But that isn't true. Real estate isn't that safe in the first place, and they are also throwing money away by not renting it. They'd do better in buying a commercial property and renting it out.

Vancouver is suffering from this with wealthy mainland chinese, leading to the second worst affordability ratio (housing price : average annual income) in the world. You see similar behaviors in condos in china itself.

It has very bad effects for the people who already live there, especially for the young and newly established. Younger people with better opportunities go away once they do the math and the cities eventually suffer brain drain. I would suggest a high long term unoccupied residence tax to avoid the problems of unused property in cities. Hopefully it will prod these people just a little bit to hire property management companies to avoid the tax and rent the places out.