As told by Winston Lee, Director of Special Projects - Greater China Market, PropertyGuru Group.
There is enormous potential in the Singaporean property market to acquire Chinese buyers. This potential only grows with time as new avenues become available and new niches come to be.
Winston Lee shares with us the opportunities not yet discovered by Southeast Asian developers and how they can capitalise on such opportunities.
How has the Mainland Chinese buyer evolved over time and are there any new opportunities?
There are always new opportunities if you look in the right places. One such niche opportunity on the rise is from young Chinese high net worth individuals (HNWI) who rose to their fortune through the use of blockchain technologies such as cryptocurrency trading.
However, the Chinese government recently imposed a crackdown on cryptocurrency trading, which is effectively pushing these young millionaires to Singapore. They are part of the growing popularity among young Chinese buyers looking to own a home in Southeast Asia.
I don’t believe that this opportunity has been looked at closely by the real estate market at large. There are many other growing trends and concepts that affect the buyer decisions and help shape the market through the ages. While it is not easy to predict the future with full accuracy, we can use our expertise to tell which indicators to look for when buying or market patterns change - such as when there is a sudden uptake of the HNWI from crypto trading and blockchain related industries entering the market.
What are the challenges faced by property developers when approaching these Chinese buyers?
We can take the current market change as the best example, with blockchain-driven HNWIs entering the market. Developers who don’t understand how crypto, NFT and blockchain work find it extremely difficult to maintain a conversation with the new market players.
Technical knowledge is not something you can easily pretend to have. Therefore, it becomes a challenge when you haven’t invested the time and resources to learn the market. Essentially you should adapt yourself to how the market is changing and identifying those changes in advance will give you the edge to survive. At the end of the day, you have to understand your customer and their needs and be equipped with the necessary tools to do so.
Another common challenge throughout time has been language and cultural barriers. China is a large country and buyers originating from different areas have vastly different likes, dislikes, and mannerisms.
There are no catch all behaviours or pitches that developers can use to entice potential buyers of any area, despite what the real estate marketing gurus may say. The geographical trends must be identified:
• Where are the most HNWI buyers originating from?
• Do I know these customers’ cultural backgrounds?
• Do I know what their mannerisms may mean?
Ask these questions before exerting resources to penetrate the market, or the developers may find themselves down the path of a sweet deal just for it to be cancelled last minute.
Why are these blockchain-driven HNWIs of China interested in Southeast Asia real estate?
Unlike other usual clients looking to invest in real estate, this customer segment does not see real estate as a way of making money. They make money through leveraging blockchain technology and crypto investments, and that is a much faster way of growing their net worth than real estate will ever be.
However, there is security in real estate and that is what these individuals are attracted to. The risks involved within the blockchain sphere do not apply to real estate for real estate will never crash so low that it will be valued at zero. Therefore, they see property as a way of preserving their wealth.
At the same time, China has imposed a ban on all crypto-currency transactions to supposedly curtail financial crime. This came as a big hit as China is one of the world’s largest crypto-currency markets, initially taking up almost 75% of the Bitcoin mining market, which has since fallen below 50%.
Trading crypto currency has officially been banned in China since 2019 and Chinese state institutions warned that buyers would face no protection if they continued to sell Bitcoin and other cryptocurrencies on the internet.
Mining companies have been keen to relocate their operations overseas in the months since this crackdown, causing an exodus rightly called the “great mining migration”. Most of these individuals are now moving to Singapore, creating a potential market regionally for developers.
So how different is your approach in reaching these Chinese HNWIs?
This is a key point. We must go beyond our usual processes of approaching Chinese customers because the social media platforms they use would be very different from
the rest of the world.
For instance, Weixin/WeChat is the most popular social media platform, followed by Weibo and Kuaishou, according to Hootsuite’s We Are Social report.
They would also be heavily swayed by the views of Key Opinion Leaders (KOL); In China there is a KOL for everything, and they are often web influencers that can offer valuable insights more than just pushing your product or service.
We will need to take these consumer behaviours into consideration before strategizing on an effective and objective game plan to reach the right audience in the right place.
How does PropertyGuru’s China Solutions come into play and how does it help property developers?
While property developers may be eager to tap on this opportunity, it is not an easy task. Individuals and real estate agencies may spread thin doing the
research as there is so much content to understand.
We are, however, constantly staying up-to-date with the latest Chinese market developments and hence able to help any developer who wants to approach
interested Chinese buyers. This could be achieved with a lot less time and effort as we have already done most of the groundwork while also creating the connection between the agency and the buyer.
We have identified the potential impact of blockchain long before it was mainstream and brought in the experts who could help identify changes that may impact the real estate industry. For instance, usually after a government restriction is imposed, there would be some buyers who want to move their business to avoid change; these are the indicators that let us know in advance where and what to look for when spotting trends.
Our recent partnership with Asia Blockchain Gaming Alliance (ABGA) helps property developers meet potential customers at their events and we have set up frameworks such as the SEA Investment Property Forum to increase their exposure.
The Chinese blockchain-driven HNWIs is the low hanging fruit in this current market change for any SEA developer.
There is much potential here for developers to approach and acquire a whole new market by tapping into this newly-minted wealthy individuals who are keen to preserve wealth by channelling “new money” (created from new technologies such as blockchain) into “old money” investments (such as real estate purchases).
No new market can be tapped into without trying new things. As your trusted partner, PropertyGuru China Solutions can help you maximise this potential with our industry experience and network, so get in touch with us today.
About Winston Lee:
Winston is the Director of Special Projects in PropertyGuru Group. As a digital media strategist, Winston has passion and commitment in all his endeavours, with a keen interest in latest technology trends such as Web 3.0 and blockchain technologies. At a personal level, Winston is a seasoned serial real estate investor. His portfolio includes residential, commercial and industrial properties in 5 countries across Asia Pacific. He enjoys discussing property market and technology trends with like-minded people.
The opinions expressed in this article are those of the author.