New strategy to lure investors
Vancouver real estate sales and marketing company TheKey.com is taking a leaf out of Donald Trump's book in its latest initiative to market Canadian property in Hong Kong and the mainland. The idea is to launch projects simultaneously on two continents, giving buyers on both sides of the Pacific first crack at the prime opportunities.
It might not sound like such a big deal, but surprisingly - according to Cam Good, president of TheKey.com - it hasn't been done in Asia before. He explains that the concept puts an end to local buyers cherry-picking a developer's offering, so that only what's left is offered to overseas investors.
Good has been brewing the idea since November 2006, after the Trump International Hotel & Tower Waikiki Beach Walk, launched simultaneously in two countries, and set a record for the amount of residential property sold in one development on a single day.
Buyers in Hawaii and Tokyo snapped up more than US$700 million worth of the 38-storey residential tower in what was reported as the biggest one-day sale in real estate history.
The recent stream of Hong Kong and mainland investment in Canada convinced Good to act. He chose one building for the pilot - developer Onni's prestigious Central condominium project in Vancouver - and set a date in June for invitation-only launch events in both countries.
TheKey.com was so convinced it would work in Hong Kong the company opened an office here. 'We have a virtual presentation centre that allows buyers access to the same homes as locals in Vancouver. This gives us the capability to update inventory in real time and makes the whole thing work easily,' Good says.
The Hong Kong presentation centre features maps of neighbourhoods, floor plans, availability sheets - 'everything but the building model', he says. 'I became obsessed with this idea when I was selling in a presentation centre on a construction site, and I started thinking: 'I don't need to be here.' I realised I could be anywhere in the world doing this.'
Hong Kong was chosen as the trial for Asia because of its sophisticated investor base, and the predilection of wealthy mainlanders to use the city as their international gateway, Good explains.
'The second reason is that it's easier for us to do business there, via our company, TheKey.com Hong Kong.'
Chinese investment in offshore real estate is soaring, with Canada a major recipient. China Daily reported that in the past six months, mainlanders spent 1.3 billion yuan (HK$1.56 billion) through Colliers International's property department, mostly in Canada, Britain and Australia.
'We are expecting a clear increase in the extent of mainland buyers' purchases of overseas properties this year because of the government's rigorous restraint on the number of homes a family can buy in key cities,' Alan Liu, managing director of Colliers International, was quoted as saying.
It's been estimated that up to 80 per cent of all real estate sold in the city of Vancouver is to mainland/Hong Kong buyers.
Rick Wong, ReMax realtor for Vancouver and Burnaby, confirms that 'the rumours are true'.
'For the past year, real estate sales in the Greater Vancouver area have been largely driven by investors from overseas, specifically China,' Wong says on his blog, citing a 153-unit condominium development in New Westminster that sold out 'in 21/2 hours' in May. 'For every unit sold, there was at least one back-up offer made. Of the 153 units sold, about 40 per cent went to Chinese buyers,' he says.
That's okay if you're a Chinese living in Vancouver, and could join the 400 local buyers who queued up on the project's launch day. But according to Good, by the time a property is marketed in Hong Kong or China, all we're left with is 'the dregs'. Really?
'Absolutely,' he says. 'Selling the dregs of the Canadian real estate market overseas has been the norm for many years. It represents a last-ditch effort to get people to buy product that wasn't selling locally.'
The locals' reaction is his benchmark. 'If a couple of hundred sales are made [to locals] in the first week, then common sense prevails.'
While recommending that every buyer should do their due diligence, Good says many investors in Hong Kong and the mainland are already familiar with Vancouver locations. 'I could be in Beijing, and someone will ask me if I have anything in Coquitlam [a suburb in Vancouver]. You couldn't ask such specific questions about the market unless you'd been there.'
He believes this real-time approach is the marketing model of the future. 'We sold five units out of 300 in Central in the first few days and we expect to sell many more in the coming weeks.'
TheKey.com works with some of Canada's biggest developers and Good says they're all watching how this project with Onni works out.
'Onni has taken a big leap of faith in launching their newest building, Central, in Hong Kong. And that makes them very progressive - and brave. Now, with our success in Hong Kong, I have other developers calling me every day. Many are flying over there and trying to figure out what we're doing.'
Good adds that he could put 50 projects into his Chinese network with a month, 'but I don't want to - I only want the best projects and I want to sell a lot within each project rather than a few at each'.