Why do Asian people love real estate so much?

Why do Asian people love real estate so much?
–Shane

The Harvard MBA says:

An excellent question! I can’t speak for Asians in their own countries, but I can talk about Asian landlords here in America.  For example, in my neck of the woods (Palo Alto, CA) it seems like the majority of landlords are Chinese.

I suspect that several factors are in play. First, because many Asian countries are crowded, I suspect that Asian immigrants to America have a predisposition to valuing property.

Second, real estate investing requires capital, patience, and frugality–traits that fit well with the admired virtues in many Asian cultures.

Third, being a successful landlord does not depend on language skills or existing connections, making it particularly attractive to immigrants.

Finally, real estate is a very tax-advantaged investment, which makes it attractive to many thrifty Asians.

In summary, real estate is a tax-advantaged investment that doesn’t require language skills, and rewards capital, patience, and frugality.  In other words, it is as attractive to Asians as the Toyota Avalon (Lexus quality at Toyota price)!

Another day, I’ll write about the Chinese Landlord Principle, and how you can turn it to your advantage.

Bonus Asian-American humor: High Expectations Asian Father

3 Comments

  1. Posted December 10, 2010 at 12:09 am | Permalink

    Another hypothesis could be that many Asian immigrants grew up while their country was going through an industrial revolution, so they did not have access to a developed market for financial investments, like stocks and bonds. Real estate is the only investment they know and trust. And this philosophy is being passed down to their American kids.

    An interesting read about Vancouver’s real estate market:

    http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/singlepage/

    “There’s also general agreement that a large proportion of Chinese immigrants won’t opt to rent instead of buying, even if the economics make more sense. “People in China always feel very insecure if they do not own their own house,” says Fang Chen. “Even those with a very low income will spend their savings to buy.” It’s a trait common to any country with an agricultural heritage and limited land, explains Tsur Somerville, an associate professor at the UBC Centre for Urban Economics and Real Estate. “There are some countries where the only collateral has been real estate.”

  2. Susan Su
    Posted May 3, 2011 at 6:02 pm | Permalink

    Hey Chris,

    I wonder if another factor is that the majority of the Chinese diaspora in North America (US and Canada only) originates from Guangdong and Hong Kong.

    In the latter, a lot of Chinese “old money” are basically large-scale landlords who have built their fortunes on developing, managing, and deriving value from high-occupancy residences in densely-populated, and geographically constrained, urban areas.

    In that way, it’s not just that real estate happens to be a good fit because of cultural characteristics (which are also likely to play key roles), but also because of established business traditions and experience.

    Really fascinating that Chinese immigrants are big part of the landlord population in Palo Alto!

    Susan

  3. Taelor
    Posted May 25, 2011 at 8:02 pm | Permalink

    You mean it isn’t just my family that does this?

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