Capital Inflows and Property Prices: Ethnicity, Education, and Spillovers

Yuk Ying Chang and Sudipto Dasgupta

China has experienced significant capital flight over the last two decades. Despite anecdotal evidence that some of this capital has been invested in foreign residential markets, not much is known from academic research about its destination and impact. We examine the effects of capital inflows from China on residential property prices and the real economy in the U.S. and global metropolitan areas. We show that inflows had significant effects on residential property markets and employment in regions that (a) have strong ethnic ties to China and (b) are destinations of Chinese students. We document spillover effects to other regions.