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Look East! Opportunities in The Chinese Market

Date post: 15-Nov-2014
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Scott Holmes, Business Development Director at REA Group presented at The Business Of Real Estate held on 1-3 September 2014. #rebiz14
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Page 1: Look East! Opportunities in The Chinese Market
Page 2: Look East! Opportunities in The Chinese Market

November 2013

Look East! Opportunities in the Chinese Market

Page 3: Look East! Opportunities in The Chinese Market

China is in the midst of a digital revolution. During the course of 2013, the number of active

smart devices grew from 380 million to 700 million.1

On Singles Day, the e-commerce marketplaces Taobao and Tmall posted more than

RMB 36 billion (almost US$6 billion) in sales in just 24 hours. Some five billion daily

searches are made through Baidu, and hundreds of millions communicate via WeChat,

Tencent’s mobile messaging app. Now with 632 million users (and counting) the internet is

fundamentally altering the fabric of daily life in China.2

1. McKinsey Global Institute 2. China’s digital transformation: The Internet’s impact on productivity and growth

Page 4: Look East! Opportunities in The Chinese Market

What is happening in China

•  New government means new rules and structure.

•  Major crackdown on corruption across the country.

•  Pollution is a real issue in China.

Page 5: Look East! Opportunities in The Chinese Market

Property value in China

•  Chinese citizens are restricted to purchasing one house.

•  Cost of purchasing property has increased at a rate that consumers cannot keep up with.

•  Property is purchased on a 70 year lease.

•  Lately, some developments have started to discount their pricing which is creating panic

around pricing and value, plus the one purchase house rule has been lifted in 3 provinces so far to increase sales.

Page 6: Look East! Opportunities in The Chinese Market

The great firewall separates the Chinese internet from the west. Facebook, Twitter, Youtube and Vimeo are blocked

in China. Unique Chinese Social Media sites are - Weibo

- WeChat - Youku

- RenRen

The great firewall

Page 7: Look East! Opportunities in The Chinese Market

The 3 types of Chinese buyers are buying Australian property for:

They typically borrow about 70% of the purchase price through an Australian bank

Average sale price is around $685,000

Investment Education Migration

Page 8: Look East! Opportunities in The Chinese Market

2013 Immigration numbers

There were an additional 394,200 new residents in Australia over the past year, 60% of which can be attributed to net overseas migration.

Chinese migrants are the second most populous at 17,790

New Zealand was number 1 at 28,750

While movements from India (17,520) the UK (12,100), Philippines (6,760) and South Africa (4,750) are also large drivers of the migration flow.

Source RP Data

Page 9: Look East! Opportunities in The Chinese Market

Immigration and the Chinese HNWI 2014 report

Emigration destinations

The US and Canada are the top choices for investment immigration. Los Angeles,

San Francisco and Vancouver are the most desirable cities.

Page 10: Look East! Opportunities in The Chinese Market

Immigration and the Chinese HNWI 2014 report

Most desirable cities

The US is the first choice for overseas property investment, with 60%, followed

by Canada and Europe, with 22% and 7% respectively. Los Angeles, San Francisco

and Vancouver are the top 3 cities for buying property abroad.

Page 11: Look East! Opportunities in The Chinese Market

Education

Top 10 International Education Destinations in 2013

Source: Hurun Report, Chinese Luxury Consumer Survey 2013

Page 12: Look East! Opportunities in The Chinese Market

New property

•  1 in 6 new properties are sold to a foreign buyer

•  Average sale price is around $685,000

•  Chinese developers will build 50% of all new apartments that are planned to be built in Melbourne

and 36% in Sydney

•  Foreign developers see Australia as a stable economy and a safe place to do business

•  Project marketers charge around 3% to 6% for some projects

Page 13: Look East! Opportunities in The Chinese Market

Second hand listings

•  The issue has been commission rates payable on second hand properties.

•  The Australian newspaper recently reported that the FIRB has failed to prosecute any foreign buyer

for breaching the foreign ownership rules and there have been no prosecutions since 2010.

•  It is very hard to get clear statistics on the total number of second hand properties.

•  Overseas students studying here are buying property for family and friends.

•  Overseas Chinese consumers are buying property directly via family and friends living in Australia.

Page 14: Look East! Opportunities in The Chinese Market

Why China? Chinese investment in residential real estate grew to $5.9 billion and makes up more than half of foreign investments in Australia.

Page 15: Look East! Opportunities in The Chinese Market

How do you find and service Chinese buyers?

•  Load your properties on to China focused property portals

•  Open an office to direct markets via newspapers and databases

•  Use a network or project marketer to sell on your behalf

•  Set up a internal team in Australia that focuses on Asia

•  Target Chinese consumers here in Australia Note: Almost all enquire from myfun.com, the consumer asks for a mandarin speaking agent

Page 16: Look East! Opportunities in The Chinese Market

Why Australia?

