3 ways Chinese buyers are adapting to China’s new capital rules

Despite tightened money transfer policy effective January 1st 2017, Chinese overseas property buyers remain undeterred. Although the policy tightening was meant to curb the overseas property investment binge, Chinese buyer views have shown robust growth for top destinations on Juwai.com in February 2017, especially rising investment destinations like Thailand and Malaysia, which grew 89.3% and 69.4% y-o-y, respectively.

Chinese buyers are rolling with the punches, acclimatizing to the new capital controls and finding ways to sidestep it amidst rising demand for international property. A recent report from The Real Deal looking at New York – one of Chinese buyers favorite real estate markets – shows how Chinese buyers are adapting to get deals signed.

#1 Adjusting the focus

With forex rules of Chinese individuals being only allowed to buy up to $50,000 of foreign exchange per year being more strictly enforced, many Chinese buyers have switched focus to now target lower-priced properties around $1 million to $5 million, as it’s easier for them to put together a deposit.

#2 Making use of mortgages

While most Chinese buyers have a preference for paying all in cash – 71% of Chinese investors who purchased in the US paid in cash last year – a growing number of Chinese are now making more use of loans finance to get deals done.

In fact, 50% of Chinese buyers completing deals so far in 2017 have financed with a loan, according to a realtor cited by The Real Deal. That said, American banks have been quick on the uptake, with many adapting to the changing market by increasing their offerings of loans geared towards foreign buyers.

Well-known banks, including the East-West Bank, Bank of China, the Industrial and Commercial Bank of China (ICBC), Guard hill Financial, and Abacus Federal Savings Bank have all spotted the potential of the Chinese market and adapted their loan products accordingly.

#3 Huge markets remain unaffected

Strangely enough, purchases for education, travel, and medical care are still allowed by the Chinese government, and that means a huge market left untouched by government controls.

Chinese buyer outlook remains positive

With Chinese real estate investors increasingly readjusting to new government rules, and huge parts of the market for overseas property still open for investment, the outlook for Chinese demand remains positive.

Strategy is key, though, to maximize your appeal to real estate buyers from China, so bone up on how to launch an effective online strategy, such as via the right Chinese social media; target peak sales seasons, including Golden Week; and built Trust with a prospective client.