Insights into Buyers from China and Overcoming the Cultural Divide
Stop me if you've heard this one before: a listing comes on the market only to be scooped up days later by a buyer from China, in cash. It's been one of the hottest real estate trends in real estate for some time now, and a source of great optimism for sellers, but for some agents a great frustration, as their clients cry, "Where's my buyer from China?"
As a country with more than a million millionaires, China's staggering production of wealth in the last 20 years is certainly being felt in markets around the globe, yet what most sellers don't realize is that the aforementioned anecdote is an abridged version of a complex transaction. As is often the case in real estate, it's not quite as simple as it sounds when you take into consideration the vast cultural, lingual and geographic barriers. But what we're finding at Leading Real Estate Companies of the World(r), a network comprised of the top 500 independently run brokerages around the world, and its luxury property division, Luxury Portfolio International(r), is that with proper training, exposure and management of expectations, overcoming these barriers can easily be accomplished. Furthermore, if you're not making a concerted effort to do so, you could leave a lot of (your client's) money on the table.
Over the years, we've learned what works, what doesn't and how to overcome the many obstacles that inevitably arise. One of the first issues we were confronted with was "The Great Firewall of China." What's that? In fact, many top websites like YouTube and Twitter are blocked there, and unless you're in China, it's impossible to know how your site looks and your brand is being represented. With this in mind, Luxury Portfolio undertook a comprehensive initiative to get on the other side of the wall, so to speak. Through our broker-members in China, their related sites, the Wall Street Journal, and local partners such as Juwai.com, a top Asian-based property portal, we can ensure every listing on LuxuryPortfolio.com is marketed on a site that's actually hosted in China.
"Even if an international website happens to be freely visible at any given moment, the bottom line is that Chinese users are less likely to visit it because they have learned that-as often as not-sites from overseas are more trouble than they are worth," shares Simon Henry, co-CEO of Juwai.com.
Equally important is understanding the buyer from China-what they're looking for, where they're looking and the cultural differences that can instantaneously make or break a deal. For example, one of the main factors driving Chinese overseas investment is asset diversification. A traditionally stable market, such as London or Paris, is a sensible place for these wealthy individuals to park their money, and while the trophy sales (upwards of US $15M) get all the headlines, the majority of transactions tend to be in the US $1-$5 million range.
Even more interesting is that buyers from China are now venturing into other markets, as Beverly Sunn, president of Asia Pacific Properties, notes: "They're not just looking at major cities. That's just the beginning. They're going to look to invest and broaden their portfolio into smaller towns." Detroit, for instance, has quickly become a favorite among Chinese investors since the city filed for bankruptcy in July 2013, due to the long-term investment opportunity.
While a deal can be struck quickly, it can be left in shambles just as fast over something as simple as negotiation style, for example. At Leading Real Estate Companies of the World(r), this led to the creation of the Cross Border Concierge Program, where an account manager oversees each referral and works with both parties.
"You have to check all of your cultural assumptions at the door," explains Jessica Landis, a referral specialist who oversees the program, "especially when there's a language barrier. It's important to set expectations for effective communication and recognize that subtle implications in your tone and body language can be magnified and interpreted any number of ways." For buyers who aren't experienced in international property transactions, it's helped to anticipate and overcome potential obstacles, such as what currency the transaction will be in and who's going to cover the conversion fee.
With the success of this program came the Luxury Portfolio Immersion Conference, taking place this July in Shanghai, where members of the network are essentially given a three-day crash course in Chinese culture to gain a better understanding of financial and political policies in this part of the world, as well as an education on the affluent Chinese consumer and their desire to purchase real estate abroad. It's another piece of the puzzle that we believe encourages and increases business, and that's good for everyone.
Since relaxing their emigration policy in the early 1980s, the Chinese have gone from virtually non-existent in the overseas real estate market to a driving force behind international real estate transactions. The possibilities are endless, but if you're not adapting your business to accommodate the new player in global real estate, your clients will continue to ask, "Where's my buyer from China?"Wesley Grover is luxury property coordinator, Luxury Portfolio International(r) and Leading Real Estate Companies of the World(r).
For more information, visit http://www.luxuryportfolio.com.