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Wealthy Chinese snap up prime Seattle real estate

By Sanjay Bhatt

The Seattle Times

LAST UPDATED: 9:45 a.m. HST, May 25, 2013

SEATTLE » Real-estate agent Joseph Ho climbed the gilded staircase of a Hunts Point, Wash., mansion listed for almost $5 million, shooting video on his Apple iPad tablet and narrating in Chinese.

Buyers from China have inquired about the 5,540-square-foot house. Ho made sure to capture a blue-sky fresco in the formal dining room — “It’ll remind them of Caesar’s Palace in Las Vegas” — and a yacht-ready dock.

“Water features are important for Chinese feng shui,” Ho said. “When you have 1.4 billion Chinese, many of whom are millionaires, somebody will like it.”

China’s super-rich, who have historically been drawn to San Francisco, Los Angeles and Vancouver, B.C., are investing in Seattle-area real estate in growing numbers, buying multimillion-dollar homes, rent-producing properties and land for commercial development.

In the process, they are accelerating the real-estate market’s recovery, sometimes edging out other buyers with all-cash offers, and deepening ties between Seattle and China.

While exact numbers are hard to obtain, Seattle-area real-estate agents, bankers and China experts say there’s been a definite increase in the past year of rich Chinese nationals shopping for homes.

Citi Private Bank, for instance, reports it’s seen about a 30 percent increase over the past 12 months in the volume of mortgages involving buyers from Asia in the Seattle area.

The buyers have several motives: Some want a safe place to invest and diversify their fortunes. Others want their children to start school or university studies here. And some want to launch businesses here.

There are at least a few who are buying property without setting foot on it.

“We’ve had several projects come in here where the person purchasing from China bought it without ever seeing the property,” said Robert Grumbach, who oversees development for the city of Medina, Wash., home to Microsoft Corp. Chairman Bill Gates. One of Ho’s clients in China bought a Hunts Point mansion last year for almost $7 million — and decided to tear it down to build a new home. The client, who thought he could get it built in three months, was shocked to learn it would take two to three years.

Though some may buy based on just a video, Ho says, it’s more common for the rich buyer from China to hop on a plane to Seattle as part of a U.S. tour.

The buyers have cash to spend and are eager to close a deal, said Ho, of Prudential Northwest Realty Associates in Bellevue, Wash.

“They want to negotiate, but if you don’t engage, they’re gone” to San Francisco; Malibu, Calif.; or other West Coast cities, he said.

While San Francisco has long been a destination for Chinese investors, tourists and students, Seattle’s star has been rising.

The Chinese began paying more attention after President Hu Jintao visited in 2006 as part of his first state visit to the United States, said Mark Wen, president of the Washington State China Chamber of Commerce.

Direct flight service starting in 2008 made traveling from China quicker.

And then former Washington Gov. Gary Locke, the first Chinese-American U.S. governor, became the first Chinese-American to serve as U.S. Commerce secretary in 2009. Locke became ambassador to China in 2011.

In addition, a recent Chinese romantic comedy, “Finding Mr. Right” — or titled “Beijing Meets Seattle” in Chinese — is giving Seattle a media splash in China.

“We’re not the end of the Earth anymore,” said Joe Borich, president of the Washington State China Relations Council.

Circumstances in China also are driving wealthy Chinese to look abroad.

“It’s only natural that they want to be part of a better environment — clean water, clean air, less density of people,” said attorney Leo Peng, who manages the Beijing office of law firm Garvey Schubert Barer.

Moreover, investment opportunities in China are limited. Some wealthy families also may want to protect their assets by stashing some abroad.

“This is pretty much identical to what happened to Vancouver (British Columbia) in 1997,” Wen said. That year, the British transferred control of capitalistic Hong Kong to communist China. “Vancouver became a haven for people moving money out of Hong Kong.”

Two other recent trends contributed to the current wave of superrich China buyers coming to the U.S.: The rise of China’s currency against the U.S. dollar and the run-up in China’s property values that made many millionaires, said Tom Chang, who oversees the Pacific Northwest for California-based East-West Bank, the largest Chinese-American bank in the United States.

In 2011, China had more than 1.4 million millionaires, ranking it third globally, and 648 households with more than $100 million in wealth, according to a study by Boston Consulting Group.

Some of these Chinese investors are obtaining investor visas from Canada and the United States that allow them to move their families here in exchange for investing in job-creating projects. In 2012, about 80 percent of such investor visas issued by the U.S. government were to Chinese nationals.

To be sure, buyers from around the globe are shopping for homes in the U.S. market: International sales totaled $82.5 billion in 2012, up from $66.4 billion in 2011 and $53.4 billion the year before that, according to the National Association of Realtors.

International buyers who want to buy homes in the U.S. market can have trouble getting loans from U.S. banks, experts say, because of cultural barriers and not having an established credit history here.

Complicating matters, China restricts individuals from taking more than $50,000 out of the country per year.

Citi Private Bank has helped Asian clients buy real estate in their own name or through a foreign corporation or through a trust, said Ida Liu, who oversees the Asian Clients Group in North America.

“Our team in Asia can underwrite the mortgage for a house in the U.S.,” she said. “It’s really seamless.”

Peng, who lived in Seattle and now practices law in Beijing, said some of the affluent Chinese nationals buying houses in the U.S. made their money in real estate and intend to develop apartments, offices and shopping malls here.

“This is just the beginning of a huge wave of investment,” he said.

“We’ve had several projects come in here where the person purchasing from China bought it without ever seeing the property.”We’ve had several projects come in here where the person purchasing from China bought it without ever seeing the property.”

Seattle Times computer-assisted reporting specialist Justin Mayo contributed to this report.

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