Today we will talk about risk from a Chinese investors perspective and what you, as a professional real estate agent selling to Chinese should know. Have a look at the headlines in China….
Forbes: China Property Collapse Has Begun -Gordon G. Chang
Forbes: “Without question, everyone thinks there is a bubble.”
International Business Times: China Housing Market Bubble Start to Pop, Jerin Mathew
Wall Street Journal: This Chinese City’s Property Market Is Even Chillier Than Its -22-Degree Weather, Chinese port city of Yingkou
It’s getting increasingly obvious that Chinese real estate investors are jittery about real estate prices in China and considering, or actively buying, overseas. Instead of joining the debating society on if Chinese real estate is a bubble or not, I recommend looking from the Chinese perspective. Land has risen relentlessly for over 20 years. It was widely reported, though hard statistics are murky, that the combined value of Chinese real estate surpassed the US in 2012: Suffice to say that Chinese real estate is serious business.
Pop quiz: What would you do if you were wealthy through real estate in China, increasingly nervous that prices were too high and were not even the legal owner of your house in China? (investors in China cannot own land. The government owns all land and investors get a 70 year lease) And what if you could buy overseas, legally own land and get your kids into a great school at the same time? And more and more entire cities are empty in China: Ghost cities.
Answer: uh….buy abroad? Yes and that’s what’s happening. Everywhere from Singapore to Melbourne to Sydney to Dubai to London to Birmingham to Cyprus to Spain to Portugal to New York to Los Angeles to San Francisco to Florida are seeing a huge influx of Chinese buyers. Chinese investment started in these gateway cities and has spread far and wide.
So Chinese families, increasingly nervous about their Chinese holdings, with unique needs, thinking and culture have great motivation and ability to invest and buy real estate outside China. And you are an agent wanting to sell real estate, get listings and build your business. How can you attract them and help them invest securely? Think from their perspective. What are they really looking for?
One major motivation is security. Security of ownership. Security politically. (remember that as recently as the 1940’s, the Chinese government took ownership of all property in China. Literally stole the land, in most cases with little no compensation, from everyone in China. Would this recent memory put you at ease? Landlords were publicly humiliated, killed and their land was stolen by the non-landowning classes) So land ownership is a major issue, risk is a concern (what if it happens again? Is lurking in many minds) Will regurgitating this dark period in Chinese history win you clients? Or course not. Best not to even mention it. But good to know what owning assets in China is not as secure as many places. How can you provide value to Chinese families with interest in investing abroad?
Answer: Show the safety and security of investing in your area rather than talking about the risk in China. Believe me, the clients will put it together themselves. They are the ones at risk.
Make marketing materials with topics to address Chinese buyers fears and needs: Simply understanding the buyers needs will put you head and shoulders above your competition but if you incorporate your understanding into materials you can disseminate by email, on the web and physically, you win twice.
Some good topics to talk about:
- Occupancy: remember the empty apartments in China?
- Historical pricing data to show the relative value in your area Renting is the new black.
- Show rising rent statistics
- Security of asset ownership-legal protection
- Ability to pass land on to heirs in future- inheritance law Return on investment:
- Potential ROI: Do the numbers.
Write content that explains historical data (i.e. show that historically real estate prices are low. this is easy to do in most areas because it’s simply true. explain safety. safety of assets, legal protection, ownership of land. Talk about the legal protection owners have in your area. Talk about the potential returns as land prices are historically low. Talk about trends. Talk about rising rents in your area. Talk about things that put the client at ease. Give specific examples of properties in your area. Don’t be general. Give hard stats.
Talk about your area. Occupancy, productivity, ROI, rising prices (from very very low levels) Talk about how renting is the new black. Many young don’t want to buy cars or houses and this is driving rents sky high. Look at London and San Francisco ! Workers are being driven out because rents are so high. But prices are not yet. Talk about the incredible timing now. These are all attractive to Chinese buyers, Chinese investors and Chinese families wanting to send their children to study abroad.
More than anything Chinese investors are looking for security. Appreciation is nice. ROI is nice, protection is key. They are already pretty rich. Of course they want to be richer but values change. Safe food, protection, education become more important. Give the people what they want. That is all for today regarding Chinese investors and their current mindsets.
Now you are thinking from a Chinese perspective and have content that Chinese actually want to read. Not some MLS data that means nothing to someone new to your country. You are already head and shoulders above the competition. Later we will talk about how to be visible in China and cheaply disseminate your information in China.
To get the inside scoop on finding and selling to Chinese buyers go to ChinaCashBuyers.com
By Vivian Zhao
