Expert Interviews with Kevin Turner.
Michael Yang represents the biggest source of Chinese buyer introductions into our market and tells us why his clients can’t wait to get their hands on a piece of Aussie property.
Listen to the interview now:
Kevin: Well, we do know, don’t we, the importance of overseas buyers, and how important they are to our property prices and the impact. But how do they get to find out about us? How do they get to find out about the property in this part of the world, particularly Chinese investors?
Kevin: GiFang Group are opening doors for Chinese investors, and are finding that more and more, they need to work very closely with our real estate agents here. Joining me now, the CEO for that company, Michael Yang. Michael, thank you very much for your time. Welcome to the show.
Michael: Great, thank you, Kevin. Thank you.
Kevin: I’ll ask you firstly about the name, GiFang. What does it mean? Does it have a meaning in Chinese?
Michael: It does. In Mandarin, “gi” means to collect or collecting, and “fang” means houses or property, so together GiFang means collecting houses or collecting properties.
Kevin: How important is that to a Chinese person, that they are seen as collecting property? Is this their way of showing wealth?
Michael: Probably not. We started the name, Kevin, by hoping to introduce the concept of investing or buying real estate outside China, and to make it as easy and simple as possible to the Chinese. Rather than saying buy properties or we invest into properties, we just say collect properties. A lot of the Chinese buyers in China previously didn’t have a good understanding of how to buy into Australia, or into US and other markets outside China. In China, it is actually quite hard to buy into real estate, you often need to put up a lot of deposits and banks make it tough, so we want to make sure that their experience in buying into Australia is simple and smooth and seamless.
Kevin: How do they see that? If it is difficult to buy property in China, and they can see how easy it is to buy it here, obviously the barriers that were put in place recently to make it more difficult for foreign buyers really isn’t much of an obstacle for them then, if it’s difficult where they are now?
Michael: Yeah. Well, at the moment, the exchange rate is working in favour to the Chinese, compared to where we were probably 12 months ago. The Aussie dollar’s worth around 6-8% lower than what it used to be, so that’s working in favour. But the other thing I suppose, Kevin, is in China, the Chinese investors, they don’t actually have a lot of choices when it comes to investments. They generally do not want to invest into the share market in China, because of its volatility, high volatility, and when it comes to investing in property in China, there is no residential property in China that can be offered at freehold. They’re all leasehold for 70 years, and all commercial and industrial properties is up for freehold for 40 to 50 years, if not less. So even that we have certain obstacles here in Australia, the fact that people can own property outright, freehold, is a big attractive factor to them.
Kevin: In China, if they can only lease property, who is the lessor? Is it the government?
Michael: The government, yes.
Kevin: Okay, so they would obviously see this as a very attractive entry into building property. There are obviously cultural differences. Do you find that Chinese people like to deal with other Chinese, or are they happy to deal with Australians, in terms of when they buy property?
Michael: Do you mean buying, in terms of dealing with Chinese agents or Chinese …
Kevin: Yes. How important is it for them to deal with someone who is also Chinese, is really what I’m asking.
Michael: In China, when we’re dealing with the Chinese citizens that are buying into Australian property, it is important that we have the Chinese speaking agents on the ground to answer their questions, to provide personalised services, but when it comes to dealing with Chinese buyers here in Australia, they’re quite comfortable dealing with Australian agents.
Michael: Now, I guess one of the reasons is that there seems to be, funny how I say that, there seems to be more trust from Chinese buyers to Australian agents because we do have certain regulations that pertain to govern the behaviour of agents, whereas in China that’s quite absent, actually. I was dealing with one of the top real estate networks in China and he made the comment that maybe out of 100 China-based real estate agents, probably only one or two are actually accredited. So that trust is quite important and that makes the Chinese buyers, investors, quite comfortable dealing with Australian agents.
Kevin: Yeah, well, you came across my desk because of a release that announced that you would be working closely with First National Real Estate. That’s not the only group that you deal with, is it? Those relationships to you, are they very important?
Michael: Absolutely. So, First National Group, we’ve been dealing with them since 2014, starting off with a number of offices, and then the relationship grew, and their CEO, Ray Ellis, and also Jonathon Walls, their National Commercial Director, we sat down and we talked about the possibility of having the opportunity to open up, I suppose in this case, open up doors to Chinese investors, not to only a few First National offices, but also to the national level, where it can be Brisbane, or Gold Coast, or New South Wales, or Melbourne.
Michael: The demand of Chinese buyers coming to Australia doesn’t tend to focus on particular parts heavily, so it’s really in the major cities, but it can be nationwide. So with First National and ourselves, we got together, and this partnership is very important for both groups. We’re also at points where we’re delivering extra values to not only the buyers but also the agents across the whole First National Group.
Kevin: Typically, what are Chinese buyers are looking for in Australia, is it residential or is it commercial property?
Michael: Kevin, it’s interesting you ask that. Where we see in the last three or four years, people are investing into residential, but now people are looking at commercial on a regular basis because of the fixed returns and possibilities of development on certain commercial property. But when it comes to residential, the typical Chinese middle class families, for example, they always have considerations for the kids, so properties close to stations, within school zones, close to shopping centres would always be popular.
Kevin: Michael, great talking to you. Thank you so much for your time.
Michael: Great, thank you. Thank you, Kevin. Thank you for having me.
Kevin Tuner worked in radio as General Manager of various east coast radio stations. He started in real estate in 1988 and was ranked in the Top 10 Salespeople in the state until he was appointed as State CEO 1992. He also operated a number of real estate offices as business owner and was General Manager of several real estate offices in Christchurch.
He now hosts a real estate show on Radio 4BC and a weekly podcast at www.realestatetalk.com.au and a daily 7 to 10 minute podcast show for real estate professionals at www.reuncut.com.au.
To hear more podcasts by Kevin Turner, click here
Disclaimer: while due care is taken, the viewpoints expressed by interviewees and/or contributors do not necessarily reflect the opinions of Your Investment Property.