The Crown Green Square project in Sydney, Australia. (Courtesy Photo)
With a close proximity to China, high-quality education opportunities, and stable economic situation, Australia is a key target for wealthy Chinese property buyers. The market has been heating up so fast in recent years, in fact, that Australia’s government is proposing extra charges for foreign buyers in order to stabilize surging Chinese demand. To learn more details about the effect this trend is having on Australia’s luxury property industry, we interviewed Iwan Sunito, the CEO of Australian luxury real estate developer Crown, a company on the front lines of Australia’s Chinese real estate buying boom. With a $4.5 billion portfolio of six properties and many others in development, the company sells over half of its luxury apartments to Chinese buyers. In order to respond to Chinese demand, it is currently planning to open a China office in 2015, and is considering property development in China as well as Los Angeles, another favorite location for Chinese real estate buyers.
How important are Chinese buyers to your overall sales?#
They are the number one buyers group from the international market. It’s Chinese from all over the world, and it’s about 60 to 70 percent of our buyers. That includes buyers who are buying to live in [the apartments] and people who are buying for their children to study, and people who are global investors. We are very focused on the mainland Chinese market because it is a very strong buyers’ profile: very discerning buyers, high- and sometimes ultra-high-net-worth individuals, and an interest in what we are offering at Crown—very beautiful architecture that appeals very much to this group of buyers. We are very focused on them. We work closely with a lot of existing buyers that we have and real estate agents that have a massive client database; we are also for that reason interested in expanding our office to China to make it more accessible to Chinese buyers.
Crown CEO Iwan Sunito. (Courtesy Photo)
You’re currently eyeing locations for global expansion such as Los Angeles, which is a top city for Chinese real estate purchases. Are Chinese preferences an important factor when you’re choosing global locations?#
Yes. Research has shown that in Los Angeles, for the the majority of the offices, international buyers are coming from China. Chinese buyers are by far the largest of the groups from around the world. We are looking at expansion to Los Angeles. We identified that one of the key [groups of] property buyers has to be mainland Chinese. The reason for this is that Chinese and Asians love property. We know that property will go up in value if you hold it long-term, and property is a rare commodity—you can’t simply build more land. Also, Asian and Chinese investors are investing globally. They’re not unfamiliar with investment in global markets around the world—in London, in Australia—they’re quite well-informed buyers. In particular, the Chinese and Asian ones that we have like to invest in markets where they can send their children to study. For that reason, a city like Los Angeles is an interesting city for Crown because it is one of the most favored destinations for Asian people.
What kinds of effects are Chinese buyers having on Australia’s luxury property market?#
What I feel is that it actually helps to improve the quality of property in the market, because the Chinese do value the uniqueness and luxury-ness of the product, and they are willing to go and pay for above a standard apartment. In Sydney, for instance, it allows developers to put more into the development because they understand that there will be a very strong market for this product they’re supplying.
What are wealthy Chinese property buyers’ main reasons for buying apartments in Australia?#
Number one is because of the political security; the economic strength, and they love to send their children to study. What makes it fairly attractive is that the distance of travel is closer—for a more Western education, it’s probably the closest by far from Asia. They like the fact that they can send their children.
The other thing is that Sydney is very unique, a very beautiful city, and very friendly for Asian buyers because we have a very beautiful Chinatown and it’s safe to go around anywhere in the city. It has leading hospitals and you’ve also got shopping centers in the CBD. Everything is becoming accessible if you live in a city like Sydney.
The Sydney by Crown project in Sydney, Australia. (Courtesy Photo)
Are they living in them full-time, using them for vacation, or purchasing as an investment?#
I think about 50/50. Fifty percent buy them because they want to live here and they have children studying here, and they see that it is a great investment. The other 50 percent are buying because they believe in the fundamental of the Sydney market, where there is a supply shortage. There aren’t enough apartment units being built in the city, but they also see that the price in Sydney compared to a city of similar economic power—Singapore, or Hong Kong, or Shanghai—is very attractive. Some of them are buying because they see that the price’s capacity to grow is quite strong. And lately, the improvement of the value of the Australian dollar is lower compared to the U.S. dollar. That’s an attraction to a lot of investors.
The other thing that’s worthy to add is that unlike in Asia, the buyers in Sydney, Australia only need to pay 10 percent when they exchange on the property. They only need to pay the balance when the project is completed, which is about two years later on. That’s very attractive because in Asia, they often have to pay the payment progressively, but here they only need to put 10 percent down.
What is the average Chinese client looking for in a luxury apartment?#
I find that they like location—near transport, near jobs, near shopping centers—but they also look at within the building itself: they like to look at a lot of facilities, such as the ones that Crown is offering—a really beautiful swimming pool, a theater room, a library, and beautiful gardens that create a sense of retreat. That’s the sort of thing that Chinese investors are looking at. They’re looking for a similar product offering to what five-star resorts are offering—which is a great foyer, beautiful architecture, and amazing gardens, and proximity to other conveniences such as shopping centers and major tourist destinations. When we launched our Sydney by Crown, we were surprised by the take-up, because we were aiming to sell $100 million, but we sold $170 million within four hours. The reason is simply because it is beautiful architecturally, it has all the facilities that they’re looking for, and the proximity to transport and to iconic tourism destinations like the opera house and the Harbour Bridge—those are all within walking distance.
How does Crown market its properties to potential Chinese buyers?#
Over the last 18 years, we have built up a lot of loyalty from our Chinese clientele. Many of them are very big buyers for Crown, and many of them have heard about Crown even if they haven’t bought—from friends of friends, and some of them are also brought by our agents, because the agents have a connection or connectivity with clients who are looking for a a product offering similar to Crown.
In addition to that, we have offices in Singapore, we have offices in Indonesia, we have also our agents in China. We make the project accessible to our buyers. The majority that we have are buyers that have bought before and are buying again.
We also tap into Chinese publications to get the word out about us, we tap into online social media tools available in China, we use media like Singtao, China Daily, a lot of the Chinese media are being used in terms of marketing the product to potential buyers. But the majority of our success rate, as I was saying before, is because a friend introduced the project to somebody else. It’s becoming quite a referral program. A buyer brings their friend, and their friend brings another friend; we often see them bring more than one—one buyer will bring 10 friends; another will bring three friends. It is a lot of word of mouth.