Chi­nese buy­ers – what do they re­ally want?

Financial Mirror (Cyprus) - - FRONT PAGE -

A most in­ter­est­ing re­port was pub­lished re­cently re­gard­ing the Chi­nese buy­ers wish­ing to in­vest in real es­tate abroad. A sur­vey was con­ducted based on 150 Chi­nese es­tate agents who in to­tal can claim 11,000 for­eign sales a year. The con­clu­sions in the re­port pre­pared by in­vestorist.com is use­ful to study.

The Yuan has suf­fered against the other ma­jor cur­ren­cies caus­ing the Chi­nese Govern­ment to be more strict in the out­flow of money. This has had no ma­jor ob­sta­cle on in­vestors who con­tinue to target for­eign prop­er­ties.

The sur­vey showed that the ex­pected strength­en­ing of the for­eign de­mand is due to: - the fur­ther de­val­u­a­tion of the Yuan (34%), - safer places of in­vest­ment (46%), - mi­gra­tion (17%), - weak­en­ing of the do­mes­tic econ­omy (3%). Mi­nor/in­creas­ing re­stric­tions by other coun­tries for Chi­nese buy­ers will not af­fect the de­mand by Chi­nese abroad.

In­vest­ment yields are not as im­por­tant as se­cu­rity and long-term cap­i­tal ap­pre­ci­a­tion. For Chi­nese, a yield of 5% is sat­is­fac­tory for the in­vest­ment mar­ket. The main rea­sons for Chi­nese buy­ing abroad are: - in­vest­ment (41.8%), - ed­u­ca­tion (26.7%), - mi­gra­tion (19.3%), - lifestyle (12.2%). Coun­tries of pref­er­ence are: - Aus­tralia - U.S.A. - U.K. - Spain/Por­tu­gal - Canada - Malaysia/Singapore - Ja­pan - Hong Kong A ma­jor role in the mar­ket’s pref­er­ence is to­wards coun­tries with sta­ble gov­ern­ments, ro­bust economies, top­class ed­u­ca­tion and per­ma­nent res­i­dency pro­grammes.

Pre­ferred type of prop­erty is apart­ments and for own oc­cu­pa­tion. This is the re­sult of the fol­low­ing rea­sons for buy­ing. 58% de­mand is for apart­ments, 24% for town houses (maisonettes), 16% for houses, 2% house and real es­tate. In terms of size, the top mar­ket de­mand is 50-100 sq.mts., in­creas­ing to 100-200 sq.mts. and at the end over 200 sq.mts. (res­i­den­tial prop­er­ties). For the more se­ri­ous in­vestors seek­ing in­come: 52% di­rect their in­ter­est to­ward sea­side apart­ments, 31% to ho­tels/re­sorts, 11% in re­tail prop­er­ties, 6% for apart­ments/re­tire­ment com­plexes. With the fol­low­ing bud­gets: US $500,000-700,000 (54%), $700,000-1,000,000 (33%), More than $1 mln (4%), Less than $500 mln (9%). The Chi­nese are look­ing for: - lo­ca­tion 39%, - price 39%, - prop­erty tax 12%, - loan terms 10%. What are the Chi­nese es­tate agents look­ing for: - com­mis­sion (5% in the case of Cyprus), - cus­tomer sat­is­fac­tion. The agents have their pro­mote: - price, - com­mis­sion rate, - value for money, - fa­cil­i­ties avail­able, - prop­erty type. De­mand is mainly com­ing from: - Bei­jing, - Shang­hai, - Guangzhou, - Shen­zhen. Mar­ket­ing to China is done: - on line 45%, - per­sonal re­la­tion­ship/ref­er­ences off line 55%. So, how does Cyprus com­pare to the above re­quire­ments of Chi­nese buy­ers?

pri­or­ity

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Visa/pass­ports – Our best strong point by com­par­i­son to other coun­tries;

Speed in re­ply to ap­pli­cants ( in Canada it is 1 1/2 years) here it is 3-8 months; Ed­u­ca­tion – not a strong point but we are im­prov­ing; Lifestyle/af­ford­abil­ity – by com­par­i­son to oth­ers we are “okay”; Es­tab­lished com­mu­nity – we are get­ting there; Past his­tory – ter­ri­ble rep­u­ta­tion but try­ing to over­come our past mis­takes; Sta­ble po­lit­i­cal sit­u­a­tion – we rank high; The re­port refers to an over­all com­mis­sion in other coun­tries of 1%-5%. In Cyprus, com­mis­sion de­mands range from 15% to 20%.

Cyprus is not part of Schen­gen and it is at a dis­ad­van­tage by com­par­i­son to Greece, Spain, Por­tu­gal and oth­ers. An is­sue that needs to be seen ur­gently.

Di­rect flights from China are non ex­is­tent, but we are hop­ing for a start in the im­me­di­ate fu­ture (2017).

Tourism ar­rivals from China, the ba­sis of real es­tate pur­chases, is very low with next to noth­ing in Chi­nese hol­i­day­mak­ers.

As re­gards prices, if we ig­nore the crooks among our agents/de­vel­op­ers, we are not too bad in com­par­i­son.

Fi­nally, qual­ity of life is a sig­nif­i­cant de­mand, where we rank quite high, as is the ac­cept­abil­ity of the Chi­nese in the Cypriot way of life.

An in­ter­est­ing re­port all round where we need to com­pare the above with the pre­vail­ing sit­u­a­tion in Cyprus.

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