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November 16, 2016

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Chinese eying overseas homes set to grow

AFTER staying in China for a few years, Catherine Chan, a Hong Kong-born American who now leads the China operation for the international property department at Colliers International, bought herself an apartment in Shanghai. That was back in 2005. Just recently, she made a decision to sell that apartment, making a perfect exit with hefty gains from her very first overseas property investment.

“I believe it is in our Chinese blood that we all love to invest in properties,” Chan, a real estate industry veteran with over 15 years’ experience , told Shanghai Daily during a recent interview. “I still remembered when I first arrived in China’s mainland, there was actually no interest or demand from local people to make overseas property investment but now this trend has been up and up.”

Joining Colliers International in March 2015 to run its China international property business, a division set up in 2010 with a team of three, Chan is now leading more than 20 people across five offices around the country — Beijing, Shanghai, Guangzhou, Chengdu and Shenzhen.

“We have been expanding definitely as more and more people are thinking about bringing a proportion of their money out of the country particularly since the devaluation of the Chinese currency,” said Chan, who has been in the city for about 15 years with majority of her time spent in sales and marketing on the developers’ side. “In Asia, Colliers has always been the strongest in terms of international property investment and we are the No. 1 agency in Hong Kong and Singapore.”

The UK’s Brexit vote in late June to withdraw from the European Union has been presenting great opportunities for Chinese mainland buyers to invest in UK where Colliers International has more than 30 residential projects to offer, outnumbering any other country, including New Zealand, Australia, US and Canada, according to Chan, a veteran investor herself whose investment portfolio covers the US, Canada, UK, Thailand, Morroco and China.

A stable rental yield, London’s unwavering status as a global financial center despite its pending withdrawal from the EU, a shortage of homes in the market that is not likely to improve anytime soon as well as a record low currency brought by the Brexit vote should help the UK maintain its position as a hot destination for international property investment.

“In London right now, a lot of our projects can offer rental yield of between 4 and 5 percent, compared with the average 2 percent yield in Shanghai,” she said. “A lot of foreign buyers are flocking to London as the British pound dropped to its 31-year low, meaning they are buying at a virtually 20 to 30 percent discount.”

While Brexit did bring uncertainties that might slow down growth next year, the UK is still seen as a safe haven for the wealthy to hedge their investment because London is set to continue to remain the world’s financial center while the pound is estimated to rebound early next year. Another factor supporting the view is that the whole of UK, particularly London, faces an inadequate supply-demand situation in housing.

One immediate impact from the depreciation of the UK currency as Colliers International has perceived is that an increasing number of home buyers are purchasing bigger-ticket items, from an average price point of 500,000 pounds (US$620,740) before the Brexit vote to the 2-million-pound bracket due to significant savings.

To Chinese mainlanders in particular, the rapidly soaring home prices in many Chinese cities are probably making overseas property investment more affordable than ever before.

Take the Royal Arsenal Riverside project as an example. Occupying a prime location along the River Thames in southeast London’s Woolwich area with the forthcoming on-site Crossrail station, the project developed by Berkeley, one of UK’s largest and most renowned home builders, is launching its third phase with starting prices of 482,500 pounds for a one-bedroom apartment.

“There used to be a misconception that you have to be very rich to make overseas property investment,” Chan said. “Actually we are seeing more ordinary white-collar employees in their 30s or 40s, most of them families with young children, secure their first overseas property investment with us and there is also an emerging trend that we are seeing more single female clients in late 20s with monthly income of between 20,000 yuan and 25,000 yuan.”

With high expectations on the UK market, Chan’s department is probably expecting a 20 percent growth next year in deal numbers and even more significant increase in terms of transaction value.

In its latest effort to facilitate business growth, Colliers International formed a strategic partnership last month with Austar Group, a leading overseas study and immigration services provider in Shanghai. The two parties will share resources and expertise and seek cooperation in areas including marketing and sales of overseas real estate projects, overseas investment strategy consulting as well as asset transaction management.

“It’s been very good synergy as they boast huge data base of local buyers while we enjoy very good relationship with overseas developers,” Chan said. “Hopefully, we will be able to further improve our service quality in overseas real estate investment through our alliance with Bang Overseas, a high-end service platform established by Austar last year with key focuses on overseas property purchase, medical service, immigration and investment.”


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