Page 17: Look East! Opportunities in The Chinese Market

Why Australia?

•  Clean air.

•  Good food and services.

•  Stable government.

•  Country with a high level of natural resources.

•  There are already 1 million Chinese living in Australia , this makes Australian property a very

secure investment for the Chinese buyer.

Page 18: Look East! Opportunities in The Chinese Market

Investment

•  Good long term capital growth

•  Good yields

•  Good supply and demand

•  Freehold title

•  Good macroeconomics in Australia

•  Australia has established itself as a good brand

Page 19: Look East! Opportunities in The Chinese Market

Purchasing in Australia

Overseas buyers are allowed to purchase the following:

•  New apartments that have not been lived in

•  New house and land packages

•  Individual land lots

•  Commercial property up to AUD $54,000,000*

•  Rural property that is income producing

•  If you are on a study or working visa, you are permitted to purchase second hand property

* Other properties or higher values for commercial property can be purchased if approved by the FIRB.

Page 20: Look East! Opportunities in The Chinese Market

President Obama passed legislation that requires people gaining a US green card to disclose all their sources of global income.

Page 21: Look East! Opportunities in The Chinese Market

China fast facts

Page 22: Look East! Opportunities in The Chinese Market

Hurun Report estimates China’s staggering wealth to consist of around 11,800 Chinese billionaires,767,000 super-rich (10 million or more), and 3.99 millionaires.

Wealth-X and UBS Billionaire Census 2013

Hurun Report Immigration & The Chinese HNWI 2014

Amazingly, some 89% of Chinese billionaires are self-made.

Page 23: Look East! Opportunities in The Chinese Market

15% of wealthy Chinese with US$10 million (that’s over 10,000 millionaires!) allocate 60% of their total assets to property investments, and 93% of China’s wealthy are more likely to make a legacy home purchase worth US$1 – US$3 million for the family.

Sotheby’s International Realty Luxury Lifestyle Report

Page 24: Look East! Opportunities in The Chinese Market

Overseas asset allocation On average, overseas investments accounted for 16% of their total wealth. 8% have put more than 50% of their wealth overseas. For more than 70% of those surveyed, overseas investments accounted for less than 20% or less of their total wealth. Immigration and the Chinese HNWI 2014 report

Page 25: Look East! Opportunities in The Chinese Market

Reasons for investing abroad Asset diversification was the most common reason given for investing abroad with 19.8%, followed closely by children’s education with 19.4%. Investing in the hope of being able to emigrate accounted for 16%, retirement nest egg for 11% Immigration and the Chinese HNWI 2014 report

Page 26: Look East! Opportunities in The Chinese Market

Population of China

1,351,130,000 which is almost

19% of the world’s population

Page 27: Look East! Opportunities in The Chinese Market

China has the largest internet population

in the world

596,000,000

Page 28: Look East! Opportunities in The Chinese Market

That’s almost

6 times the entire Australian population

Page 29: Look East! Opportunities in The Chinese Market

And it’s growing by

one person every 5 seconds

Page 30: Look East! Opportunities in The Chinese Market

In 2012 China added

50,900,000 new internet users

Page 31: Look East! Opportunities in The Chinese Market

Twice the size of Australia’s

entire population

Page 32: Look East! Opportunities in The Chinese Market

China is the world’s second

largest economy

Page 33: Look East! Opportunities in The Chinese Market

“ Chinese consumers are increasingly opting for quality goods at higher prices and going to online mediums to gather information & purchase.

Page 34: Look East! Opportunities in The Chinese Market

Mobile internet users outnumber PC based internet users in China

420,000,000 Mobile internet users

398,000,000 PC internet users

Page 35: Look East! Opportunities in The Chinese Market

Devices that Chinese netizens use to go online

75% Mobile

71% Desktop

46% Laptop

Page 36: Look East! Opportunities in The Chinese Market

Where they access the internet from

92% Home

32% Office

22% Cybercafe

16% School

Page 37: Look East! Opportunities in The Chinese Market

91% of China’s netizens visit social media sites daily

Page 38: Look East! Opportunities in The Chinese Market

Number of smartphone users in China

420,000,000

Page 39: Look East! Opportunities in The Chinese Market

That’s more than

the entire population of the U.S.A.

