But wouldn't a bank vault in America be an even better choice than a house in SF? Why aren't these wealthy Chinese people making more liquid investments once they've moved their money abroad?
http://www.forbes.com/sites/erincarlyle/2013/12/20/ken-deleo...
http://www.forbes.com/sites/realspin/2013/10/28/in-china-the...
Another angle, the house may be owned in another person's name, then the illiquidity is an advantage. The other person who you trust, may still be tempted to use tiny bits of large chunk of cash if its sitting in a bank account. Meanwhile selling a house is a pretty big deal.
The reason for not keeping the house in your name are possibly related to avoid the local government's oversight into your assets, etc.
1. Negative real interest rates.
2. It's easier to protect your identity/privacy. Notably, real estate agents and title insurers are exempt from having to file Suspicious Activity Reports with the Treasury Department.
When you buy a home the information on the title is public knowledge. Sure, you could create a holding corporation, but the officers of a company are also public information.
Also, real estate agents and title insurers don't handle cash at all. If you buy a house from me in cash, I'll kindly ask you to deposit it and send me a check. When the buyer goes to a bank with cash or other suspicious sources of money, the banks will fill out a SAR.