The Chinese stock market collapse began when the Shanghai Stock Exchange lost a third of its value between June 12 and July 27.
The Chinese market continues to waver as the country’s leaders scramble to correct it, including devaluing the yuan on Aug. 11.
The recent turns in China raise the question of how they might impact Orange County’s luxury homes market, given Chinese buyers’ growing presence in the local market since 2010, when “new rich” Chinese began looking at Southern California as a safe haven for their fortunes, often buying multimillion-dollar homes with cash as investments.
“It’s too early to define how, precisely, the recent turmoil in the Chinese stock market will affect the Orange County luxury homes market,” said Steve High, president of Villa Real Estate. “Last year, the Chinese buyers made up approximately 10% of the Newport Beach high-end luxury market, so if those type of buyers are removed from our buyer pool, that can certainly have an effect on our market.”
High added, however, that his Chinese sources say the downturn in the Chinese market is affecting the middle class far more than the wealthy.
“It is exactly one of the scenarios that previous, wealthy Chinese buyers were trying to hedge their money against,” he explained. “That is why we saw so many of them purchase in the United States—so that they would have secure investments outside of their own country.”
Sharran Srivatsaa, president of Teles Properties, shared his thoughts: “The uncertainty in the Shanghai and Hong Kong equity markets have triggered numerous ‘flight to safety’ conversations targeting U.S. real estate.”
He said Teles Properties has been receiving numerous inquiries from private bankers and asset managers, not only regarding one-off purchases but to explore a portfolio of U.S. real estate investments for their Asian clients that are focused in the luxury markets of L.A. and Orange counties.
“Although the devaluation of the yuan has intrinsically made U.S. real estate a little more expensive dollar for dollar, it is still being viewed as a less-volatile and higher-quality, long-term investment,” Srivatsaa added.
High said he feels the real impact of the uncertainty in China will be in the lower-priced OC housing market.
“We have seen many of the middle-class Chinese save their money to send a child to college in the U.S., and some have purchased lower-priced homes for their children to live in. This group seems extremely vulnerable because they are the ones that are most affected by the downturn in the Chinese stock market. I expect that we will see an end to the Chinese buyers purchasing in the lower price ranges and may see several of the properties that have previously been purchased placed back on the market for sale.”
38 Deep Sea for $17.4M
The 13,040-square-foot, six-bedroom, nine-bath mansion ensconced on a half-acre lot at 38 Deep Sea in Newport Coast sold for $17.4 million on Aug. 26. It was listed in April 2014 for $22.5 million.
The Italianate-style residence features an oval entry coliseum framing views of the Pacific Ocean and Catalina Island.
Virtually all aspects of the home are controlled through the Savant System and can be operated remotely.
The subterranean entertainment level includes a bar area with three televisions, a gym/spa, and a movie theater. The six-car garage has elevator service to all three levels of the estate.
Rex McKown and Marcy Weinstein of Surterre Properties Inc. represented the seller, and Lili Peters, also of Surterre, worked on behalf of the buyers.
Resort-Style
The six-bedroom, seven-bath home at 17 Needle Grass in Shady Canyon in Irvine sold with multiple offers at 99% of its list price. It was listed for $9 million and closed at $8.9 million on Aug. 18.
The sale marked the highest Shady Canyon sale since 2012 and the third highest ever in the community, according to Tim Smith of the Smith Group, Coldwell Banker Previews International, who represented the seller.
Robert McCarthy of RDM General Contractors built the estate. The 11,000-square-foot home is positioned atop a 0.81-acre view lot. Its resort-style design blends contemporary materials with custom finishes, including reclaimed beamed ceilings and limestone flooring. The interior includes a chef’s kitchen with a walk-in butler’s pantry; a master suite featuring a seating area, limestone fireplace, and balcony; a wine cellar; and a theater buyer.
Jun Yang of Surterre Properties worked on behalf of the seller.
