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Overseas properties open windows
By Cao Qian |
November 8, 2010, Monday
|
Print Edition
Print Edition
CHINESE mainlanders are emerging as important clients for overseas property sellers as their growing enthusiasm for houses and their rising purchasing power offer an antidote to depressed real estate markets overseas.
The Chinese have reasons beyond simple investment. For many, buying property overseas opens opportunities for immigration, holidays, children's education and dreams of a better life.
"For many overseas real estate developers, China has definitely become a market of great significance as demand climbs rapidly with ever-increasing wealth among Chinese people," said Gu Shiqi, general manager of Shanghai YUBO International Exhibition Co, organizer of the annual China International Luxury Property Show.
"And for rich Chinese, properties always remain one of their favorite ways to spend money," Gu added.
Now in its fifth year, the luxury property show, held in Shanghai in September, featured residential projects from 18 overseas cities, including London, Melbourne, Tokyo, Honolulu and Singapore. The event attracted thousands of visitors during its three-day run, according to the organizer.
Four residential projects from Japan, which in July eased its visa application process for Chinese mainlanders, were included in the exhibition for the first time this year.
According to a Hurun wealth report released in April, there are currently 875,000 Chinese mainlanders with personal wealth of more than 10 million yuan (US$1.5 million), a 6.1 percent increase from a year earlier. The number with fortunes of more than 100 million yuan rose 7.8 percent to 55,000.
"It has become a popular option among affluent Chinese to buy properties abroad when they seek safer and better-yielding assets," said Stephanie Zhang, project director with Shanghai Kuntai Exhibition Ltd, which has organized a couple of luxury property shows in Shanghai since 2009.
"In addition, more Chinese people seem to think about owning an overseas property, such as a place in Japan, purely for holiday use," she said. "It's one of the favorite exotic leisure destinations for wealthy Chinese."
There are no figures available on just how many Chinese have bought property overseas, or are even looking.
Ticket to better life
Many Chinese living in crowded cities with constant pollution and increasing traffic gridlock are eyeing property abroad as a ticket to a better lifestyle.
"With ever-rising incomes, more Chinese people are starting to focus on their quality of life," said Bunny Wang, director of International Properties at Colliers International, a major real estate services provider.
"It's natural for them to look at purchasing houses abroad, often in less congested areas, to cater for their holiday and even retirement plans," she added.
Property can be a good investment too. "The return ratio on property is also quite good overseas, at about 5 percent to 6 percent a year," Wang noted.
Contrast that with Shanghai, for instance, where industry analysts put the annual yield from rental income at less than 3 percent.
Colliers was perhaps one of the earliest international property consultants to seize on the emerging demand for foreign property as part of its China growth strategy.
The company, which established its International Property division in China in September, is offering marketing and sales services to overseas developers. The company said last week that it plans to expand its international property business to about 30 cities in China from the current five within the next two years.
"We've noticed huge opportunities in the China market as local investors become better informed and educated about overseas property investment," said Alan Liu, managing director for Colliers' North Asia operations.
"That's due to a number of factors, such as increased global business flows and more frequent overseas leisure travel by Chinese," he added. At the same time, he noted, the Chinese government's efforts to rein in investment in domestic property has helped accelerate interest in real estate abroad.
Since mid-April, China has implemented a series of tightening policies in a major effort to crack down on property speculation and to deflate what it fears is a dangerous bubble in the real estate market.
Down payments for mortgages on second homes have been raised to 50 percent from the previous 40 percent, and interest rates for those loans have been set 10 percent above the standard rates.
Mortgages for third and beyond homes have been banned.
Some cities, including Shanghai and Beijing, have also capped the number of homes a family can purchase even without bank loans. In Shanghai, for example, each household, both local and those from outside the city, is restricted to only one new home purchase for an unspecified period of time.
Even first-time home buyers have been affected by the tightening policies. Major commercial banks across the country are now limited to offering a 15 percent discount in mortgage rates for first-home buyers, compared with a maximum 30 percent discount previously.
