What attracts so many Chinese to the Australian market? – Simon Henry

What attracts so many Chinese to the Australian market? – Simon Henry

 

In today’s show we talk to Simon Henry, who is the co-CEO for Juwai.com, named recently as the most influential international property site in China.

 

Transcript:

Kevin:  Simon Henry, who is the co-CEO for Juwai.com, joins me.

Simon, welcome to the show.

Simon:  Good morning, Kevin.

Kevin:  Congratulations. Juwai.com was named recently as the most influential international property site in China. What does that mean to your company?

Simon:  It was a sensational award, the fact that we were recognized by one of the peak commerce bodies in mainland China in 2014. Two weeks ago, we won the follow up award to that one, so we actually received it two years in a row.

For us, it really brings credibility to what we’re doing and what we’re achieving, to really promote the world opportunity to Chinese property buyers and investors.

Kevin:  Of course, when we think of foreign ownership, there’s so much talk about Chinese buyers into the Australian market, but really the Chinese impact on the Australian market is fairly low if you look at some of the other countries who are buying into Australia.

Simon:  Absolutely. The Chinese, while their dollar value of investment over the last couple of years has been quite high, they still rank outside the top five in terms of total land ownership in Australia. If you take, say, every hundred acres of property owned by foreign investors, the Chinese own only 4%.

The Chinese are definitely buying new projects and developments and houses, and that’s adding to the supply. It’s creating massive amounts of jobs, and it also means a lot more industry is being supported by Chinese tourists and students coming to Australia. It’s a good thing.

Kevin:  When we talk about Chinese buying in Australia, or buying units and apartments as you just said, are they buying them to hold into a portfolio, or are they buying them as an investment to put tenants in?

Simon:  This is one of the beautiful things about Juwai. We have a product called Juwai IQ, which we launched today. It’s the first time we’ve got really hard information on the motivations behind Chinese buyers.

  • The number one reason they buy property internationally is for investment. They’re already property rich in China, Hong Kong, or Singapore, and are looking to diversify their portfolio.
  • The second is to buy a property for their kids to live in while they study.
  • The third is to emigrate overseas.
  • The fourth is for lifestyle. They’re the trophy homes and harbor homes that you see.

The data really does support a diversified portfolio approach to international property.

Kevin:  We hear a lot of stories, particularly out of Sydney, about foreign buyers who are buying units in an apartment block, locking them up and not even turning the power on. What’s the reasoning behind that? Why are they doing that?

Simon:  This is actually quite interesting. We saw this report out of mainland China for the same practice happening in mainland China, and we asked the question why is it happening? The psyche of the mainland Chinese is that if you buy a property and have a tenant live in it, it becomes a secondhand property and loses some of its value.

We’ve been doing a lot of education over the last couple of years about the benefits of property management and leasing properties back. We’re starting to see a lot of enquiry now for once they purchase the property to actually hand it over to an estate agent to help manage the property moving forward.

Kevin:  What is it that attracts so many Chinese to the Australian market? Is it the lifestyle or areas like the Great Barrier Reef?

Simon:  Australia definitely has a good brand reputation amongst Chinese communities globally. Australia is obviously a destination where they think food, they think education, they think travel, they think tourism. The proximity to mainland China is fantastic, and the time zones are relatively the same.

It’s a very easy transition to go from mainland China to Australia as one of their destinations of choice when they travel overseas. Australia still lags behind the United States, but it’s catching up.

Kevin:  Is Australia seen as a desirable area for Chinese developers?

Simon:  Absolutely. We have a number of very large Chinese developers who are now starting to buy blocks of land and parcels to develop projects in Australia. Contrary to common belief, these projects are intended for domestic supply, not for international supply. They’re moving in to build developments and then selling them to locals.

Kevin:  Just to round this out, what are the top cities in Australia for Chinese investment?

Simon:  Looking at our data for Q2 2015, Melbourne is actually the number one destination, followed by Sydney, Brisbane, Gold Coast, and then Perth.

Kevin:  What’s driving that investment into Melbourne? Is it a price point?

Simon:  Melbourne has a lot of new project developments being built at the moment, and they’re very aggressively marketing their projects and properties in mainland China. It is about brand reputation and city familiarity, so the Melbourne developers are doing a great job of marketing their product.

Kevin:  Great talking to you. Simon Henry, who is the co-CEO for Juwai.com.

Thanks for your time.

Simon:  Thank you Kevin.

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Kevin Turner
kevin@realestatetalk.com.au
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