Page 40: Look East! Opportunities in The Chinese Market

Average time spent online

46 minutes per day

Page 41: Look East! Opportunities in The Chinese Market

China has the largest number of online shoppers in the world

242,000,000

Page 42: Look East! Opportunities in The Chinese Market

China’s total e-commerce transaction value in Q3 2012

US$ 319,000,000,000

Page 43: Look East! Opportunities in The Chinese Market

That equates to more than

US$ 40,000 in e-commerce transactions

in China every second

Page 44: Look East! Opportunities in The Chinese Market

Number of unique visitors to Taobao & Tmall

on Singles day 2013

402,000,000

Page 45: Look East! Opportunities in The Chinese Market

Almost one in every three Chinese, had checked out the deals on

Tmall and Taobao on Singles day

171.4 million orders; contributing to a total of 324 million parcels were delivered

Page 46: Look East! Opportunities in The Chinese Market

Total value of transactions Taobao & Tmall

on Singles day 2013 US$ 5,700,000,000

Page 47: Look East! Opportunities in The Chinese Market

Estee Lauder launched its official Tmall store on 21 May 2014 Within 24 hours had clocked 7,941 transactions averaging ¥339 ($54).

The day's takings totalled ¥2.7 million ($430,000), more than the average offline store does in a month.

Page 48: Look East! Opportunities in The Chinese Market

China's Alibaba signs deal with Australia Post to attract shoppers

The deal aims to connect Australian consumers with

Chinese manufacturers and boost Chinese consumption of Australian products

The Chinese company will also have its

Alipay purchase card distributed throughout Australia Post stores, allowing Australian consumers to purchase Chinese

product direct

Page 49: Look East! Opportunities in The Chinese Market

Unique viewers of online video in China

350,000,000

Page 50: Look East! Opportunities in The Chinese Market

Youku and Tudou attract more than

475,000,000 unique visitors each month

Page 51: Look East! Opportunities in The Chinese Market

So what is REA doing to help reach this market?

Page 52: Look East! Opportunities in The Chinese Market

myfun.com REA has invested in establishing a premium

property portal in China.

The site is now 8 months old and growing well, we have designed the site to offer a simple, efficient and stress free way of adding

property to this site.

Page 53: Look East! Opportunities in The Chinese Market
Page 54: Look East! Opportunities in The Chinese Market

Homepage

Page 55: Look East! Opportunities in The Chinese Market

Search results

Page 56: Look East! Opportunities in The Chinese Market

Property details

Page 57: Look East! Opportunities in The Chinese Market

Trust and traffic

•  We are at the start of the using the internet to find property.

•  Privacy laws are changing this is pushing consumers to find property online. This is growing and

will become the number 1 place for consumers to find property in the near future.

•  Trust is a big issue for Chinese consumers.

Page 58: Look East! Opportunities in The Chinese Market

Unique features of myfun.com

Two sites

•  English (to show our clients here in Australia) & Chinese (simplified Chinese/Mandarin)

Reporting

•  Full Omniture reporting (there is no independent reporting on most sites in China)

Local expertise

•  Built by our own Chinese team in Xian

•  Communication formats liaison person, up to 4 different people in China, one in HK, quick chat, and 10 social

media formats

Technical function

•  Currently hosted in Japan- looking to eventually move to China for faster load times

Page 59: Look East! Opportunities in The Chinese Market

CHINESECONSUMER

MYFUN.COMCHINESE CONSUMER

SEES PROPERTYON SITE

AGENT/DEVELOPER SENDS LEAD BACKTO OUR PROPERTY LIAISON SPECIALIST

REA PROPERTY LIAISON FORWARDS THE LEAD TOBROKER CONCIERGE SERVICE WHO HELPS THE

AUSTRALIAN AGENT CLOSE THE DEAL

MAKES ENQUIRY SENDS LEAD INENGLISH TO

AGENT/DEVELOPER

PROPERTY LIAISON PERSONASKS CHINESE CONSUMER A FEW QUESTIONS

REA PROPERTYLIAISON SPECIALIST

OPTIONAL SERVICEIF AGENT/DEVELOPER CANNOT DEAL WITH CHINESE LEAD

REA PROPERTYLIAISON SPECIALIST

BROKER CONCIERGE

AUSTRALIANAGENT

AUSTRALIANAGENT

No sales channel in China?

Page 60: Look East! Opportunities in The Chinese Market

China based sales team

CHINESECONSUMER

MYFUN.COMCHINESE CONSUMER

SEES PROPERTYON SITE

AGENT/DEVELOPER SENDS LEAD BACKTO OUR PROPERTY LIAISON SPECIALIST

REA PROPERTY LIAISON FORWARDS THE LEAD TOBROKER CONCIERGE SERVICE WHO HELPS THE

AUSTRALIAN AGENT CLOSE THE DEAL

MAKES ENQUIRY SENDS LEAD INENGLISH TO

AGENT/DEVELOPER

PROPERTY LIAISON PERSONASKS CHINESE CONSUMER A FEW QUESTIONS

REA PROPERTYLIAISON SPECIALIST

OPTIONAL SERVICEIF AGENT/DEVELOPER CANNOT DEAL WITH CHINESE LEAD

REA PROPERTYLIAISON SPECIALIST

BROKER CONCIERGE

AUSTRALIANAGENT

AUSTRALIANAGENT

Broker or Project marketer

Page 61: Look East! Opportunities in The Chinese Market

Agent admin

Page 62: Look East! Opportunities in The Chinese Market

Translation admin

Page 63: Look East! Opportunities in The Chinese Market
Page 64: Look East! Opportunities in The Chinese Market

Our liaison team

We have 4 dedicated people that handle the day to day enquiry from myfun.com

Their role is to obtain contact details from Chinese consumers and send it to the agents.

