PBN: “Chinese buyers have ‘insatiable appetite’ for Hawaii real estate”

Hawaii resort brokers have long talked about the potential for Chinese buyers to enter the second home market in a big way.  So far, at least on the neighbor islands, we haven’t seen it, but the speculation continues” – CP

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Chinese buyers have ‘insatiable appetite’ for Hawaii real estate

Oct 2, 2013, 2:56pm HST UPDATED: Oct 2, 2013, 4:04pm HST

Reporter-Pacific Business News 

Wealthy Chinese buyers have an “insatiable appetite” for Hawaii real estate, and there is a group that is looking to purchase larger projects and is even in discussions with local developers, a Canadian entrepreneur and co-founder of a New York and Shanghai-based company that offers lifestyle and travel opportunities to its private network of high net worth and emerging wealth Chinese members said Wednesday.Derek Muhs, co-founder of Affinity China and the keynote speaker at the “China Ready Real Estate Investment” seminar held at the Ala Moana Hotel, told a group of real estate industry stakeholders and others, about what the Chinese are buying in Hawaii, why they are buying it and how to connect with Chinese consumers.

Chinese real estate investors are expected to spend more than $175 billion during the next few years acquiring residential and commercial properties around the world and Hawaii is on the list of desired investment places, according to Affinity China.

The Chinese are buying single-family homes in high-end areas ranging in price from $500,000 to $1.5 million, and 70 percent of them pay cash, Muhs said.

“They buy it because they can afford it and they are looking for deals, like distressed assets and when the economy slows,” Muhs said. “They come to top locations like New York City, Los Angeles, San Francisco with central locations and good schools, but Hawaii is there in the top 10, sometimes in the top five.”

He also pointed out that Chinese buyers like new, or newer, projects and look for infrastructure, such as shops and other amenities.

The Chinese also like it when businesses adapt to them.

For example, Muhs said, one of his clients bought in San Francisco instead of Hawaii because, besides pointing out that properties are dated, the city by the bay seemed to have more restaurants with menus in Chinese.

Muhs noted that the Chinese are buying in Hawaii because it’s a good investment for them.

“There are many trust issues they have in China, so they want to get some money out and diversify,” he said. “They have a lot of cash and they don’t want it all in the same bucket. It is part of their DNA and culture to own tangible assets, real estate.”

Trust is one of the bigger challenges when trying to connect with Chinese consumers and Muhs said that many people in China struggle with this challenge.

For instance, they’ll often trust a family member or friend, rather than a professional.

“One of my clients bought in Greece because a family member bought there too,” Muhs said. “They expect a relationship to commence. This ‘hit it and quit it, get the deal done’ stuff won’t work.”

About Chris Ponsar
I'm a commercial and high-end residential real estate appraiser in Hawaii. I'm passionate about appraisal and valuation issues in the same way some folks obsess over football, shopping, or bacon. I love this stuff.

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