International Property

Online property marketplace Investorist looks to Chinese buyers for new growth

The company, whose platform links developers and agents worldwide, sees Chinese buying driven by desire of the wealthy for an overseas home for educational and lifestyle reasons

PUBLISHED : Wednesday, 18 October, 2017, 7:32am
UPDATED : Wednesday, 18 October, 2017, 7:32am

Online property marketplace Investorist is looking to expand in China, where it anticipates strong growth as interest in buying overseas homes takes off among the country’s wealthy.

Founder Jon Ellis said education, diversification of assets and migration are the key driving forces for high-net-worth Chinese to own properties abroad, and he aims to provide accurate and transparent information about properties around the globe and to facilitate cross-border home purchases.

“We want to change a large industry,” said Ellis, a 37-year-old Australian who is also chief executive of Investorist. “The overall trend is that overseas property buying (by Chinese people) is increasing.”

Investorist has 5,500 clients in 25 countries, with its China businesses accounting for one-tenth of the global total. About 50,000 properties worth more than US$45 billion are listed on Investorist’s platform.

The platform connects residential developers and property agencies, but does not deal with buyers directly. It charges developers advertising fees for listing their developments on the website, one of its main revenue sources, and also sells software to clients. It does not charge a fee based on transactions conducted via its platform.

It has about 800 Chinese clients, most of which are real estate brokers, while its developer clients include Greenland Holdings, the mainland’s fourth-largest developer, and Dahua Group, both of which have projects in Australia.

Its foray into China coincides with a surge in interest in overseas property among Chinese investors and with the country’s e-commerce boom that is redrawing the commercial landscape in the world’s second-largest economy. The company said in its 2017 report that overall sentiment from Chinese property agents about overseas property transactions was “very positive” for the next 12 months.

Chinese developers are also increasingly looking overseas for new opportunities, spurred on by concerns that surging property prices at home may lead to a price bubble that could collapse and by the need for stable returns that overseas markets provide as well as the burgeoning demand from many Chinese for a home away from home, especially those with global ambitions for their children’s education.

Ellis added that such buying decisions driven by education and lifestyle, rather than by speculation on currency exchange rates, would ensure the industry’s long-term and sustainable growth.

He said that new product launches in the next 12 months could help the firm grow. In China, it plans to offer VIP services to clients, helping them to complete online contract signing and conduct contract management.

“It helps us get deeper into transactions,” Ellis said.

Chinese overseas property purchases crash through US$100b barrier in 2016

Ellis took up the property business when he developed marketing strategies for developments by Australian developer Mirvac. He founded Extension, a property marketing agency, at the age of 26 and was among the first property marketers to use Facebook as an advertising medium.

There are headwinds however. In August the Chinese government announced a series of restrictions on overseas investment in a number of areas, including property, over concerns about the amount of money leaving the country, a depreciating yuan currency and a perceived threat to financial stability.

The new rules prompted some developers to rethink their overseas plans, with Dalian Wanda Group backing away from a £470 million (US$606 million) acquisition of the Nine Elms Square site in London.

Chinese buyers retreat from global property market as Beijing restricts deals

Morgan Stanley said in a report in August that outbound property investment by mainland Chinese firms was already down 82 per cent from a year ago, and is expected to plummet 84 per cent to US$1.7 billion for the whole 2017, and down another 15 per cent to US$1.4 billion next year.

Due to the lack of an efficient overall reporting mechanism on Chinese investors’ purchase of overseas properties, it is unknown how much they have exactly spent on aggregate to own flats and houses outside the mainland.

The Beijing News estimated that Chinese homebuyers splashed out more than US$30 billion on overseas properties last year, while a report released in July by Juwai.com, a major property website, said Chinese investors spent a record US$101.4 billion on international property in 2016.

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