They obtain these enquires via many communication systems including:

•  Phone

•  Email

•  Quick chat

•  And around 8 social media platforms

They operate from 10.00 am until 9.00 pm China time, 7 Days a week*

*Please note we do not offer this service during Chinese new year or public holidays

Page 65: Look East! Opportunities in The Chinese Market

Our translation team

We have a team of 12 translators based in Xian China.

All have English degrees and are proficient at communicating in both Chinese and English.

We also operate a temp team that gives us the ability to handle a large amount of property description translations

within 24 hours notice.

Page 66: Look East! Opportunities in The Chinese Market

Our agency in China

Page 67: Look East! Opportunities in The Chinese Market

Traffic plan: SEO &SEM

We are currently utilising SEO and SEM best practice from both our digital agency and our own internal team.

We have designed the site to index across many of the Chinese search engines such as:

Page 68: Look East! Opportunities in The Chinese Market

Social media traffic plan

We have already started using social media to build brand awareness and

drive traffic back to www.myfun.com.

Article submissions, points of interest about the Australian property market

will make sure we become the number 1 source for Chinese consumers

looking to invest or immigrate to Australia

975,000 Weibo followers

1,317 WeChat followers

Page 69: Look East! Opportunities in The Chinese Market

Traffic plan: House ads

Page 70: Look East! Opportunities in The Chinese Market

Traffic plan

We have presented at two property shows in China.

Shanghai International Property Show

•  14th - 16th of March 2014

•  29th April - 2nd of May 2014

More to follow

Page 71: Look East! Opportunities in The Chinese Market
Page 72: Look East! Opportunities in The Chinese Market

Syndication partners

www.ausproperty.cn

Myfun is currently exploring syndication deals throughout China to

gain maximum exposure for our listings.

Page 73: Look East! Opportunities in The Chinese Market

Syndication partners & alliances

30m Million visitors per month

1.73m Million registered Realtors

9,984 Developers

Cooperate with over 70% Developers in

New Home Industry

100,000 Brokerage Agencies & Realtors

Cooperate with over 85% Brokerage Agencies &

Realtors in Resale Industry

8,200 Home Furnishing

Companies Cooperate with over 60% Home Furnishing Companies in Home

Furnishing Industry

Page 74: Look East! Opportunities in The Chinese Market

Fang.com key facts

15 million Soufun Card members

With Overseas property purchase demands

With Domestic property purchase demands

We are powering au.fang.com Source: 2012 Chinese Buyers Overseas Home Buying Trend Analysis

Page 75: Look East! Opportunities in The Chinese Market

Squarefoot.com.hk

Page 76: Look East! Opportunities in The Chinese Market

Competitors

www.juwai.com

www.chineserealestate.com.au

www.acproperty.com.au

www.ausproperty.cn

www.gifang.com

Page 77: Look East! Opportunities in The Chinese Market

Broker concierge

We compiled a list of Broker concierge companies located in China to help our

Australian agents manage the sale. The Broker Concierge will be treated like a

conjunctional agent agreement. You agree on the commissions structure direct with

them

Your own office in China ?

We also work closely with another company that offers you a chance to have a real

presence in China by setting your business up with a 400 phone number, email ,

website, desk, a consultant that speaks Mandarin and English, will answer the

phone as your business and negotiate for you any leads in China. This is a shared

service therefore very economical and a great listing tool.

Page 78: Look East! Opportunities in The Chinese Market

Realcommercial.com.au

•  Site is now live

•  3 month evaluation period

•  Hard launch in October

•  Only for sale properties to have access to the site

•  Estimated traffic of around 20,000 investors per month

Page 79: Look East! Opportunities in The Chinese Market

How much does it cost?

•  The cost is $330 for 90 days

•  Any premier is bundled on to myfun.com

•  Any project profile is bundled on to myfun.com

•  Commercial property rates have not been decided at this time

Page 80: Look East! Opportunities in The Chinese Market

Who is the next rising country to view Australia as a great place to buy investment properties? Currently in second place behind the Chinese is Singapore. In the near future we are expecting

Indonesia

Page 81: Look East! Opportunities in The Chinese Market

Xièxiè – Thank you!

谢谢

Page 82: Look East! Opportunities in The Chinese Market

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