Chinese buyers are an important part of the Australian property landscape – but how do you reach them with your real estate marketing? In the first of a two-part series, I interview WeTools to gain their perspective on Chinese property investors and whether they are still a viable buyer group to target with property campaigns.
Learning from WeTools
Lisa Hutchinson and Harriet Geoghegan from real estate marketing agency WeTools are specialists in Chinese social media marketing. Over the past two years, they’ve had great success supporting property developers with “off the plan” property developments in Australia, explicitly targeting Chinese property buyers.
Lisa and Harriet highlight that Chinese buyers now make up a significant part of the Australian real estate market, hence every real estate agent and agency should better understand this particular segment and ensure they have promotional strategies that will effectively reach Chinese audiences.
To be successful, you must first understand the dynamics of Chinese property investment in Australia. Only then will you appreciate the intricacies and need for marketing strategies devised specifically to reach different types of Chinese property investors.
What’s driving Chinese interest in Australian property?
In China, residents don’t buy a property outright; they purchase a lease that’s up to 70-years. Most homes in China are small apartments, with only one or two bedrooms. In major cities, these units fetch prices of $1.6 – $2.4 million Australian dollars.
Consequently, Chinese people see property ownership as a status symbol. This leads them to look outside their own country for opportunities to invest. For the price of an apartment in China, they can own a standalone house in Australia with three or four bedrooms, a garden, a lower deposit and stable capital gains. On average, a Chinese property buyer will invest between $500,000 and $950,000 in Australian real estate.
Australian real estate is attractive to Chinese property buyers for several reasons. For a start, Australia is not too far away from China. Additionally, the Aussie lifestyle is attractive to Chinese families, particularly the top-quality schools and universities. Education is extremely important in Chinese culture – 42 percent of Chinese people living in Australia are degree-educated, compared to just 14.8 percent of the general Australian population.
So Chinese buyers are generally affluent, well educated and middle-class. They’re overwhelmingly attracted to our major cities. Between them, Sydney and Melbourne are home to 75 percent of the Australian population born in mainland China.
Four ways Chinese investors are buying Australian property
Chinese property investors can purchase property in Australia in one of four ways:
1. Off-the-plan homes
Buying a brand new property is the only way someone still living in mainland China can buy property in Australia.
2. Resale properties
If a Chinese person has Permanent Resident status in Australia, they can purchase a “resale property”. Temporary Australian Residents are required to sell an older residential property when they leave Australia, but many foreign nationals can retain, rent out, sell or live in newly-constructed dwellings. This is a major draw for Chinese investors and explains why they are interested in new residential developments.
3. Purchasing as students
Chinese students are allowed to purchase property in Australia under the terms of their Student Visa. Many Chinese investors do this to secure their children an apartment to live in while studying.
4. Significant investors
High net-worth individuals can become Australian residents under the Significant Investor Visa. Made available in 2012, this entry visa requires the holder to invest at least $5 million in Australian funds and retain it for a minimum of four years. Hence, a number of wealthy Chinese residents in Australia can now access their funds, and a high proportion is moving their investment into property.
What’s slowing property sales to Chinese buyers in Australia?
Jonathan Kearns, the RBA’s head of financial stability estimates that foreign buyers account for approximately 5 percent of total housing sales in Australia. However, that figure rises to around 10 to 15 percent for sales of new housing, and 25 percent of new apartment sales.
In Sydney and Melbourne, sales of off-the-plan apartments to foreign investors are capped at 50 percent. Also, penalties now exist for homes left vacant, to encourage foreign owners to include their properties in the pool of rental homes.
The governments of New South Wales and Victoria now require Chinese investors to make higher down-payments on their properties. Also, stamp duty and land tax payments increased for foreign buyers.
China is also attempting to implement obstacles to discourage its citizens from moving away. The movement of money out of China is currently restricted to $50,000 and advertising foreign property is banned on many online platforms and marketing channels.
How to market Australian properties to Chinese property investors
In spite of the hurdles placed in front of Chinese property investors, they remain a significant buyer group. In 2016, Chinese investment in Australian property reached a high of $31.9 billion. Since then investment has eased, but the Chinese are still interested in Australian property as an investment vehicle.
So how can you tap into this lucrative market and reach Chinese buyers with your Australian real estate marketing?
1. Understand the Chinese culture
Chinese property buyers are extremely thorough. While they rely heavily on their advisors and real estate agents to help purchase properties, they also conduct their own research into the countries and projects they wish to invest in.
They are also extremely suspicious of advertising – even more so than we are in Australia. Doing business with the Chinese community is about building trust-based relationships, which takes time. The most effective type of real estate marketing is word-of-mouth recommendations.
Family hierarchy is extremely important to the Chinese, so you need to respect this. Make sure you’re addressing every member of the family. For example, the university student may be purchasing the property, but their parents will be the key influencers behind the decision and their opinions are highly valued.
This partly comes down to status, which is respected in China to a level that’s hard to fathom in Australia. This is why influencer marketing is extremely powerful – Chinese property buyers hold the opinions of those they see as having a higher status than themselves in high regard.
2. Get your digital marketing right
China is a digitally-savvy nation – the Chinese conduct their whole lives on their smartphones. But their digital culture is very different from our own.
When it comes to social media marketing, the platform that matters most is WeChat, China’s most popular social network. I’ve previously written about how WeChat works. It operates very differently from the likes of Facebook – it’s about sharing information within your group of friends rather than seeking maximum visibility within the world. It’s also extremely difficult for an Australian real estate business to crack as foreign users can’t see Chinese information on WeChat, and vice versa.
It can be difficult for an Australian real estate agency to even get a WeChat account. As Lisa and Harriet explain: “Before we launched our own agency we spoke with off-shore Chinese marketing agencies, and said, ‘We’d like to set up a WeChat account and implement a real estate marketing strategy’. We had a budget, we agreed to the costs and were ready to sign on the dotted line. But we’d get a ‘We’ll see’ response at the end of the meeting.”
Can you imagine meeting with an Australian agency and saying, ‘We’d like to run a Facebook campaign, we’ve got $20,000 to spend, and we’re ready to go now’, and having the agency reply, ‘We’ll think about it’?
WeChat, just like every other element of real estate marketing to Chinese property buyers, is built on trust and referrals. In Part Two we’ll discuss more specifically how you can use WeChat to influence and open doors to Chinese property investors.