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The property market on Costa del Sol could open doors to attract Chinese investors and wealthy clients if Europeans understood the mentality and perception of the Chinese. With their enormous financial resources, Chinese developers and investors could form a unique niche in the property industry. I have spent more than 25 years in China and I know this culture and mentality very well, and this could undoubtedly help to develop a start-up project on the coast for attracting such investors.
What attracts the interest of Chinese investors?
There is a misconception that the Chinese gravitate towards their historical culture. This is true only for the middle class. The wealthy are increasingly keen to resemble Europeans in everything they do. Therefore, there is no need to bring Chinese motifs into the decoration of luxury properties.
The key criteria for investment is high profit, which is only possible if the property is unique enough on the market, has no analogue. The Chinese love stories, so developers invent legends and tell stories related to a particular property to attract more interest.
One of the most important requirements for high sales prices is the name of the property linked to a well-known brand. Wealthy Chinese are willing to pay, and especially overpay, only for uniqueness. The more unique design ideas are applied in architecture and interior design, the more interest it generates and the more willing they are to accept the price.
In order to sell property for Chinese clients, you need to take into account their mentality
Chinese characters are images, so the Chinese think very differently from Europeans. They think in images. Creating an image is the most important thing for the right perception.
European culture as a way of life of rich Chinese is an element of prestige and high taste, a sign of distinction, belonging to a special caste.
Chinese society is a clannish society. Social classes can not cross, they live by their own concepts. In modern China belonging to one or another social stratum is determined by the level of wealth. China is a club society. Membership in a club of a certain level shows the status of its owner. Thus there are clubs for owners of private islands, yachts, collectors of luxurious cars. One of the most prestigious is Beijing's billionaires' club, consisting of just under 100 of the richest families.
Therefore, the status of the property is one of the fundamental principles.
The property market in China today is undergoing a tremendous change. It is a bubble of sorts in the form of mortgage lending and oversupply. Entire cities remain uninhabited. Of course, this is more true for the middle class. However, the situation is no better for the wealthy. There is no room in the market for high-yield investments in this industry. That is why investors are looking to the West.
The major problem in the West is the partner the Chinese have to trust. The trust process, due to the Chinese mentality, takes a great deal of time. It took me 20 years.
The second problem is a historically developed habit of copying. It is worth saying here that copying is not due to the fact that the nation itself is so dishonest and does not respect property rights. It is primarily due to the enormous competition, resulting in the strongest intellectual overstrain, when there is simply no time to design a unique product, because competitors occupy a place in the market, without waiting for you to invent something new. But that's why creativity is so valued in the marketplace. That is why rich Chinese people pay more money for the opportunity to stand out and keep their individuality.
Considering all these features, Europeans could act more deliberately to create these unique niches in the market, and especially in the real estate industry. But there is another driver in Europe that prevents us from seeing those opportunities. It's stereotypes.
Why bother if the European market already eats what we build. The market is overwhelmed by faceless architecture "boxes" - modern houses made of glass and concrete. They have an attractive production cost and speed of construction. The size of the house and the location where it is built determines the category the property falls into. This is where the false perception of luxury property comes from. Those stereotypes make the consumer follow the market and buy whatever is offered and presented as the new fashion trend. With this approach, you need to forget about attracting Chinese investors. They are not interested at all.
If we review the statistics on property sales in Europe for Chinese people, we find that the residential property is sold in the range of 2-3 million. So far, the Chinese are prepared to invest only in historic buildings, mainly hotels. The private sector remains beyond their interest.
However, this niche could change the very concept of construction and the rate of return. For China, $2-4 million is not a price at all. If we are talking about the wealthy class, the figures are completely different. They vary, depending on the region, but on average, in the mentality of the wealthy Chinese, a property of 30-50 million is a property for their status. If for example we take Chengdu, the capital of Sichuan province in south-west China, we face paradoxes there. With relatively low prices for elite housing, private villas 10-15 million dollars (villas for finishing), investments in interior decoration may be up to 50 million.
How attract investors from China?
In mainland China, I was involved in conceptual design of private villas for 2 development companies focusing on luxury real estate. The principle of structuring the business was very simple.
A project with unique features is created. The basic thing is to have no match in the market. Then the model villa is built, used to attract clientele from different regions of China.
Then, the project is fully replicated: one villa per a region. Given the massive territory and population, even copying the ulra luxury property remains a phenomenon of uniqueness. 10-15 such villas scattered throughout China are simply lost in the market.
A prototype of this kind of villa is a must. It is this approach that generates business later on. Seeing a property built once and seeing the consumer's reaction is a great tool for replicating such a business further.
Why don't rich Chinese go to Europe and buy expensive property? Because there is no offer on the market. Europeans think that old castles or multi-million dollar celebrity homes would be of interest to China. But this is absolutely not the case.
China lives by stratagems and Feng Shui philosophy. These teachings are embedded in the mentality of the Chinese from childhood. A Chinese person would only buy a new home. As Feng Shui teaches, you never know who lived in it before you and what energy remains in such a house. The 33 stratagems teach the Chinese how to structure their lives to maximise their benefits. That's why it seems to us that that they take a long time to make decisions, don't like Europeans, never say 'no' to them, but only 'yes', even if they don't plan to work with them. Patience and a long term vision are the basic concepts.
The niche for attracting investors and opening up property business opportunities with a completely different return rate is just around the corner. The idea lies on the surface. You need to build a different type of property, making it a display piece to bring in investors. If the project is unique enough, even mid-level developers are able to instantly occupy the luxury property market in the shortest possible time.
This is exactly the kind of niche we intend to create by attracting investors in Marbella. And then you could build a link with the Chinese market and get exclusive business the market doesn't even think about.
We advise you reading the article that deals with the topic in the most comprehensive way. It shows how you could get a tremendous rate of return with the involvement of Chinese investors.
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