick, I take people to, like during COVID, I got a third rate degree from Harvard, the extension school, I got a master's. And so I can take people to the Harvard club and this impresses these guys for some reason, and they get impressed by that. And, you know, third rate degree, first rate impression. That

SPEAKER_01:

builds

SPEAKER_03:

trust.

SPEAKER_01:

A lot of our customers, actually five or six, all their kids are at Harvard. Or graduated from Harvard.

SPEAKER_06:

Scott Hobbs had a question earlier, a harder question. Why don't you ask it now, Scott? Ask the hard question.

SPEAKER_01:

What's the hard question? I'm ready.

SPEAKER_05:

I was wondering as to where the... how have the Chinese clients earn their money and how do they actually get it out of the country? Are they allowed free access with their export of their cash? And is it just a simple transfer or is a longer process to try to get money into the United States?

SPEAKER_01:

Thanks, Scott. Your question, we can answer that in the last 40 years of Chinese history. How did it open the door? How did the new generation Rosen about everything, right? So basically, where their wealth or how they got it, how they got to US is not our business. When you call, hey, Julia, I want to buy this property, 2 million, 20 million, 10 million, it doesn't matter. My first question would be, oh, hi, Scott. Oh, where's your phone? Are they ready? Are they in US? Oh, no, Julia can help me transfer money. Oh, no, Scott, this is your own issue. Deal with it.

SPEAKER_03:

But I will say that most of it is either made in real estate or manufacturing. So manufacturing is a source of most of the wealth in China. And we have a lot of real estate developers that do 2,000, 3,000 units there and then want to bring the money here. Is

SPEAKER_06:

it matter how you made your money, whether it's easier to move it or not? If I made my money in real estate there or I made my money in manufacturing, Well, the

SPEAKER_03:

rules keep changing.

SPEAKER_01:

No, it's timing. It's about timing. We talk about 10 years ago, 2015 to 2018, or 2010 to 2018, before the China government tightening the outflow capital. Doesn't matter. You know, you're in pharmaceutical, you're in entrepreneurs, you're in manufacturers, you're real estate developers, whatever business field, education, right? Doesn't matter. You can get whatever you want it out. But the most the problems. Most people are not that advanced thinking. So they were late. Or their connections. Have you

SPEAKER_06:

seen anybody do creative deals? If I can't get the money out of China, can I trade Chinese assets for international assets? Do you see people trying to work through creative solutions? It occurs to me that if there's demand in China and there's supply in the rest of the world, a market's going to develop on figuring out how to bridge that gap. And it occurs to me people aren't going to just say... Well, I guess, you know, I guess we can't sell them anything.

SPEAKER_01:

It's not, you know, that's a really good question, too, because right now there are a few new developments, new construction developers accepting RMB, which is a Chinese currency. So there are a few, but rarely to be seen in Manhattan.

SPEAKER_03:

We've seen a couple of resales where half of the transaction was done in Chinese currency and the other half in dollars. We've seen that happen a few times. Did that help

SPEAKER_02:

the explosion? Because the renminbi was kind of pegged to the dollar for a little over a decade, I think, from like 93 to maybe 2005. And then when they decoupled that... their currency actually strengthened. Now it's losing a little bit to the dollar, but it seems like the currency strengthened. Did that help people because they had more purchasing power?

SPEAKER_01:

Yes or no. That's relevant to the people ready to purchase. Not to the people not ready, never ready. Never know until the day the door closed. You know, the door closed, you couldn't get out. Oh, we're too late on the boat. We're too late to catch the boat, you know? So... That's, a lot of developers are accepting RMB, but not everything. It's only partial. The only reason they accept the Chinese currency is they have business over there. So they can use that, but they still use all the attorneys in US, in New York. They don't use the local attorneys in local, okay? And also not the entire building accepting. They're just partial. Partial. So otherwise, all the money you build, everything you sold goes to the local instead of New York or California, whatever city you are. But still very limited. The thing is, the building that accepts Chinese currency, the buyer may not want to go to that building. They want to be in the hand. So there's even yes and no situation. Does it make sense to you, Roberto? I see you nodding.

