What do Chinese buyers want?

What do Chinese buyers want?
What do Chinese buyers want?

The increasing interest from offshore Asian buyers, and largely Chinese buyers, has been attracting a lot of attention. Not only are real estate agencies expanding out to these areas, but Chinese-language news outlets and online portals specialising in property are going from strength to strength.

It's interesting then, that many are restricted by certain types of rules and regulations. Property Observer set out to find specifically what stock these buyers can purchase, and what they're looking for.

Australian Property Monitors' Andrew Wilson points out a few major points that are of interest to Chinese buyers.

Firstly, he says, it's a case of replacing the 'location, location, location' mantra with "good schools, good schools and good schools."

Linked to this, they look for highly established quiet to upper-mid price range neighbourhoods, as well as those with "cultural connections". For Sydneysiders, this may mean a suburb such as Ashfield.

Value is then the final most important consideration.

The categories of buyer

However, we must be wary when categorising all Chinese investors together. Just as resident buyers do not fall into any one strict category, there are a number of buyer-types here also.

Andrew Taylor, co-CEO of Juwai.com, a listings portal for Chinese buyers to find international property, helped us categorise the buyers into these three segments.

He explains that they classify offshore Chinese buyers into four distinct categories, based on net worth.

1.    Extremely high net worth: Those seeking prime properties, from $5 to $50 million in value. Usually for immigration or as secondary residence. These buyers are fewer in number, but account for a significant dollar amount of total investment.

A typical investment for this type of buyer, may look like a $6.5 million listing they had of a property on Wategos Beach, Byron Bay.

2.    High net worth: Those seeking luxury properties, from $1.5 to $5 million.

3.    Upper middle class: Those seeking properties from $750,000 to $1.5 million. The greatest number are in the $1.2 to $1.5 million range.

4.    Middle class: Those seeking properties from $250,000 to $750,000. The greatest number of these buyers are in the $500,000 to $650,000 range.

He points to the top reasons for buying, across the categories, being for reasons of education, migration and investment diversification. Often, all three are combined.

This may be a buyer purchasing an investment property and renting it out, until a few years later their children live in it to study in Australia, with the entire family staying when they visit.

"Then, perhaps one day, they immigrate to Australia and retire to the home," says Taylor.

In fact, Chinese buyers can also differ in their buying needs and wants due to their ethnicity.

OH Property Group's Oliver Stier pointed to the following points:

- They like full-brick homes (as opposed to brick veneer, weatherboard or fibro – unless they plan to knock it down).

- They like rectangular-shaped land.

- They generally would prefer not to have a swimming pool. Swimming is not a big part of the Chinese upbringing and many Chinese-born children don’t know how to swim. Therefore a swimming pool is seen to be more a danger and a chore than a source of pleasure.

- They like level and clear land with not too many trees (especially protected species such as gum trees, which are not always possible to remove).

- They like low-maintenance properties (e.g. paved backyard as opposed to cottage-style garden).

- They prefer high side of the street and generally dislike properties that have an entrance below street level.

- They have a preference for newer properties and less of an appreciation for older-style features such as an ornate ceiling or picture rails, etc. Therefore, a heritage-listed property usually does not appeal to Chinese buyers.

- Position is important, and many Chinese buyers will not want to purchase properties that are at a T-junction, for example.

- Aspect is also important, and Chinese buyers typically prefer morning sun than afternoon sun.

- Some feng shui-related features are important.

A window into Chinese buyers' thoughts

If you're interested in understanding the Chinese buyer, look no further than the Chinese developers, says Taylor. Particularly those who are developing in Australia, as often this is to attract Chinese investors.

“I had dinner with two small Chinese developers this week, both with projects worth around $65 million. They just purchased several blocks of land on the coast in Queensland and New South Wales. Their requirements are that the land be close to schools or close to good hospitals. Their target market is investors, especially Chinese investors, who will rent out to locals," he says.

In December, he wrote  for Property Observer four tips for those looking to sell their property to Chinese buyers.

We've also recently written about marketing your property to Chinese buyers.

Which cities are seeing interest?

