With the pace of Chinese investment gaining speed, property sellers should familiarise themselves with what Chinese buyers look for.
Recent figures from the Foreign Investment Review Board show Chinese interest in Australian property continues to grow. The board's annual report revealed that spending on Australian commercial and residential real estate doubled in 2015, after having doubled in 2014. Chinese investment in Australian residential and commercial property reached rose from $12.4bn to $24.3bn over the 12 months to 30 June 2014, having risen from $5.9bn in 2013.
For property sellers, this represents a distinct opportunity. A new report from Juwai.com shows Australia is second in popularity only to the United States in attracting Chinese real estate buyers. The report said Australia's low-risk business environment, educational opportunities, lifestyle and large Chinese population make it an attractive destination for buyers from China.
- Gold Coast
- Sunshine Coast
Chinese real estate site Juwai.com said Chinese buyers are looking overseas for new opportunities, and see investment in overseas real estate as a chance to further their financial position, open up possibilities for entrepreneurship and secure their children's future. While some choose to buy an investment property with an eye toward generating rental income or capital gains, others are looking to migrate to Australia as owner-occupiers.
"Real estate investments are the most preferred investments for Chinese, and to find one with good returns overseas is a no-brainer. After all, such legacy homes can be passed down for generations to come, as well as furthers the opportunity for their children to go abroad for education and explore new business ventures – all in one fell swoop," the site said.
While investors from China are also putting money into sectors such as healthcare and renewable energy, 45% of funds from Chinese investors are allocated to Australian real estate.
What are Chinese buyers looking for?
With this in mind, savvy property vendors should make sure they're catering to this growing market. There are a few important things Chinese investors often look for when choosing a property, and sellers can help their chances if they tick these boxes.
According to real estate network LJ Hooker, Chinese buyers tend to favour brick homes over those with a brick veneer or homes made of weatherboard or fibro. This is in stark contrast to Chinese buyers shopping in New Zealand, where Bayleys real estate agent James Chan told The New Zealand Herald buyers tend to stay away from brick houses, which are seen to be less earthquake-proof.
Juwai.com says educational opportunities are a major factor in where Chinese investors choose to buy. Locations in close proximity to top-notch high schools and universities are hot-spots for Chinese buyers, the site says. Phillip Webb Real Estate senior sales consultant and auctioneer Michael Hill agrees, telling Realestate.com.au that Chinese buyers will sometimes pay a 10-15% premium for properties near good schools.
While this might not be a concern to all Chinese buyers, numerology is still an important part of Chinese culture. Numbers such as six, eight and nine are considered lucky, while the number four is considered unlucky. Juwai.com pointed out that, while this may not seem to be an important factor, a property in Sydney sold for $8.5 million to a Chinese buyer after changing its street number from 64 to 66.
It's important to consider the fact that Chinese investors are making significant purchases in a city and country that may be unfamiliar to them. Sellers who take this into account and make the process as smooth and accessible as possible will come out on top. This could mean offering marketing materials for your home in Mandarin. It could also mean working with your real estate agent to offer the services of an interpreter. Above all, show respect and make sure to thoroughly and patiently answer any questions prospective buyers might have.
Playing by the rules?
The Foreign Investment Review Board (FIRB) has very specific rules surrounding the types of property that can be sold to foreign investors. It's important to be familiar with the laws governing foreign investment when you're courting potential buyers.
Much like numerology, this might not be a significant factor for all Chinese investors, but it's still important to keep in mind. Feng shui is the philosophical system that seeks to harmonise the surrounding environment. Some Chinese buyers will look to abide by feng shui rules when purchasing. According to Juwai.com, it's considered good feng shui for a property to sit on a parcel of land that's slightly raised at the back. Meanwhile, properties with the front and back doors aligned or those with a view of a streetlight or lamppost are considered bad feng shui.
Research from Juwai.com shows that 64% of wealthy Chinese citizens are already invested in properties overseas, while 85% say they want to educate their children overseas. Overseas property investment is increasingly becoming a sign of affluence and upward mobility in Chinese society. Likewise, owning property in auspicious locations is considered a sign of success.
"With that in mind, make reference to local landmarks, history or geography in your pitch, as this could help sway their buying decisions," Juwai.com said.
Value and return
Like any investor, Chinese property buyers are looking for good value and a return on their investment. If they're purchasing as an owner-occupier, it could be helpful to point out the area's trends for capital growth. If they're buying the property to generate rental income, make sure you know how your area stacks up to others for rental yields.