Understanding Chinese property buyers and sellers

It’s not news to anyone that there has been a constant increase in the number of Chinese property buyers and sellers in Australia, particularly in metro city areas. In light of the Chinese lunar New Year, I find it timely to take a look at some of the taste and behaviour idiosyncrasies of this significant group of property actors.

This article will refer mostly to Chinese residential buyers and sellers. While there are some similar behaviour patterns with Chinese commercial buyers and sellers, most commercial transactions are different as many involve syndicates rather than single players.

I also would like to highlight that a level of generalisation is required to write an article such as this. The observations made in this article are from years of experience in dealing with Chinese clients and from the knowledge of my colleagues who are of Chinese origins and understand the finer details of the culture.

The first mistake that many people make when discussing Chinese buyers is to group them all as one. The reality is that Chinese buyers behave very differently depending on whether they are overseas Chinese buyers, new Chinese immigrants, long term Australian residents of Chinese heritage, or even Australian-born-Chinese buyers of 2^nd generation. The main difference is due to their level of English as well as the level of familiarity, trust and comfort they have in the Australian real estate processes.

The second mistake often made in understanding Chinese buyers is to assume all buyers of ethnic Chinese origins behave in similar fashion. A Taiwanese buyer can behave very differently from a Hong Kong buyer or a mainland Chinese buyer. Chinese Malaysians, Indonesians or Singaporeans likewise all behave in their own unique manner during property negotiations.

While increasing sensitivity to Chinese buyers and sellers is becoming the norm in real estate transactions, many agents still only have a superficial understanding of Chinese clients. Many have a basic understanding of Feng Shui, or the preference for certain lucky numbers such as 8, and tend to focus on these in the marketing of properties. While this is certainly important for some Chinese buyers, it is not usually equally so for second generation Chinese Australians. Many properties with the supposedly unfortunate number 4 (meaning ‘death’) have sold for high prices to Chinese buyers. Therefore, while important to keep these cultural preferences in mind, it is not an all-consuming factor. Chinese buyers are rational and they are not buying every single property that has an ‘8’ in the number.

With this said, my colleagues and I have noticed a definite pattern of preferences with many Chinese buyers over the years:

• They like full brick homes (as opposed to brick veneer, weatherboard or fibro – unless they plan to knock it down).
• They like rectangular shaped land.
• They generally would prefer not to have a swimming pool. Swimming is not a big part of the Chinese upbringing and many Chinese-born children don’t know how to swim. Therefore a swimming pool is seen to be more a danger and a chore than a source of pleasure.
• They like level and clear land with not too many trees (especially protected species such as gum trees which are not always possible to remove).
• They like low maintenance properties (e.g. paved backyard as opposed to cottage style garden).
• They prefer high side of the street and generally dislike properties which have an entrance below street level.
• They have a preference for newer built properties and less of an appreciation for older style features such as an ornate ceiling or picture rails, etc. Therefore, a heritage listed property usually does not appeal to Chinese buyers.
• Position is important and many Chinese buyers will not want to purchase properties which are at a T-junction for example.
• Aspect is also important and Chinese buyers typically prefer morning sun than afternoon sun.
• Some Feng Shui related features are important. However, so long as a ‘flaw’ can be fixed, it shouldn’t be a huge problem. For example, some superstitious Chinese buyers believe it is bad Feng Shui to be able to see through from the front door straight out the back door. To them, this implies that money which comes into the house will immediately find its way out the door just as quickly. However, if some kind of partition or barrier can be built to disrupt this flow, then this problem is solved. This is quite unlike many non-Asian families who actually think it is preferable to have that cross ventilation and see-through aspect from the front door.
• For any Chinese buyers with school-aged children, the proximity to their preferred school is almost always the main consideration. This is not surprising given the heavy emphasis on education placed by parents upon their children.

When it comes time to buy or sell, many Chinese buyers and sellers who may not be fluent in English would show a strong preference to deal with Chinese-speaking agents. This is why many Sydney suburbs (such as Chatswood, Eastwood, Epping, Strathfield, Campsie, and Asfield etc.), which have strong Chinese demographic presence also tend to have the most number of Chinese speaking agents. Quite often the Chinese agents are not necessarily the best when it comes to sophisticated or glossy marketing. However their ability to communicate in the same language and build a relationship with the client gets them the business.

At the end of the day, while recognising that there are distinct behavioural differences between Chinese and non-Chinese property buyers and sellers, it is also important to note that there are also similarities. As with any other buyers, Chinese buyers also like to get a ‘bargain’ when buying. They tend to be savvy property investors who are risk averse and rely on the advice of their family and friends. Earning their trust is important when dealing with them, regardless of whether it is on the buy or sell side. And just like any other buyers, once they are emotional about a particular property which meets their criteria, they are prepared to pay a premium if they can afford it.

Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation. You can follow Oliver on Twitter at www.twitter.com/ohproperty.