Scott Holmes, Business Development Director at REA Group presented at The Business Of Real Estate held on 1-3 September 2014. #rebiz14

2. November 2013
Look East!
Opportunities in the Chinese Market

3. 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

4. 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.

5. 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.

6. The great
firewall
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

7. The 3 types of Chinese buyers are buying Australian property for:
Investment Education Migration
They typically borrow about 70% of the purchase price through an Australian bank
Average sale price is around $685,000

8. 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

9. Emigration destinations
The US and Canada are the top choices
for investment immigration. Los Angeles,
San Francisco and Vancouver are the
most desirable cities.
Immigration and the Chinese HNWI 2014 report

10. 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.
Immigration and the Chinese HNWI 2014 report

11. Education
Top 10 International Education
Destinations in 2013
Source: Hurun Report, Chinese Luxury Consumer Survey 2013

12. 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

13. 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.

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

15. 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

16. Why Australia?

17. 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.

18. 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

19. 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.

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

21. China fast facts

22. 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.
Hurun Report Immigration & The Chinese HNWI 2014
Amazingly, some 89% of Chinese billionaires
are self-made.
Wealth-X and UBS Billionaire Census 2013

23. 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

24. 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

25. 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

26. Population of China
1,351,130,000
which is almost
19%
of the world’s population

27. China has the largest
internet population
in the world
596,000,000

28. That’s almost
6 times
the entire Australian population

29. And it’s growing by
one person
every 5 seconds

30. In 2012 China added
50,900,000
new internet users

31. Twice
the size of Australia’s
entire population

32. China
is the world’s second
largest economy

33. “
Chinese consumers are
increasingly opting for quality
goods at higher prices and
going to online mediums to
gather information & purchase. “

34. Mobile internet
users
outnumber PC based internet
users in China
420,000,000
Mobile internet users
398,000,000
PC internet users

35. Devices that
Chinese netizens
use to go online
75%
Mobile
71%
Desktop
46%
Laptop

36. Where they
access the internet
from
92%
Home
32%
Office
22%
Cybercafe
16%
School

37. 91%
of China’s netizens visit
social media sites daily

38. Number of smartphone
users in China
420,000,000

39. That’s more than
the entire
population of the U.S.A.

40. Average time spent online
46 minutes
per day

41. China has the largest number
of online shoppers in the world
242,000,000

42. China’s total e-commerce
transaction value in Q3 2012
US$ 319,000,000,000

43. That equates to more than
US$ 40,000
in e-commerce transactions
in China every second

44. Number of unique visitors
to Taobao & Tmall
on Singles day 2013
402,000,000

45. 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

46. Total value of transactions
Taobao & Tmall
on Singles day 2013
US$ 5,700,000,000

47. 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.

48. 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

49. Unique viewers of
online video in China
350,000,000

50. Youku and Tudou attract more
than
475,000,000
unique visitors each month

51. So what is REA doing to help
reach this market?

52. 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.

54. Homepage

55. Search results

56. Property details

57. 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.

58. 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

59. No sales channel in China?
CHINESE
CONSUMER
MYFUN.COM
CHINESE CONSUMER
SEES PROPERTY
ON SITE
AGENT/DEVELOPER SENDS LEAD BACK
TO OUR PROPERTY LIAISON SPECIALIST
MAKES ENQUIRY SENDS LEAD IN
ENGLISH TO
AGENT/DEVELOPER
REA PROPERTY LIAISON FORWARDS THE LEAD TO
BROKER CONCIERGE SERVICE WHO HELPS THE
AUSTRALIAN AGENT CLOSE THE DEAL
PROPERTY LIAISON PERSON
ASKS CHINESE CONSUMER A FEW QUESTIONS
REA PROPERTY
LIAISON SPECIALIST
OPTIONAL SERVICE
IF AGENT/DEVELOPER CANNOT DEAL WITH CHINESE LEAD
REA PROPERTY
LIAISON SPECIALIST
AUSTRALIAN
AGENT
BROKER CONCIERGE
AUSTRALIAN
AGENT

60. China based sales team
CHINESE
CONSUMER
MYFUN.COM
CHINESE CONSUMER
SEES PROPERTY
ON SITE
AGENT/DEVELOPER SENDS LEAD BACK
TO OUR PROPERTY LIAISON SPECIALIST
MAKES ENQUIRY SENDS LEAD IN
ENGLISH TO
AGENT/DEVELOPER
REA PROPERTY LIAISON FORWARDS THE LEAD TO
BROKER CONCIERGE SERVICE WHO HELPS THE
AUSTRALIAN AGENT CLOSE THE DEAL
PROPERTY LIAISON PERSON
ASKS CHINESE CONSUMER A FEW QUESTIONS
REA PROPERTY
LIAISON SPECIALIST
OPTIONAL SERVICE
IF AGENT/DEVELOPER CANNOT DEAL WITH CHINESE LEAD
AUSTRALIAN
AGENT
AUSTRALIAN
AGENT
Broker or Project marketer

61. Agent admin

62. Translation admin

64. 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

65. 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.

66. Our agency in China

67. 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:

68. 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

69. Traffic plan: House ads

70. 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

72. Syndication partners
www.ausproperty.cn
Myfun is currently exploring syndication deals throughout China to
gain maximum exposure for our listings.

73. 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

74. 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

75. Squarefoot.com.hk

76. Competitors
www.juwai.com
www.chineserealestate.com.au
www.acproperty.com.au
www.ausproperty.cn
www.gifang.com

77. 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.

78. 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

79. 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

80. 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

81. 谢谢
Xièxiè – Thank you!