In 2015, 712,157 Chinese students headed out of the country to study abroad, setting a new record, why is studying abroad so popular in China? China has a fast-growing, middle-class student population, and seeking an international education is one of the principal drivers of outbound real estate investment from China. Education is of very high priority for Chinese families, as it represents the best way to socially raise their standing and will benefit several generations. If your real estate agent doesn’t include this Chinese focus on education in your value proposition, you’re missing deals from China.
Education drives Chinese overseas real estate investments
70% of Chinese buyer inquiries in 2015 were tied to education (source: Juwai Data).2
- The US is the top destination for the Chinese for both education and real estate investment.
- In 2015, more Chinese students enrolled in US colleges: 304,040 (new record).
- Australia is the 2nd most popular country and the property investment linked to education was estimated at $1 billion ($745 million) in 2015.
Confirming this correlation between education and real estate Chinese investment, the Hurun Report ‘2015 Annual Chinese HNWIs Asset Allocation White Paper’ indicates that school districts are the most preferred locations for Chinese real estate investors in their property searches.
Aside from this important factor in Chinese real estate investment and reinforcing this phenomenon, another important trend has emerged: Tiger Mums
Supported by easier visitor visa policies, Chinese mothers even migrate in order to assist their children and to lay the foundations for long-term emigration overseas… This also means ultimately buying a house instead of renting as it’s a better long-term investment. Here short-term letting is also popular whilst students and their families weigh up their options overseas.
The flow of Chinese students studying overseas continues to grow and this trend of investment trend is impacting the globe from Palo Alto to Paris, Cambridge to California, and from New York to New South Wales. London is a key area for student accommodation growth with Chinese student numbers increasing by 10-15% year on year.
There are several factors explaining why the Chinese are obsessed with education abroad.
The Chinese students and their family’s criteria when looking at overseas schools and colleges are:
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School/University Quality
China has only 2 mainland universities in the worldwide TOP 100 while the US has 39, the UK has 16, nine for Germany, and six for Australia.
A better university is seen as the key factor to social mobility and a well-known global university on a CV makes a difference…
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Heritage
Prestige and long-standing schools/universities strongly resonate with Chinese families. Schools like Harrow and Eton, and well-renowned universities like Cambridge and Stanford are very popular amongst Chinese families.
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Accessibility
Chinese students take the gaokao exam which is the National Higher Education Entrance Examination (over 9 million students took this on June 14) and is the sole decider of where you go for higher education. The Chinese college quota system is notoriously tough. Beijing University (referred to as ‘Běidà’ (北大) offers 84 places for every 10,000 Beijing students and 3 spots for every 10,000 students from heavily-populated provinces like Anhui and Sichuan, giving very little chance of access for thousands of able students.
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Immersion
In order to attain an excellent standard of English, a lot of Chinese students take additional weekend classes, specially-appointed tutors, and engage in endless testing. Complete immersion overseas (from kindergarten to university) is always preferred as it’s a faster and more efficient learning solution.
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Less pressure, broader curriculums
The gaokao exam pushes students to the limit. It requires students at least a year of preparation (across English, mathematics, and one more humanity or science subject of choice). More and more parents prefer the option to study abroad for their children as it is perceived as less pressured testing.
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A stepping stone to emigration
A foreign education with cultural and linguistic assimilation represents a great entry point for emigration. An estimated 1.5 million Chinese students who have or are graduating from overseas universities have opted to stay abroad.
What does it mean for international brokers?
This growing appetite for abroad education constitutes a strong and growing potential market for real estate agents. Reinforcing this, China’s burgeoning middle class will feed this Chinese overseas education pipeline.
In parallel to this, China has also now more international schools than any other country in the world, it representing revenue of 18.4 billion yuan ($2.75 billion) by the end of 2013.17
China’s international schools are considered a useful step to gaining a good education abroad. Evolving in a bilingual environment and being exposed to an international education system, students are more equipped for a smooth transition to overseas education. Having your child in an international school is also a status symbol in China.
Those facts highlight the importance of education in Chinese real estate investment behavior and enable you to adjust your sales strategy accordingly. With the rising power of China’s rapidly-growing middle-class population and the potential baby boom thanks to China’s two-child policy, positioning yourself as a go-to agent for educationally-driven investment could represent a goldmine.
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