Compared to the United States, China’s percentage of household savings in the real estate market is nearly triple.
Foreigners Can’t Buy Property in China
Putting all the above aside, fundamental problems with China’s real estate market still exist.
One, you can never truly own property in China, whether you’re a foreigner or local. Every plot of land is technically owned by the state and can only be bought on a leasehold basis for up to 70 years.
This makes real estate in China a depreciating asset. If you (or any heirs) decide to sell a house in China 50 years after buying it, the fact that 20 years are remaining on your land use right would be reflected in the sales value.
Not only that, but foreign property buyers in China are severely restricted by law. Perhaps the worst limitation is that you must have already worked or studied abroad in China for one year and possess a long-term visa before buying real estate.
You may “own” a maximum of one apartment in China as a foreign buyer. Furthermore, you’re forever banned from renting it out and making any money off the home.
Many cities place additional limits on foreign real estate owners. In Shanghai, for example, you must marry a local Chinese citizen before owning property. Beijing demands that foreign purchasers show five years’ worth of tax returns.
Finally, owning property in China by itself doesn’t give you any right to live there as a foreigner. Compare that to countries like Thailand or Malaysia that give investors permanent residence.
Most foreign investors want the right to actually live in countries where they’re buying residential property.
It’s regrettable that you can’t ever truly buy a house in China as a foreigner. Nor will it ever entitle you to permanent residence, or any long-term visa.
Alternatives to Property in China
People often ask us a seemingly easy question: “Is this a good investment?”.
Whether they’re talking about real estate in China or something entirely different, we must, and always, answer these types of questions relative to other investment options.
After all, opportunity cost is very real. Why would you buy a high-risk, low-return asset when there are thousands of superior options for growing your wealth?
We strongly believe that’s the case with property in China.
Asia includes plenty of developed countries with less financial risk. In several places, you can own freehold land and houses while paying less per square meter… and a permanent resident visa included on top of all that.
There are several better places to buy real estate in Asia as a foreigner for you to choose from. Depending on specific needs, you might consider investing in Malaysia or Thailand instead of China.