SPEAKER_02:

Yeah, no, no, of course. You just brought something up. So are people, when they think of New York, are they thinking primarily of Manhattan? Or do they think, hey, there could be great opportunities in Queens. I want to explore that.

SPEAKER_04:

Yes.

SPEAKER_03:

Well, we see mainly Manhattan. We've seen a little bit in Long Island City, but mainly Manhattan.

SPEAKER_04:

They

SPEAKER_03:

don't want the prestige associated. You having a pied-a-terre in Manhattan is a very, has a lot of cachet.

SPEAKER_01:

You know, the things, a lot of newcomers, they don't really understand what New York means. You have to tell, New York City is New York City. Manhattan is just like the most famous city, of course. A lot of people, they want to be, you know, in London City, Queens, and some people want to go to Brooklyn. So that's why the Brooklyn new constructions, they got a lot of customers

SPEAKER_03:

here. We've seen some

SPEAKER_01:

in the

SPEAKER_03:

very top tier

SPEAKER_01:

of Brooklyn. Yeah, the Hoist Street, you know, the Brooklyn Towers, you know, all this. So, Brooklyn Point. Also, a lot of people that go into Long Island. Long Island. That's the

SPEAKER_03:

second place

SPEAKER_01:

they go. Not only in New York City, but New York State.

SPEAKER_06:

So what I've heard, I'm going to replay it back. I've heard that some are motivated by prestige. Some are rich on return on investment. Some want to be part of the Chinese community. And some are choosing location based on school. What's the most? And some, I guess it's a family decision. Oh, I want to go because my family is there, even though it's not a community, a Chinese community. or it's not next to a school or it's not Manhattan, it's not prestigious, but my family's already there. Of these five criteria, what are you seeing strengthening as a reason for coming? It sounds to me like education has been on the rise for quite some time. Prestige is actually coming down and education is important and value. right return on investment value play is what i think i hear you saying

SPEAKER_03:

yes correct you're almost spot on you know that there is a safety in parking the money it depends on whether the whether it's the first person in the family moving into New York or whether they've already established themselves as to what the motivations are.

SPEAKER_01:

Yeah, John's answer was like a pretty, you know, it's

SPEAKER_03:

very,

SPEAKER_01:

so education is like really in the top decision making. I have customer, the family wants to be in Long Island. Oh, you better get a bigger house. It's so much bigger. But the kids say, hey, my school is New York City in Manhattan. I'm not going to commute every two hours. And so the family gave in.

SPEAKER_03:

Sometimes they buy, they go ahead and let them have the one in the city and they go buy Long Island.

SPEAKER_01:

But that's after a while, after the family coming over, okay? So, but just one kid here, they won't buy the big house, you know, in Westchester or in Long Island yet. But, oh, once my family come over, yes, we will buy a bigger house. But for now, just to be convenient and save less travel time for, you know, my son go to school. because schools study so hard. So education's on top. The prestige, that comes later. Depends where the family's located, right? And also- Or it

SPEAKER_03:

can come earlier. Or it can be empty nesters that want the prestige of the pied-a-tête.

SPEAKER_01:

Yeah, of course, the lifestyle is what their kids want. Their family wants a lifestyle. We don't have

SPEAKER_03:

any Asian empty nesters, believe it or not. We do get some, so.

SPEAKER_02:

So they're

SPEAKER_01:

different.

SPEAKER_02:

Are there certain regions of China where you're seeing more of the people come from, say, Beijing or Shanghai?

SPEAKER_06:

That's a great question because we keep talking about China as if it's like one thing. Right.

SPEAKER_02:

There's even Hong Kong, which is separate but similar.

SPEAKER_01:

Yeah, we're not going to miss that question after all this coming along. Totally. In the beginning, or even right now, the major... Chinese buyers are from Shanghai and also all the cities around Shanghai.

SPEAKER_06:

Why?

