Chinese are the nation of savers and although they are the biggest consumer power in the world, they like to secure their money in investments. Wealthy people in China invest in many assets, but their favorite has always been real estate. But the recent real estate crisis and problems of the biggest real estate company in the country – Evergrande, made Chinese property buyers question their choices and look more eagerly for opportunities abroad.
But, you might be wondering how to sell real estate properties to Chinese investors? In fact, there’s no secret: you will have to adapt to Chinese property buyers in order to do business with them. In this article, we are going to give you some tips and advice to sell your properties to the Chinese.
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The real estate industry in China
The real estate sector is a key part of China’s economy, accounting for around a quarter of China’s economy is facing problems. According to Reuters, new home prices are expected to fall 1.4% in 2023. Property sales were seen slumping 24.5% in 2022, a far bigger drop than the 10% fall forecast in the May poll. China’s real estate sector is facing a crisis since regulations in 2020, resulting in developers’ problems to finish some projects in the country.
Data collected by Reuters and an overlook of China’s situation, however gloomy for China’s economy, brings good news for foreign interest groups, that are seeing the that the interest in foreign properties in the US, Australia, or Europe has grown dramatically over the last years.
In recent years, China has seen tremendous volatility in overseas property investment. In a country with a population of 1.3 billion citizens, its GDP grew by about 7% and the potential market for overseas real estate investors is boundless. Investors are looking for better opportunities in terms of environment, work, immigrant investment, and educational opportunities.
Who are Chinese real estate buyers?
With their domestic economy becoming increasingly stronger, Chinese investors have become a formidable force in international real estate markets. While some remain within China to buy properties there, others are looking abroad for ventures beyond the country’s borders.
Bloomberg projects that these property buyers will be at the forefront of foreign investments over time due to increased economic growth and the advancement of China’s GDP. In this blog post, we explore two key types of Chinese investors: those who live outside and purchase overseas as well as those who live in China but are looking for residential properties overseas.
Why do Chinese buyers engage in foreign real estate investments?
There are many reasons for Chinese investments abroad, like the zero-covid policy, increasing housing prices in Chinese cities, the growth of the middle class, and the growing lack of trust in Chinese authorities. In this post, we will focus on three main reasons; education, investment, and migration.
Mainland China is experiencing a wave of students seeking foreign education, with 83% dreaming to have their children study abroad. As the competition for university spots in Chinese schools continues to be fierce and job opportunities are widely limited locally, overseas schooling has become an attractive option – not just because it sets them apart from others on paper but also allowing young people to immerse themselves culturally and internationally.
Wealthy Chinese are making big investments in the property market, especially in residential properties, with 61% buying real estate abroad as a lifestyle choice. Whether it’s for rental income or to spend time there on holiday and potentially even for retirement purposes – these savvy investors have their eyes set on securing long-term wealth through global investments.
Emigration of wealthy Chinese
Chinese high-net-worth individuals are becoming an increasingly common sight overseas as the Covid pandemic and economic setbacks lead to a mass exodus of wealthy citizens. In 2022, China saw 10,000 affluent people departing – with further migrations expected in the coming years – thus placing them firmly in second place worldwide for high-net-worth immigrants.
A soaring real estate crisis is also contributing to this trend with investors choosing dividends from foreign capital instead of their native country’s boundaries.
Preferred investment locations
Even after some commercial issues, the US is still one of the major destinations for Chinese investors. Between April 2021 and March 2022, Chinese buyers accounted for roughly 10% of total foreign investment in U.S. residential real estate, spending around 6.1 billion dollars. Chinese residential real-estate investments are highly focused on the Pacific Coast, and nearly 40% of Chinese buyers have already purchased in California.
However, Chinese investors are shifting toward alternative countries like Canada, Australia, Singapore, Malaysia, or Italy amid concerns about tense trade relations.
The United States: The most popular destination for foreign investors
The United States is still China’s largest real estate investor, but it is also the most popular destination for Chinese investors. The east-west coast is often the most popular area, and New York is currently at the top of the list.
However, it’s not only Chinese investors that are buying properties, but also Chinese companies that are investing in overseas offices. In general, overseas investment returns are better than investing in China. The US attracts a lot of foreign investors and the Chinese are investing heavily, especially in major cities like New York, Miami, and Los Angeles.
Australia: A promising market for Chinese property buyers
Due to its geographical position, lifestyle, popularity, tourism, and weather, Chinese investors are particularly shifting their investments toward Australia’s real estate industry.
China owns 2.2% of Australia’s real estate industry, accounting for 91.8 Australian dollars in 2021. If we look a the graphic, we can see that China Merchant Group’s investment in Propertylink (an Australian company) amounted to 280 million Australian dollars. The industrial property was located in Sydney, along with most other leading real estate investment transactions in that year.
OFDI (Outbound Foreign Direct Investment)
As the Chinese strategy for international expansion is under constant development, China’s outward foreign direct investment (OFDI) increased dramatically with Chinese enterprises’ growth. China’s outward investment continues to play an important role in the global FDI market, ranking third behind the US and Japan in terms of investment flows.
Chinese people do realize that investment in bricks-and-mortar properties is the best way to take advantage of their assets, particularly in well-developed countries. When it comes to residential developments this is not surprising that with rising standards of living, priorities around education and lifestyle have become the main factor of acquisition for Chinese investors.
Some tips and advice to sell real estate properties to Chinese buyers
First of all, if you’re a real estate developer or property owner, you should take into account Chinese investors’ state of mind. Focus more on promoting real estate properties that have integrated innovations and new technologies.
