Chinese Real Estate Investors
October 19, 2011 Leave a comment
China Real Estate Buyers – A Market Realtor’s Can’t Ignore
In Canada, the current government is under a lot of pressure to increase trade with China. With the US market so stagnant and with the US not appearing to be able to end its recessionary woes, Canada must look to new markets. China is the key source given its capabilities, technology, and that it continues to lead the world. China’s economic growth slowed in September but it still has a trade surplus with the US. It doesn’t look like much will stop China’s rise to the number one economic power in the world. Not increasing economic trade with them is a formula for a disastrous future.
China’s own real estate market is teetering on the edge. Some describe it as a bubble but it would take a global recession to stop it. The country is progressing in the type of goods Chinese buyers are shopping for and the type of goods it wants to manufacture. It’s travelling up the value chain and in the not too distant future it will produce much higher technology products.
Currently the Chinese are buying up Canadian Oil and Gas reserves. Sinopec recently bought shale gas producer Dalight Energy for 2.2 billion dollars. Investment research firm Sanford C. Bernstein & Company forecasts that Asian oil and gas companies will spend $150-billion in the next five years on global assets, including Canadian oil sands. The Chinese are definitely in a buying mood.
If China does decide to let the Yuan rise freely against the US dollar, it will give the Chinese tremendous buying power against weaker global currencies. Speculators will buy up the Yuan currency as it rises too. In the end, the Chinese will be able to purchase some of the worlds greatest asset offerings cheaply. Of course, what has more potential than real estate? China’s own real estate market and its stock markets are not all that appealing.
Chinese buyers have greatly affected the Vancouver market already. If Canada opened more liberal immigration and trade relations with China, this would just be the beginning. Currently, more than 60 per cent of Richmond BC‘s 200,000 residents are immigrants, among the highest rate of any major city in Canada. About 40% of the population of most of southeast Vancouver are Chinese.
Demand for Canadian Properties
The current Chinese investment in Canadian real estate is being called a bubble by some pundits. However, the Canadian economy and real estate market are fairly well balanced. It really doesn’t look like a bubble and if continuous marketing of Canadian property in China is done, the demand will keep Vancouver property prices high. The new Chinese immigrants want to get out of China and live in a beautiful country like Canada. China recession or not, there is a latent demand that can be stimulated over there. If you’re a Vancouver real estate, Chinese real estate investors are a worthy target. They have the funds and are looking for the right opportunity. They just need education in how to think like an investor rather than just an immigrant. Many are investing in Vancouver properties and see them as a form of savings.
The Chinese may not know much about Calgary, Edmonton, Kelowna, Winnipeg, Regina or Mississauga, and that’s where Canadian realtors can make big gains. Of course that will take a new website and news releases in Chinese. There’s no doubt Chinese are hungry for information and opportunities with their fast rising income in hand. If no one is letting them know about real estate across Canada, and trade relations aren’t relaxed then these investors will simply invest in other areas. So far, the Chinese haven’t invested in Dubai. Oddly, more Canadians have invested in Dubai than Chinese have.
Chinese Have Been Buying US Properties too – Institution Sales
Vancouver-based Cam Good, president of real estate marketing company The Key, launched the first Canadian-owned real estate office in Beijing, China. Apparently, he has sold hundreds of homes to Chinese buyers, who want properties in Vancouver and Toronto.
MSN quotes Good as saying: “We’ve sold over 800 homes so far this year, and it’s only April — I think that puts us at No. 1 in the country in terms of volume.” He estimates that 60 per cent of his clientele are from China. “I can’t give you specifics, because it’s fiercely competitive right now. Every developer is going over, trying to figure it out. One developer I met this week spent around $1.5 million in marketing over there, without results. It’s definitely hit and miss. But we struck gold. I am just a bit ahead of the crowd.”
Good says further than Chinese buyers often buy their homes outright, without getting a mortgage. New home and condo developers will be keen to interest wealthy chinese buyers and investors.
The wealth of Chinese buyers shouldn’t be underestimated. In 2007, China had about 22,000 millionaire households and and is forecast to increase to 409,000 by 2017, according to Barclays Wealth. Even if China’s growth slows to 2%, it is the world’s largest source of investment funds.
Chinese buyers are a serious source of leads for you, particularly if you’re a luxury home realtor. It’s time to plan and launch your Chinese buyer strategy and tap into a source that doesn’t need mortgages!
Need help with your real estate marketing strategy? Contact Gord to build a new plan that covers all markets and gets you front and center with thousands of new buyers. The market is there for the taking.