SPEAKER_01:

Because of Beijing is like a political center. Shanghai is international business center. The people in Shanghai, they have more open-minded. They were the early birds go to Japan. They were the early people, you know, leaving the country. So over past 20 years, the majority of the Chinese buyers are from that region. And then some from North, later more, some from North, South, you know, of that, because Shanghai is just in the middle, but other cities got developed as well. And more people come from all different cities, but major was also because of the, you know, airport. Shanghai has direct airport come to New York. It used to be, Beijing has as well, used to be two flights a day. Maybe now it's one flight every week. So you can see the changes. There are big changes. But to answer your question, the majority are from Shanghai and that region. Of course, there are later people from Beijing and also Southern Shenzhen and also Hong Kong, Taiwan, of course.

SPEAKER_06:

Why is Hong Kong not level with Shanghai?

SPEAKER_01:

Because Hong Kong needs, they have their freedom in the first place. They have been immigrating to Vancouver before 1997. 1997, that was Hong Kong before they belonged to England at that time, UK. Because 1997, Chinese government took over Hong Kong. And they had the major, immigration from Hong Kong to Vancouver to London or UK before 1997. So that movement was happening already a big time. That's why you go to Vancouver, you can see, yeah, they're big, big population of Hong Kongese. And

SPEAKER_06:

later, Vancouver is not. So that would be a good question is our U.S. policies and attitudes which have been harming, you know, the number of flights, the number of immigration. But Canada is not adopting these policies. Is Canada thriving at the U.S.''s expense? Is Vancouver doing well when the U.S. does not?

SPEAKER_01:

But the same time period, even before US was booming 10 years ago, a decade ago, Vancouver already booming. They have new populations coming in from China, all over China, Hong Kong, that's already established. Because Canada, they also have not the EB-5 program, they also have a sort of program. they opened the door sooner than U.S. to China. And that time, nobody knows U.S. has this program, everyone applying to Canada. They all got green card to Canada, go there earlier, sooner. A lot of our customers, they were rejected by Canada green card. They were like, okay, then we apply for U.S. So that's how they ended up applying for U.S. green card visa or EB-5 program. For those who don't know,

SPEAKER_02:

can you just explain what the EB-5 is?

SPEAKER_01:

EB-5 back then, a decade ago, was U.S. have this program providing the family green card in exchange for$500,000 investment in a project in New York, in Colorado, in wherever it

SPEAKER_03:

is. It was an approved project for the EB-5. Now it's$800,000. And

SPEAKER_01:

you have to, with your$500,000 investment back then, you have to be able to provide 10 people to work. You have to create 10 jobs. You put one of 10

SPEAKER_04:

jobs.

SPEAKER_01:

And then they have called region center, and they have their region attorney. So they have their region accounting. It's a very well-monitored program.

SPEAKER_03:

But there's been some fraud in it, too.

SPEAKER_01:

Earlier on program, they were really good. And people, the investors, they quickly got their green card in no time. No time. And then got their money back,$500,000 plus interest, plus the green card for a whole family. The kids had to be under 21. Yeah,

SPEAKER_03:

it started out on the right track.

SPEAKER_01:

But now, not only the threshold of EB-5 has increased, also the project got a lot of

SPEAKER_03:

you know, there's been some people trying to take advantage. So, you know, whenever anything comes in, there's always a few scammers that come in and give it a bad name. So

SPEAKER_01:

still a lot of our customers have not receiving their green card right now. They've been waiting for like eight, 10 years already. So the earlier ones, they were not only lucky because they are smart, they were faster, quicker, taking action, and they got in sooner. But later ones just missed the opportunity and ended up the project they don't like. Oh, I don't believe that project. I don't believe this. Don't believe that.

SPEAKER_06:

I'm still wondering if the U.S. loss is someone else's gain. And it occurs to me that if my child has gotten into Harvard or wherever and I've made these plans, but policy decisions are getting in the way and it's causing uncertainty on whether I can buy that New York apartment, that Boston apartment. do i then are you starting to see that that energy is going to be it's going to spend that money is going to be spent somewhere are they looking at australia south america europe as other alternatives and and that capital

SPEAKER_03:

move they're looking at quickly places like edinburgh you know it's uh or or um dublin you know it's distance

SPEAKER_01:

options

SPEAKER_03:

athens yeah so it's yes there's I don't know if it's exactly a zero-sum game.

