FEBRUARY 2012 |
www.opp.org.uk
BUSINESS
when I say I’d love to get some good information on other options besides Singapore, which is only for the very rich!” Give Chinese buyers more data, she says, and they will defi nitely look at other destinations. However, surely the fact that English is the second language for so many Chinese explains why English-speaking countries do so well? “Oh yes, defi nitely,” Guo admits, “although we’re still very nervous about our English language skills and moving to a new environment! Also, the most compelling reasons are these countries’ stable economic development records, their good education and medical treatment systems, and their well- defi ned property rights. The perception in China is that these countries are the world leaders.” A sensible long-term investment plan underpins everything. “Believe it or not,” she says, “most of the people I know see an overseas home not just for vacations or short-term stays, but also - and more importantly - as an asset to pass on to their children. Some
very wealthy contacts I have are buying in hot overseas markets like Vancouver and Sydney purely for investment, with fi ve and ten year exit strategies.” “But, then again, I don’t know many of those kinds of investors, or many people in the real estate industry. If there is a possibility of making money from it, I’m sure there are many
“Give Chinese buyers more data, and they will defi nitely look at other destinations”
Chinese buyers out there interested in any sort of real estate strategy!” Is there any bias on new-build versus
older, used properties? Not really. Guo says. “I am interested in both. Second- hand homes with high quality-price ratios are attractive to me. I certainly wouldn’t be interested in a home that needed a lot of work or renovation. I hear some older homes overseas are very solidly built, but I suspect that too many years means too many problems!”
What has been happening in China in recent weeks?
• China’s new home prices fell for the third straight month in December, the latest official data showed, and may drop further as Beijing sticks to its tight- ening campaign despite signs the once-hot real estate market is cooling. • Annual growth in China’s real estate investment, a main driver of the economy, slowed in December to its slowest pace in a year, falling in tandem with property sales revenues. • Evergrande Real Estate Group Ltd, the second-biggest developer in China by sales value, forecast flat 2012 sales and said the wider property market would be gloomy in the first quarter. • China’s fledgling real estate investment fund market could see a surge of activity in 2012 as property developers launch their own vehicles in a desperate bid to bridge an estimated $111 billion financing gap in the year ahead. • China’s average home prices will probably fall between 10 to 20 percent in 2012, a pace modest enough to prevent a hard landing of the economy, with the biggest declines expected in major cities such as Beijing. • The Guangzhou government is seeking a roughly 10 bln yuan ($1.58 billion) syndicated loan for subsidised housing projects in the city. • Average new home price in Beijing fell by 11.3 percent in 2011 to 14,847 yuan per square meter compared with the level in 2010, according to a local semi-government property association. • Residential land price in China remained flat at 4,518 yuan per square meter in Q4 2011 versus Q3 2011, but was up 9% year-on-year. Thirty-seven of the 105 cities monitored by the Ministry of Land and Resources saw quarter-on- quarter decline in residential land price, up from 12 in the third quarter. • China provided 967 million square meters of land for commercial hous- ing construction in 2011, up 4 percent from 2010. Total land supply rose by 37 percent in 2011, which includes those for public utilities, government- backed homes and industrial use, the Ministry of Land and Resources said.
Money-conscious | Chinese property buyers are careful when they go shopping
But, what is defi nitely non-negotiable, she adds, is that whatever she buys it has to be freehold. “That’s the overseas dream for most of us Chinese, as you can only get freehold property here at home if you go to enormous trouble and extra expense … and even then you can only buy freehold in certain, not very favourable areas.” A house rather than an apartment appeals too. “Emigration is still a possibility for me,” says Guo, “so, if I end up living there for an extended period, I will want a stand-alone home. But - now that you mention it - an apartment in a nice community may have a management company and be easier to take care of and rent out. This interview is making me think more about my real estate strategy,” she laughs. “I will buy the place outright too. My friends see an overseas property as something you buy when you have enough money to afford it and can just buy it, not as an investment that you have to take out a loan to get. Just about all the Chinese buyers I know see the process of getting a foreign mortgage as far too complicated and too hard to get all the facts on, even if they did want to borrow money.”
Her budget is “about 2 million RMB (or £207,250),” and she will not buy anything she has not seen with her own eyes. “I will defi nitely take an inspection trip. I can’t imagine anyone I know doing otherwise. Chinese buyers are always super-cautious. If Chinese
people are buying without visiting, I believe they have either an agent or a proxy company using their money to make large purchases, and guaranteeing certain returns. I’m sure if a tycoon was planning to live in a property, he’d want at least his wife or another family member, probably the person who was going to live there, to take a trip fi rst. But that’s not a problem. Travelling around to fi nd my house is part of my dream!” It is a part of the fun. “Most Chinese buyers prefer to work with Chinese agents because of the convenience and effective communication. However, it is hard to fi nd an agent who has a good reputation for credibility and reliability when searching abroad. And I’ve yet to meet one who is 100% above board with me. I don’t have any information to form a judgement with about foreign agents, but I will need a lot of information about them before making a decision to move forward and work with them. I will also want a good lawyer to check the documents and perhaps even pay a visit to the house personally.” “Actually, integrity is my number one pre-requisite; I just have very few ways of guaranteeing integrity, short of a trusted recommendation. I will have to judge them by the little things, such as returning calls or emails when they say they will for example. After that, attractive properties and the prices that they are asking for are my highest consideration.”
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