Article by Ismary Munet
Photo credit Niko
The 2014 Asian Real Estate Association of America (AREAA) Global and Luxury Summit was held from April 12 to April 15, and highlighted the emerging market opportunities present in both the international and luxury real estate markets.
On Monday April 14, the 2014 Asian Real Estate Association of America (AREAA) Global and Luxury Summit continued to be held in New York City at the Waldorf Astoria Hotel.
One session that AsianInNY covered was Breakout #10 Understanding The China Opportunity.
Breakout #10’s session, held in the Astor room, discussed the great value China has in the real estate market; due to having the second most billionaires after the U.S.
The speakers included Dean Jones, Owner and CEO of Realogics Sotheby’s International Realty, Elizabeth Harrington, North American Publisher of Hurun Report, Bill Hunt, International Business Consultant of Keller Williams Worldwide, and Nick Antonicello the Director of New Business, Unique Homes.
Moderator Andrew Lee first asked why Chinese buyers were buying overseas, such as in the U.S. and Canada, if the economy in China itself is doing well. Elizabeth Harrington of the Hurun Report explained that 60% of high net worth individuals want to immigrate, and 43% want to immigrate to the U.S. 67% have already invested overseas and plan to invest more overseas in the next three years. Most do so, in order to provide housing for education and for their children in the U.S. They are focused on education and diversification.
According to Bill Hunt of Keller Williams Worldwide, the Chinese government puts many regulations on buying land, which limit investments. If this continues, the Chinese buyers want to be able to invest outside of China. According to Nick Antonicello, “There’s no such thing as location, location, location. With the Chinese, I would say location, education, and luxury.”
Dean Jones said it was more about “location, education, environment… It’s a real challenge when there’s a large smog of smoke over your backyard.”
Harrington went on to explain that these regulations literally drive investments out of China. In the U.S., individuals actually own the land as opposed to owning land in China; where there is a 70 year lease on the land.
The speakers continued to discuss that providing quality education for the children of these Chinese buyers is a top reason why they continue, and will continue, to invest in the U.S. In 2012/2013, 819,644 international students studied at U.S. colleges and universities.
The top three states for international students are California, New York, and Texas, which host 32% of all international students. 29% of international students originate from China.
“There’s this intrinsic tie to education and location,” Antonicello said.
Harrington explained that there is also a desire for Chinese buyers to give their children an American lifestyle, “They don’t want them to be spoiled Shanghai brats,” Harrington said.
The speakers also discussed the importance of cultural sensitivity, and the importance of an agent to get educated. According to Hunt, most deals don’t get closed because of social mistakes, or failing to get visas. Hunt suggested that agents go to events and conventions in Beijing where every university in the world will be there. It is a great way to meet housing directors and get to know who the clientele is.
Jones shared that Realogics Sotheby’s International Realty created an Asian desk, which is a virtual desk that found or created mandarin speaking brokers to be surrogates for when those opportunities came up.
According to Harrington, agents need to form a relationship with an Asian buyer, “You are not selling them a house. You are selling them a lifestyle. You have to form a full service strategic partnership,” Harrington said.
Agents have to be a trusted friend and adviser to Asian buyers, and have to inform buyers about lifestyle, taxation, immigration, cultural tolerance, etc. Agents are expected to know everything, and not simply know real estate. Harrington explained that many Hurun Report publications are available online. The Hurun Report is “the bible on who’s who,” Harrington said explaining that is a more detailed and exact Forbes 500 in China.
Moderator Lee also reminded the audience that in June AREAA will hold another summit in Los Angeles where Chinese buyers will be present.
“If you’re a luxury agent, you are required, I repeat that, you are required to know your Chinese client,” Antonicello said.
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