SPEAKER_01:

Barcelona, all those European countries. Yes, that's a good question too. Definitely, if I couldn't open this store, I will walk another different direction. And besides that, the government also tightened their domestic investment direction. They build high-end condominiums, homes, new constructions, and they offer more opportunities for within the country investment. They encourage more on that. So the money not only go into other countries, they also stay within the country to start investing.

SPEAKER_02:

Is any outside money going to China?

SPEAKER_03:

You're talking about influx of capital to invest

SPEAKER_02:

in China? Do you have any clients throughout the last 20 years who are like, I want to buy in China. We've had people

SPEAKER_03:

continue their business operations and build hotels that we are still doing business with here. So they will reinvest in China. And sometimes they'll retain their whole business in China and just do their domicile here. You know, so.

SPEAKER_02:

The market there is very sluggish. Sluggish,

SPEAKER_01:

dropping,

SPEAKER_02:

dropping, dropping, dropping, dropping.

SPEAKER_01:

It's a good opportunity,

SPEAKER_02:

as

SPEAKER_06:

you say, for that capital. There's

SPEAKER_01:

a pandemic. There's a pandemic. The economy is so bad over there. But for what our customers, because we've been doing this so long, we have so many smart people coming earlier. They already know what's going on global-wise. They are already global citizens, right? I heard a lot they want to get money out. We have customers, they are based in California. There are a lot of properties in the city as well. And they have, you know, business all over the world. They're selling their companies in China. They're getting them out. They were like, Julia, I sell my company in China. I couldn't get my money out. I said, you're American. Why can't I get it out? I have to find a way. So basically majority people, we know, don't they? they are trying to get money out instead of going in because there's no confidence. Lack of confidence, yeah. That's

SPEAKER_02:

all I can say. Is it more difficult to get the money out now than it was, say, 2016? 2016,

SPEAKER_01:

there's no restriction.

SPEAKER_03:

Well, just prior to that, there was no. And I think 2016 is about when it

SPEAKER_01:

hit. Yeah, 2017, 2018, yeah. So that's why... I

SPEAKER_03:

don't know those dates exactly.

SPEAKER_01:

I know the years. Yes. Signed a lot of new development during 2017 for new construction. Our customers signed contract with 10% down payment or 15% or 20%. And by 2019, the building started closing. They couldn't get money out. They lost all their deposit. They all

SPEAKER_04:

lost.

SPEAKER_01:

And I had, so all the deals we've been working on, So we didn't get paid. Sponsor, developer kept all those down payment. And so first of all, we didn't get paid, right? Yeah, that

SPEAKER_03:

doesn't make the reality shows.

SPEAKER_01:

It should.

SPEAKER_03:

Yeah,

SPEAKER_01:

that doesn't make the reality shows. And there's how a customer bought a$5 million two-bedroom, couldn't get money out, cannot loss a$1 million down payment. What to do? Well, we tried to help her exchange for a smaller unit in the building.

SPEAKER_04:

Yeah, we

SPEAKER_01:

were successful at that. And the rest, I'll get her to finance the rest. So we use every

SPEAKER_03:

strategy,

SPEAKER_01:

every knowledge we can to help our customers, not only to, you know.

SPEAKER_06:

How do you get in front of these customers? Is it enough to just put your name and your face out there on a website and they'll find you? It seems to me that's not enough. And it's not enough to just put an ad in the world press anymore. It occurs to me that you've got to put out I'm going to guess. Do you have to put out social media on a regular basis in Chinese in order to get in front of them and show them how you think and where your specialty is? And trust me, is social media in China becoming an increasingly important part of how you get in front of the Chinese, the Chinese in China?

SPEAKER_03:

Yes. Sure. We spend a lot of effort

SPEAKER_01:

on it. You are talking about the current right now. That is so true.

