Wealth Blog

International estate agents chase riches in China

PUBLISHED : Tuesday, 29 October, 2013, 9:26am
UPDATED : Tuesday, 29 October, 2013, 10:17am

The world’s real estate agents and developers are not waiting for Chinese customers to come knocking; they are heading to China to search them out. Several converged on the Shanghai Exhibition Centre for the Top Marques super-luxury expo last week.

More than 14,000 high net worth Chinese were there to check out super-cars, luxury yachts, private jets, expensive watches and jewellery, custom motorcycles and fine wine. They were also being enticed with international property at this expo.

The reality gap

You’ve got to hand it to these guys. Once the Chinese get rich, they spend it. It seems mainland high-net-worth individuals become internationally sophisticated very fast. They shop for an overseas second home as readily as they pick up a Ferrari. Or maybe they really do see it as an investment, not just a status symbol.

Western real estate agents have suddenly woken up to the potential of all this loot. They are actively working on luring Chinese investment money to their listings, says Dave Platter of China property website Juwai.com.

Some of the properties on offer were indeed mouth watering, but be honest, what is a mainland Chinese family going to do on a wet Sunday afternoon in a mini stately home in Warwickshire in the British midlands? Nip out for yum cha and invite a few friends over for mahjong? Hardly. If they don’t like the national pastime: hunting, shooting and fishing in Sainsbury’s supermarket on Saturday morning, followed by football, they are going to be pretty bored. Honiley Hall would cost them £10.5 million (HK$132 million) and it might be “so gorgeous it belongs in a Jane Austen book,” but most of those houses were bleak, dark and cold, miserable in English winters. Many of us live in Asia to thaw out and escape from these self-same draughty dwellings, so there’s a certain irony in flogging them to the Chinese.  

The Juwai site claims that 85 per cent of high net worth individuals in China educate their children abroad and this seems to go hand in hand with picking an overseas property. Firstly for the student scion to live in and then as retirement home, presumably. The sensible ones head for warm climes like Florida or Australia, not England. For US$10.7 million (HK$83 million) the Shanghai property tourists could buy a two story penthouse at Venetian Way, on the prestigious Venetian islands of South Beach in Miami Beach. There, at least they won’t freeze to death and might find some decent restaurants.

Then they could choose from houses and penthouses on the beach in Australia and a $6.5 million (HK$50.4 million) house in Byron Bay. Or they could have a classical $15 million (HK$116 million) waterfront mansion in Queensland.

But most want America and Florida is China’s second most popular US State. California tops the list, followed by Florida, New York, Texas and Michigan, based on sales data from January to August this year.

Three quarters pay cash

Chinese buyers will spend US$8.2 billion (HK$63.5 billion) on US property in 2013, their top property destination, according to the National Association of Realtors, generating a whopping US$492 million (HK$3.8 billion) in commission for American real estate agents. And approximately 70 per cent of Chinese pay cash.

This year, the Miami Association of Realtors is so hell bent on chasing Chinese investors’ commissions they are travelling to China for property shows in Chengdu, Guangzhou, Shanghai, Beijing and Hong Kong.