It’s no secret that Chinese investment in foreign real estate has grown drastically in recent years, and no company is more cognizant of this fact that Engel & Völkers.
- Over $100 Billion of foreign dollars were spent on residential real estate in 2016 and 45% of foreign buyers who purchased residential property came from China. (Source: NAR 2016 Profile of International Activity in U.S. Residential Real Estate)
- In 2014 China surpassed Canada as the #1 Country for foreign investment in U.S. residential real estate.
- In 2016 Chinese outbound real estate investments increased a surprising 56%, reaching $28.6 billion.
As part of the new EDGE syndication platform, Engel & Völkers has developed a strategic partnership with Juwai. Juwai.com, reaching 2 million affluent Chinese buyers each month, is the largest and most authoritative source for global property data and advanced search designed for the Chinese real estate buyer.
Recently, Engel & Völkers interviewed some of the top employees from Juwai to get a better understanding of the Chinese buyer, what they are looking for, and what our advisors should expect from them.
Here are 5 important pieces of information I took away from the conversation.
1) Chinese investment in foreign real estate is growing rapidly.
Currently, Chinese investors hold over $150 Billion in foreign real estate investments, and that number is looking to break $200 billion by 2020.
The numbers are actually overwhelming, and it’s becoming more and more clear that if a listing in U.S. is not properly exposed to overseas buyers specifically the Chinese, the listing is at a serious disadvantage.
Chinese consumers typically have an affinity for buying property. The recent decline in the Yuan and overall volatile domestic financial assets has caused much of the interest in foreign investments, which brings me to my next observation about Chinese buyers.
2) Why the Chinese are so interested in buying real estate in the United States
In addition to what I have just previously mentioned, the Chinese have a significant amount of interest in owning property, and in many cases, they are unable to do so. Most Chinese can only own one piece of property, maybe two if they are married. So for successful Chinese families, the idea of owning foreign real estate can be very appealing.
Furthermore, U.S. real estate can often be much cheaper than real estate in China. The average price per square foot for a home in Hong Kong is a shocking $4,500. That is extremely high even for us in Southern California. So paying for a brand new home or condo in Los Angeles, Orange County or San Francisco can be very manageable.
Another prominent reason to buy in the U.S. is that more and more Chinese families are sending their children to U.S. universities. Rather than pay for student housing or high priced rentals, it is common for a Chinese family to buy property near the student's school, so the family has a place to stay when they come to visit, and the student already has a head start upon graduation.
3) The types of homes Chinese buyers are primarily interested in
As with many of the insights I took from the interview with Juwai, there is a common trend among the types of real estate Chinese buyers are interested in purchasing. They are very interested in buying homes that are extremely well maintained, or better yet, brand new and never lived in, located in very safe neighborhoods, and that have excellent schools nearby.
4) What Chinese buyers expect from real estate advisors in the U.S.
Well, I'll start with what they don’t necessarily expect, which was surprising. They don’t expect you to speak Chinese. In many cases, they have been educated at foreign schools, and speak English fluently. In other instances, they use sites like Juwai.com to assist in the communication process. Juwai has an in-house call center team to help specifically with translation.
Additionally, they don’t expect an immediate response. Not to say that say that real estate agents and advisors can take their sweet time in responding, but that they are familiar with doing business overseas, and are accustomed to waiting 12-24 hours for a response. It is not like a Zillow lead where if you don’t call them in the first 15 minutes then there is a good chance they have already spoken to two of your competitors.
Now, what they do look for in their representative, is an extreme level of knowledge in the geographic areas they are looking. They want to work with a professional with high levels of integrity, competence, and passion for what they do. This among many other reasons is why Engel & Völkers has had lots of success in the Chinese market.
5) The advantages Engel & Völkers has in servicing the Chinese clientele
Engel & Völkers has a substantial presence in Hong Kong. Ask any friend who has spent a significant amount of time there, or has tried to look for real estate in Hong Kong. They will all tell you “Yeah, Engel & Völkers is everywhere.”
Ironically enough, after watching Juwai webinar interview, I had lunch with one of our clients, and he was telling me how he met his wife in London, and they spent a year living in Hong Kong. He expressed how much he loved Engel & Völkers and how prevalent our brand was in Hong Kong.
The easiest way to verify if your company or the company your agent is working for has a presence in Hong Kong, go to their international website and search for all listings in the Hong Kong area. Engel & Völkers currently has 2028 at the time of this writing, but you can check for yourself here: https://www.engelvoelkers.com/en/search/hongkong
So the presence of Engel & Völkers in Hong Kong is undeniable, but the steps they have taken in partnering with Juwai take it to a whole new level. Our partnership allows us access and exposure on an advisor level to all interested Chinese buyers. Our advisors can be assured that if they take a listing here in the U.S. it will be appropriately displayed to qualified Chinese buyers. Further more, the agent's name, photo, and phone number are exclusively displayed on the listing and any inquiries are sent directly to the advisor.
At that point, if translation services are needed, the in-house translation team at Juwai.com will step in to ensure a smooth transaction.
This new strategic partnership is an important cog in the syndication machine that is giving Engel & Völkers advisors the EDGE.
Would you like to join an international brand that is the gold standard for expertise and luxury? Call us to discuss the power of the Engel & Völkers brand and how we can work for you to move your career forward.