Chinese investment reached over $70b since 2016.
Global uncertainty is on the rise, but the outlook for international real estate investments is improving. It is also interesting to note the growing impact of foreign investors, particularly from China, on markets in major cities in the UK, Europe and the US. Chinese nationals were the biggest buyers, snapping up a record $31.7 billion worth of property this year versus $27.3 billion a year before.
Aaron Kirman, president of the international estates division of John Aaroe Group, is a luxury real estate agent with an extensive global clientele that consists of industry heads, royalty, major lending institutions, and foreign investors. He has been ranked as the 12th top real estate agent in the US and has made over US$3.5b in sales. He attributes his success to promising marketing and advertising strategies, market knowledge, and true love of luxury sales, amongst others.
In an exclusive interview with Hong Kong Business, Kirman talks about the risks and benefits that come with global real estate investment and how abundant relationships are built with foreign investors.
What are the opportunities and challenges around real estate investments worldwide?
Real estate is the biggest opportunity in the world right now. It has the value of people’s lifestyles. Opportunities are endless depending on what people are looking for. ‘A Paper’ property is the real goal, and is always the best investment and always the safest.
Riskier moves are in more volatile markets, but they can have some of the biggest uptick and worst returns, so it depends on what the client is looking to do and how aggressive they want to invest. Some of the challenges are international political instability - these things obviously affect investment every day.
What are some notable global trends in real estate investments that could trickle down to Asia?
The huge amount of monetary value and security that comes with investing in American markets. Our markets in a sense can become a second investment bank used to balance their domestic portfolios. The Chinese are able to keep safe real estate investments in the US, allowing them to keep a portion of their investment portfolio out of their own country.
This has the ability to affect Asia as a whole by balancing their portfolios allowing for a continued increase in prosperity and security for the booming Asian markets.
What is the impact of foreign investors, particularly from China, on markets in major cities in the UK, Europe and the US?
Impact is tremendous. The sheer volume of investment has driven the market up globally with over 70 billion in Chinese investment in foreign markets since 2016. Prices skyrocket because we have such a huge increase in the qualified buying pool.
It is great for our business because a lot of our business is foreign. Some of our most expensive sales are to the Chinese. In Los Angeles specifically, there is a continuous uptick in our market.
However, money is hard to get out of China, and getting more and more difficult thus creating a demand in the market for the Chinese to invest right now.
What are your insights on Chinese buyers? What types of properties normally catch their attention?
They are relationship based. They like to get to know you prior to doing business.
There are the billionaire Chinese that are looking for the best of the best. The most opulent, the most current architecture, the highest-end finishes. Looking for estates, where they get land and lifestyle. Then there are buyers that just want to park money in American investments; or those after the lifestyle and investment combination; and others that want their kids to go to American university and middle school.
Do you think Chinese nationals will continue to be the biggest buyers in the next few years? Why or why not?
Absolutely. By default, China has one of the largest populations and one of the largest wealthy populations. They will likely continue to be the No.1 buyer from this day forward.
What is your outlook for the global luxury property market?
Outlook for the global market right now is hard to rationalise a luxury market across the globe. The market has become so specific in different cities for a variety of reasons. Money, currency and people will always be moving in different directions. That said, the US specifically is still one of the safest places to invest money, and receive the services that make our markets attractive.
How will the pullback in overseas investments due to tighter regulations in China impact global property markets?
Restrictions can make it more difficult to buy property. I do believe we will see a slowdown in the lower price points. The higher end might not be as affected for both political reasons, and because they have the ability to move money with greater possibility.
My business model has 100% shifted because of the global and international marketplace in general. I personally fly to China twice a month to build relationships. Both my digital and print marketing focus is on international alliances that help drive international traffic to our business. That is something that we are going to continue to focus on. We feel that the international market is where the future is. It is a more connected world and that is something we both believe in and want to invest in.
Los Angeles is the preening luxury market place in the world because of the European, Middle East and the Asian and Chinese influences. We have buyers from every market segment that want to invest not only in America, but in Los Angeles specifically.
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