SPEAKER_03:

It's also the WeChat groups that you're talking about. You mentioned earlier, John, about these WeChat groups of people. So it's sort of referral-based within a WeChat group.

SPEAKER_06:

Well, how do you do that? I mean, she had 500 people in her WeChat group. She can't possibly know all of them.

SPEAKER_01:

It's not about... It's about, John, today you go to Boston because your son is going to Harvard over there. And immediately you're just attracted to all the parents who their kids going to Boston. Their kids could be Harvard, could be MIT, could be Boston College, right? So you were just like drawn to drag you into that group. And that group is all the parents and the families and the kids in that group. And the family, they have more resources. And you can ask, oh, where should I rent? What should I do? You get more help from that community. How

SPEAKER_06:

do you infiltrate the parents of Harvard students group? How do you do

SPEAKER_03:

that? Well, we're not telling. We are not telling that. No. No, we're not going to make it easy for everybody.

SPEAKER_01:

Come to Charles, because Charles is a Harvard

SPEAKER_03:

graduate. No, not that. Not that. Not that.

SPEAKER_02:

I mean, short of

SPEAKER_06:

sending a kid to Harvard, that's hard to break in.

SPEAKER_02:

Charles, we'll give you an offer you can't refuse.

SPEAKER_03:

We are, no, no, there's certain things, you know, this is a poker game, people. We're not showing all our cards.

SPEAKER_06:

But that's really, that's really the key. I can't just social media or take out an ad and I can't just put up a website. I really do have to connect with the people who are already over here who are in these social media groups connected with people over there.

SPEAKER_03:

We have seen some of the people that come out of school go into the business world and refer us their colleagues. So that happens a lot. So a lot of it is traditional referral based. It's not, you know, it's not always, you know,

SPEAKER_01:

from who's

SPEAKER_03:

got the TV show. You know, it's always it can very much be who has great relationships. in all of the big firms around town.

SPEAKER_01:

Even that is still a lot of hard work. You have to speak a language first, right? We keep saying this. Even you work with Charles, working with Chinese buyers, it depends on their sophistication, depends on their education, right? If they completely have no problem communicating with Charles, American agent, And Charles still needs to build that bond.

SPEAKER_03:

And the trust, yeah.

SPEAKER_01:

Yeah, trust. If not, in no time, they will find a local Chinese agent to work with them instead of Charles. I'm just using Charles as example.

SPEAKER_06:

It occurs to me that the Shanghai business owner is in a WeChat group with his counterpart in New York City. He's in that WeChat group, and he probably asks in that group, Hey, my daughter has just gotten into NYU, and I've got to start thinking about a banking relationship and a real estate agent relationship and a lawyer relationship. Who do you use? And two or three people might pop up. Oh, I really think Julia Zhang, she's been phenomenal for us for quite some time. Oh, how do I meet her? Well, she's not part of the group, but I mean, this is how it's happening.

SPEAKER_01:

Yes, let me send it to you, her information. Yes. And some people, some parents, oh, let me see if your information, in case I need it. So that's exactly what's happening, part of our resource, part of the business. Not at all, but all part of it. But all part of everything, just build it up.

SPEAKER_06:

All right. Final question, unless Roberto has one, but... Where are we going? I want you to look into the crystal ball, and I want you to either tell me that the crystal ball tells me that this is just a minor blip. Our current challenges are just a minor blip, that we've been at this for 200 years. The Chinese built the Transcontinental Railroad. They've been here for a long time, and they're here to stay, and this policy decision is just a minor road bump in the Chinese-American relations? Or are you seeing that this is going to lead to a spiraling and a great challenge for the next 10 years?

SPEAKER_01:

I would choose the last sentence. It's going to be a challenge for next 10 years.

SPEAKER_03:

OK. And I think it's a major disruptive moment that's going to, as long as this disruption continues, the crystal ball is going to be muddied.

