Chinese buyers – what do they really want?
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?
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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.