Sotheby’s International Operates In 45 Countries
With eyes on the country’s wealthy homebuyers, Sotheby’s International Realty Affiliates LLC, a unit of Realogy Corp., plans to enter China’s luxury property market by the first half of next year, targeting first-tier cities such as Beijing and Shanghai. Already affiliated with 45 countries and regions, including Japan, Hong Kong, Taiwan, Thailand and Vietnam, Sotheby’s International, like many other realty companies, is eager yet cautious to add China to their portfolio. Earlier this year, Christie’s International established a real estate franchise in Hong Kong, its first in Asia.
With China now ranking third behind the U.S. and Japan in terms of the number of millionaire households — a figure that climbed 31% to 1.11 million in 2010 — making moves into the country is perhaps not a surprising step for Sotheby’s to take. According to Jones Lang LaSalle, high-end properties priced at or around a whopping 40,000 yuan (US$6,285) per square meter account for approximately seven percent of China’s overall residential market. As Savills Plc. recently noted, a small but significant one percent of Beijing’s residential market consists of property going for a jaw-dropping 64,000 yuan ($10,059) per square meter.
Though Sotheby’s and other international realtors see opportunity in China’s luxury real estate market, Sotheby’s International Realty CEO Michael Good was quick to say this week that his company intends to proceed cautiously. As Good told Bloomberg in Shanghai this week:
We’ve had a lot of global growth, but we’ve been very careful with China, because China is such an important emerging economy….We think it’s very, very important to be measured in our approach and make sure that we better understand the real estate players and the nature of the business in this country.
Such discretion is particularly important from a brand-building perspective, since Sotheby’s and Christie’s — in their auction businesses — have thus far been restricted in the kinds of business they are able to conduct in mainland China. The overall China real estate market is also coming under stricter control by Beijing, which has spent the last two years cracking down on “speculative capital” and have introduced a property tax in Shanghai and Chongqing, higher down-payment requirements and home purchasing limits in top-tier cities. Sotheby’s CEO Good, for his part, expects his company’s China moves to potentially hearten not only Chinese, but international buyers as well to invest in luxury properties in top-tier China. As Good put it, he hopes the expected 2013 expansion “will allow Sotheby’s International Realty to tap its network of some of the world’s richest property buyers to invest in China, while connecting the country’s surging riches with the world’s luxury real estate assets.” Moreover, building a real estate relationship with China may just be the key to opening more doors to Sotheby’s other services.