SPEAKER_06:

Wait, you're the expert on the show. We asked you to come here and tell us the answer. Charles, you

SPEAKER_03:

can't talk to me about money. The dust has to settle. This thing with the student visas, that has to be sorted

SPEAKER_01:

out. But, yes.

SPEAKER_02:

The tariffs have to be sorted out. That's a tough one because you have explained that that is one of the major factors of why they're coming here. Exactly.

SPEAKER_01:

when they're not coming or what, okay. We need to know. If you tell me this is almost the end of the show, or even in the process, let me tell you something. This, I probably give you more confidence. First of all, American real estate, American assets is the legacy. It's intergenerational legacy. For just next five years, this power Change. Next five years, they can change. Next six years, change. But American real estate, American assets, they are forever strong, valid, social status. And American dream is still American dream. That cannot be changed just because current policy. Policy can change. The dream will never change.

SPEAKER_06:

And our two economies are too close together. You can't just say to all, what, 3,000 American colleges and universities, I'm sorry, but you've got to give up 25% of your revenue overnight. It's just too hard to do, right, to decouple.

SPEAKER_01:

So that's exactly what I'm saying, just for temporary. But we're going to have some rough road ahead, but we will still... be able to build a dream for all the peoples are following us. We are here building our dream. You're Americans already naturally, you're lucky, you're born here, but you still living your dream. I'm immigrants. I came 20 plus years ago. I'm working in my dream still every day. I will help whoever wants to be part of the American dream. And I'll be proud of it. and I will help in any knowledge, every value I can add on.

SPEAKER_06:

So what I hear is short-term anxiety, short-term muddiness, long-term, you're bullish. The Chinese will continue to come, continue to be educated, and continue to buy real estate in New York City.

SPEAKER_01:

You think of people, you tell them don't drink anymore, they don't drink anymore, they finally drink. I love

SPEAKER_06:

that analogy. Real estate is like drinking. Once you start with real estate, you can't just go cold turkey. We love real estate.

SPEAKER_01:

You get second one, you get second one, and you buy, you sell, and you keep going. So the harder to get here anywhere, the people want to get in. So no worries, okay? They will keep coming and they will keep have our momentum. Roberto,

SPEAKER_06:

can you

SPEAKER_01:

top

SPEAKER_06:

that?

SPEAKER_01:

It's

SPEAKER_06:

like drinking. It's like getting drunk on real estate. I'm hammered. I love this. They're going to remember one thing, Julia Zhang. Julia Zhang is drunk on real estate.

SPEAKER_01:

Oh, yes.

SPEAKER_06:

Once you start, you can't give it up. I love this.

SPEAKER_01:

This is great. You enjoy it when they're drunk, right? You're

SPEAKER_06:

going to blow up on the internet, I tell you, because that's a great analogy. I love this. I am drunk on real estate.

SPEAKER_01:

Yes. The more difficult you won't let me in, I will be there. I will get there.

SPEAKER_03:

I'm going to get her a t-shirt that says that. I love that.

SPEAKER_01:

You guys come over to New York City. We go to Charles Hawkins Harvard Club.

SPEAKER_06:

All right. This has been Julia Jong Hawkins and Charles Hawkins. And you can find them at the element.com website, or I just Googled their names and found them. This has been phenomenal. I want to thank once again, gracefarms.org. And you can find us at burrowsandburbs.com. And this has been episode 186. Thank you, Roberto. This has been another great show. And thank

SPEAKER_01:

you. That's my lucky number today. I'll go to buy a lot.

SPEAKER_02:

Thank you guys so much. It was awesome. This has been

SPEAKER_01:

awesome. So much. We'll go to Florida soon.

SPEAKER_06:

I'm, you know what, if I needed, I think it's a challenging concept and I am convinced that I need, if I want to buy, if I'm Chinese and I want to buy real estate in New York, I need somebody with your experience to help me do it. So thank you. I think you've done a very good job in this hour to convince me that there's some very subtle nuances and experiences you possess that they need. So good luck to you.

SPEAKER_01:

When you have money ready, I'll be there for you.

People on this episode

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John Engel

Host
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Roberto Cabrera

Host