Measuring activity on Juwai.com, comparing January and August 2013 (including page views, searches, search results and enquiries) the following trends emerge.

China’s Top Aussie Cities
1. Sydney
2. Brisbane
3. Melbourne
4. Gold Coast
5. Adelaide  

China’s Fasting Growing Aussie Cities
1. Melbourne
2. Perth
3. Mandurah, WA
4. Launceston, Tasmania
5. Canberra
6. Adelaide  

Source: Juwai.com

This week, Century 21 Australia and New Zealand chairman, Charles Tarbey, mentioned to Property Observer that Adelaide has been starting to market developments to Chinese buyers more heavily.

Next page: Chinese Australian buyers and the changing wants of buyers

 


Chinese Australian buyers

Sophie Jiang, from The Vision China Times, told Property Observer that it is definitely hard to generalise about what Chinese buyers want in a property. Budget, purpose, personal background and situation are, of course, game changers for every investor.

However, some constants are definitely clear from what the experts are saying.

Jiang notes that she has spoken to a number of different development groups, such as AVJennings, Fraser Property, PAYCE and Legacy group, and that this has created a fairly clear picture in her mind as to what is being marketed and snapped up.

However, it's not just non-resident Chinese buyers that are purchasing. Chinese Australian buyers, obviously, are looking for a certain type of stock.

"For owner occupiers especially those with young kids, quality schools are always on the top of their criterion list in selecting location, followed by the access to public transportation, amenities, neighbourhood," Jiang lists.

"Many Chinese Australian buyers are family oriented so they like to live close to each other and  still be able to enjoy the same lifestyle as in China. That is the reason why those suburbs with large Chinese population have been enjoying high demand," she explains.

When looking at the specific property, Chinese buyers steer towards double brick with large land content, due to opinions that this creates solid capital growth.

"Good position and floor plan in compliance with Feng Shui are also very important," she says.

A Feng Shui inappropriate floorplan may include features such as the front door looking on to another door, doors being in too close proximity (known as "arguing doors"), too many windows and doors in a row, and bedrooms that are situated over specific rooms that are not deemed peaceful (e.g. over a garage).

New apartments and townhouses, due to their low maintenance appeal, are also being favoured by Chinese buyers. While, for solely investment buyers, new and off-the-plan in the inner city are more important.

"Popular features are location (proximity to transport, university, shopping, CBD, beach), architectural design, finishes and amenities," Jiang concludes.

Taylor agrees with this, also listing the following themes:

- Water views and frontage

- New or recently renovated construction

- Proximity to educational institutions

- Proximity to Chinese Australian communities

- Easy access to amenities, shopping and transport

The changing wants of buyers

While all of these factors may sound fairly prescriptive, the sands are regularly shifting around buyers' profiles and their wants.

“In Australia, I’m constantly surprised when I hear from agents. There’s always a new suburb where vendors are benefitting from having these investors show interest in their property. Whether it’s in the Northern Beaches of Sydney, semi-rural Dural, or an outer suburb of Adelaide, Chinese buyers are turning up in places they seldom did before," Taylor says.

“I don’t think Australia has ever seen a group of foreign investors as numerous as the Chinese. As they learn more about Australia and come to love it, they are exploring new communities and property types. That’s why you see Chinese buyers in more suburbs now than you did just a year ago."

Similarly, observer Terry Ryder notes that they are not always achieving what they want from property. This will, likely, change.

"I think Chinese buyers [want] something they are not getting: they want good investment properties at market prices. At the moment they are sold bad investments at inflated prices," Ryder explains.

"They are being targeted by Australian developers with properties they can't sell in the local market because of oversupply, particularly the inner-city areas of Melbourne and the Gold Coast."

He says that he was speaking at a seminar in Melbourne, and was approached by a man in the audience who had flown from Shanghai to hear the talk, telling Ryder later that his family and friends had been ripped off by developers and marketers in the past, buying the wrong stock.

Commercial property is also emerging as being of interest to this buying group. Read Property Observer on Monday for some more information.

In the meantime, you can read observer Pete Wargent's thoughts on the reasons behind the Chinese buyer 'phenomenon'.

 

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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