In order to really start selling real estate to China, it is important to have a very thorough understanding of buyers’ purchasing habits. Gaining insight into what they are looking for across various marketing platforms used throughout China can be very helpful for you.
The most important thing to know is that China’s secret is its “digitalization”. With an investment of 900 million U.S. dollars and an Internet penetration rate of 70%, the entire investment ecosystem has been focusing on online platforms and tools.
Reach out to China’s Real Estate Investors: Online Leads/prospect Generation
China now boasts a 70% internet penetration rate with over 940 million Chinese users connected online. There are approximately 350 million middle-upper-class individuals active online in China every day. So, if you want to reach China’s middle and upper class, you will need to develop a comprehensive digital strategy and improve search engine ranking. Why? Because the Chinese market is unique & has its own internet websites, e-commerce platforms, and social media.
Create a Chinese website
Having your own website in Chinese should be at the core of your digital strategy. You have to know that the majority of the Chinese population is not fluent in English, so if you don’t have a website written in simplified Chinese, they won’t even look at it.
Moreover, this is also an important key for your ranking on the search engine Baidu. No matter how strong your reputation is in the United States, remember that when your company enters China, you are essentially invisible. All your positive reviews are inaccessible due to the “great firewall”.
Therefore, building a good Chinese website is very important, so that potential investors can understand your company’s situation and the type of property you provide. Remember about optimizing your website for mobile devices, as most people in China use their smartphones to search the web for information.
You should also include backlinks to your website to increase website traffic and your rankings in search results. Keep in mind that some overseas investors may not have the chance to see the property they are investing in. Therefore, it is crucial to provide a wide range of asset profiles with very concise details, so investors can better understand what they are getting.
Lead generation: Contact form
The two main ways to take advantage of your website is to use a ‘lead generation form’, in China it is also advisable to embed QR code links to drive traffic directly to your WeChat account as an additional method of contact for those interested to buy property.
You can also note the benefit of the ‘Baidu Live Chat’ Tool. This allows you to make contact while investors browse your content, portfolio, etc. Rich content equals longer time spent browsing and a greater likelihood of contact via live chat tools.
To sell your properties to Chinese Investors: focus on Baidu
After creating a Chinese website, you need to start to increase your visibility to create interest. As the most popular search engine in China by far and the 5th most consulted website in the world, Baidu is simply a step you can’t skip in China if you want to sell real estate. You have to know that 75% of all property and investment research is carried out via Baidu. In order to master Baidu, you will need first to optimize your website for it to be ranked on the first results of Baidu.
Moreover, you can also display and advertise your company as Baidu is like an open window on the internet. Statistics show that if you do not appear on the first search page, you may lose 65% of your potential internet traffic.
Therefore, it is strongly recommended to do search engine optimization in order to rank on the home page. Find the right keywords in order to be ranked higher on Baidu. This Chinese website will be your “storefront desk” in China, and PPC is also a great way of complementing the ongoing search engine optimization of real estate companies.
This will keep you in the top spot for paid results, while real estate will still provide a good ROI. The combination of these two approaches works best for PPC and was initially more important when you entered the market, and SEO became more viable after months of activity.
In order to rank on Baidu, follow these tips:
- 8-10 pages
- Keyword repetition in line with selected keywords
- Internal links to other relevant pages
- Clear and interesting content
- Put QR codes on your social media accounts and other places where to find you
If you want more information about Baidu, you can check our complete guide on Baidu SEO. Also, if you have more inquiries or questions, do not hesitate to contact us.
Social media to promote your Real Estate agency in China
As the most popular social media application in China, WeChat is a must-have if you want to conquer the Chinese market. Thus, it is mandatory to become familiar with the internal operation of WeChat and its promotion methods.
By setting up an Official WeChat account, your audience will have more direct contact information. It will also allow potential investors to see your company’s updates, pictures of your properties on your WeChat moments, etc.
You can also start your own WeChat group and offer additional information there, including interest rates, financial regulations for Chinese buyers (if there are any), house prices with discounts, or the newest investment opportunities, before you list them on the website.
For example, any new properties you’ll have can be shared on your official account so that your followers can see them instantly, without going on your website. WeChat is also the best way to establish a relationship with Chinese investors. WeChat is the first step toward conversion.
Almost every website in China is accessible via QR code, so include your QR code on your WeChat account so that potential investors can directly follow your official account.
The importance of e-reputation in China
Even though your company is already well established in your country, Chinese consumers are still going to be cautious. In fact, you will have to take care of your online reputation and use digital tools to increase your visibility, promote your company and gain their trust.
China news sources such as Sohu and Fung Fung are the places where investors can browse for information. You can also create topics on Baidu Tieba or Zhihu, popular forums and Q&A platforms in China, and start talking about your properties. If you are not active on Chinese social media and have not yet created Chinese content, you won’t be able to reach Chinese potential clients. So, if you want more information about e-reputation in China, do not hesitate to contact us directly.
We can help you with selling real estate properties!
As specialists in the Chinese market with over 10 years of experience, we basically know all the strategies in order to succeed in China. Over the years, we were able to enhance our services and strategies in the Chinese market.
We have had several experiences in the real estate industry, as well as many successful collaborations. However, all companies are different and require a specific approach. So, do not hesitate to contact us so that we can discuss your projects in a free consultation with one of our experts, to give you the solutions that you will need.