"Compared with the increasingly restrictive housing market in China, overseas properties, where policies are more flexible, start to look even more appealing to Chinese buyers," Liu said.
The Chinese have reasons beyond simple investment. For many, buying property overseas opens opportunities for immigration, holidays, children's education and dreams of a better life.
"For many overseas real estate developers, China has definitely become a market of great significance as demand climbs rapidly with ever-increasing wealth among Chinese people," said Gu Shiqi, general manager of Shanghai YUBO International Exhibition Co, organizer of the annual China International Luxury Property Show.
"And for rich Chinese, properties always remain one of their favorite ways to spend money," Gu added.
Now in its fifth year, the luxury property show, held in Shanghai in September, featured residential projects from 18 overseas cities, including London, Melbourne, Tokyo, Honolulu and Singapore. The event attracted thousands of visitors during its three-day run, according to the organizer.
Four residential projects from Japan, which in July eased its visa application process for Chinese mainlanders, were included in the exhibition for the first time this year.
According to a Hurun wealth report released in April, there are currently 875,000 Chinese mainlanders with personal wealth of more than 10 million yuan (US$1.5 million), a 6.1 percent increase from a year earlier. The number with fortunes of more than 100 million yuan rose 7.8 percent to 55,000.
"It has become a popular option among affluent Chinese to buy properties abroad when they seek safer and better-yielding assets," said Stephanie Zhang, project director with Shanghai Kuntai Exhibition Ltd, which has organized a couple of luxury property shows in Shanghai since 2009.
"In addition, more Chinese people seem to think about owning an overseas property, such as a place in Japan, purely for holiday use," she said. "It's one of the favorite exotic leisure destinations for wealthy Chinese."
There are no figures available on just how many Chinese have bought property overseas, or are even looking.
Ticket to better life
Many Chinese living in crowded cities with constant pollution and increasing traffic gridlock are eyeing property abroad as a ticket to a better lifestyle.
"With ever-rising incomes, more Chinese people are starting to focus on their quality of life," said Bunny Wang, director of International Properties at Colliers International, a major real estate services provider.
"It's natural for them to look at purchasing houses abroad, often in less congested areas, to cater for their holiday and even retirement plans," she added.
Property can be a good investment too. "The return ratio on property is also quite good overseas, at about 5 percent to 6 percent a year," Wang noted.
Contrast that with Shanghai, for instance, where industry analysts put the annual yield from rental income at less than 3 percent.
Colliers was perhaps one of the earliest international property consultants to seize on the emerging demand for foreign property as part of its China growth strategy.
The company, which established its International Property division in China in September, is offering marketing and sales services to overseas developers. The company said last week that it plans to expand its international property business to about 30 cities in China from the current five within the next two years.
"We've noticed huge opportunities in the China market as local investors become better informed and educated about overseas property investment," said Alan Liu, managing director for Colliers' North Asia operations.
"That's due to a number of factors, such as increased global business flows and more frequent overseas leisure travel by Chinese," he added. At the same time, he noted, the Chinese government's efforts to rein in investment in domestic property has helped accelerate interest in real estate abroad.
Since mid-April, China has implemented a series of tightening policies in a major effort to crack down on property speculation and to deflate what it fears is a dangerous bubble in the real estate market.
Down payments for mortgages on second homes have been raised to 50 percent from the previous 40 percent, and interest rates for those loans have been set 10 percent above the standard rates.
Mortgages for third and beyond homes have been banned.
Some cities, including Shanghai and Beijing, have also capped the number of homes a family can purchase even without bank loans. In Shanghai, for example, each household, both local and those from outside the city, is restricted to only one new home purchase for an unspecified period of time.
Even first-time home buyers have been affected by the tightening policies. Major commercial banks across the country are now limited to offering a 15 percent discount in mortgage rates for first-home buyers, compared with a maximum 30 percent discount previously.
"Compared with the increasingly restrictive housing market in China, overseas properties, where policies are more flexible, start to look even more appealing to Chinese buyers," Liu said.
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