The priciest homes, the best schools, the hottest handbags: From Newbury Street to the waterfront, big-money Chinese buyers are spending millions. Are we cashing in or selling out?
When I first meet Herb Entwistle at the daily catch in the Seaport, he’s chowing down on shellfish, sporting expensive sunglasses and a spread-collar white shirt. A beige Porsche hat sits on the table in front of him. In every way, he looks like the international wheeler-dealer he aspires to be. He hands me his business card, and the design isn’t subtle: It’s a miniature green card that reads, “New England EB-5 Development LLC. America’s Green Card EB-5 Regional Center.”
Entwistle is one of a handful of savvy Bostonians capitalizing on the rush by wealthy Chinese nationals—who desperately want safe investment opportunities and American citizenship—for Boston real estate. He says it was only a matter of time before Chinese money, and the people behind it, came knocking: “The average Chinese in China only knows three or four cities by name in the United States, and Boston is one of them.”
In his forties—with blond hair that looks like it’s been lightened, and a hint of gray in his wispy soul patch—Entwistle tells me how he’s lining up eager Chinese investors to buy the land for a 28-story office and retail project in Fort Point that he estimates will run about 500,000 square feet and cost $200 million. He’s also in early talks with a Chinese construction company about a billion-plus-dollar Seaport development—a business center with high-end living, offices for Asian firms, and retail for the Asian market. If all goes according to plan, it will be something like a second Chinatown, a glossy, steel-and-glass alternative to the one downtown.
Like many locals, Entwistle stumbled into the Chinese real estate market by chance. A lifelong New Englander with degrees from the University of Rhode Island and Clark University, he was making good money writing computer code for the likes of Fidelity and Boston Scientific when an influx of Chinese and Russian programmers drove down the prevailing hourly rate. Instead of getting indignant about immigrants and offshoring, Entwistle saw an opportunity. In 2005, he embarked on a real estate career brokering foreign loans. “I’d be working side by side with these Chinese developers,” he says, “and they’d be like, ‘Oh yeah, everybody wants to put money in America if they can.’” In 2011, Entwistle started learning Mandarin, advertising his services online in China, and hiring Mandarin-speaking assistants.
“The writing’s on the wall,” Entwistle tells me, and he’s not the only one who sees it. “It is true that we are seeing Chinese capital looking very, very, very hard at Boston,” Darren Xia, the China director for the International Capital Group at Jones Lang LaSalle, tells me from his Beijing office. “There will be one or two projects in Boston this year, and they will be large-scale development projects.”
Meanwhile, 28-year-old Charles Wang—who, as a rookie real estate agent in 2012, tried advertising in Mandarin and went on to sell 15 luxury condos at Millennium Place to Chinese investors in just a year’s time—is one of the many local entrepreneurs who see it too. “A big elephant takes a while to get started,” Wang tells me. “And it takes a while to stop.”
As the dust settles on the greatest economic explosion in history, China finds itself with 2.4 million millionaire households, more than any other country save the U.S. Those millionaires are sitting on the biggest real estate bubble of all time, choking down polluted air, and facing the prospect of long-term political instability. Even as the Chinese government tries to keep them in, they’re determined to get their money, their kids, and themselves out. And Boston is emerging as one of the world’s premier destinations for all three.
To China’s wealthiest investors, Boston looks like an underdeveloped growth market at bargain-basement prices. Clocking in at more than $400 per square foot, Beijing’s median housing prices are nearly twice as high as our metro area’s. Add Boston’s relatively low real estate prices to its world-class education system, thriving biotech sector, clean environment, and rich history, and the city looks like a sure thing. According to the Hurun Report, a research-based publication for and about China’s richest citizens, Boston is the seventh-most-attractive city internationally to Chinese real estate investors, and 5.5 percent of those investors consider it the most desirable place in the world to sink their cash.
The Chinese obsession with Boston began with Harvard and MIT, and thanks to those schools’ reputations, the entire region is considered the best place to get an education; for Chinese parents, education is everything. There are 16,147 Chinese citizens studying in Massachusetts right now, making up 28.2 percent—significantly more than any other nationality—of the state’s 46,486 foreign students. Combined, these foreign students bring more than $1.7 billion to the state and support an estimated 18,000 jobs in the 5th and 7th Congressional districts alone.
But student visas are temporary; what the Chinese really want is a way out of China, permanently. Enter the EB-5 visa, an incentive program set up by the State Department that offers a fast lane to citizenship in exchange for investment. For Chinese investors looking to escape the mainland, it’s a secret weapon. Through the program, up to 10,000 green cards are doled out annually to foreigners who spend money—at least $500,000 in rural areas or $1 million in urban areas—on projects that create jobs for Americans. This year, Chinese nationals accounted for 80 percent of all new EB-5 visa applications, up from 14 percent in 2007. And the Chinese now buy more American property than any other foreign nationality. During the fiscal year ending in March, they sunk $22 billion into American real estate, a 72 percent increase over the previous 12 months.
Increasingly, that largesse is coming here. Chinese money is starting to flow into Boston real estate projects big and small—one house, condominium, and EB-5 investment at a time.
They Come for the Schools
Dino Confalone’s branch of Keller Williams Realty sits on Massachusetts Avenue between Central and Harvard squares—a stretch that is quickly becoming a golden, glittering mile of opportunity between MIT and Harvard. Confalone, a Boston native and Suffolk University grad, held senior management positions at Arnold Worldwide and Monitor Group before discovering the lucrative world of residential real estate. One day in early June, a Chinese woman walked into his office with her son, who was entering MIT. She drew a circle around the university on a map and instructed her son to buy someplace inside it. She then left the teenager with $500,000 and boarded a plane back to China. The kid ended up buying a pad just across the river on Beacon Street, which he proceeded to trick out with a brand-new sound system and a “floating toilet” that juts out from the wall so you can clean under it, for maximum hygiene.
For Chinese parents of only children seeking top-quality education and a good investment, Boston just may be the promised land. They want to lay down roots here, and sometimes they don’t wait for the acceptance letter to do so. Confalone recently showed a condo in East Cambridge to a Chinese woman, who then turned to her 11-year-old son and told him, “I’m buying this because you’re going to MIT.” Confalone adds, “They are so dead-set that their kid is going to one of these schools.”
In some cases, they buy before the kids are even born. Last fall, Richard Baumert, of Millennium Partners, was showing the just-completed luxury condominium building Millennium Place to a Chinese tea importer in his early forties, when the man shared that he’s long dreamed of moving his family to Boston. Baumert asked the man if he’d brought his kids with him, and the tea merchant said, “Oh no, no. I don’t have any children yet.” Upon further questioning, it became clear that the man didn’t even have a wife, or so much as a girlfriend—just a pile of cash and a lot of hopes for the future. (Baumert is happy to report that his client now has both a luxury condo at Millennium Place and a girlfriend.)
Increasingly, it’s not just the region’s universities that bring Chinese nationals to the area; the excellent public schools are also a draw. That’s what attracted Li, a pretty 35-year-old who looks much younger on account of her braces, from the southern city of Guangzhou—population 8.5 million—to an 1,800-square-foot Colonial a half-mile north of the Lexington Golf Club. Back home, the ultra-competitive education system was already fraying her eight-year-old’s nerves. “My son goes to school in China, he’s not very happy,” Li explains, as the child in question flits around their half-unpacked living room, a new royal-blue Lexus crossover parked in the driveway. “Here, every day, he’s very happy.”