The Chinese real estate industry is a driving force of the country’s economy, contributing to a big part of China’s GDP. This booming sector has seen sustained growth over the years due in part to government stimulation and market opening. In 2019, the total revenue of China’s real estate market reached almost 16 trillion yuan and accounted for nearly 10% of its GDP. China is a vast country with extensive urbanization. Naturally, the real estate industry here differs greatly from that of western countries like America and Canada. Our company has been involved in successful real-estate lead generation projects for years while also being experts at understanding what it takes to succeed within the Chinese market! In this article, we are sharing knowledge on real estate in China, based on our experience as well as insights into future trends within China’s flourishing real-estate (investment) market.
Real Estate in China: A Very Lucrative Market
With nearly 100 000 real estate developers, China’s real estate market is ranked among the world’s largest as of 2020, recruiting over 2.9 million employees, and generating revenue from real estate sales that has increased tenfold since 2005. China’s real estate market has become a subject of debate for a long time, with housing prices doubling over the last decade when the average real estate sale price per square meter in China skyrocketed from 3.8 thousand yuan in 2008 to more than nine thousand yuan in 2019. However, different regions experienced substantially different price growth trends. As of 2019, Beijing was the region in China with the highest sales price of real estate, closely followed by Shanghai.
China’s constantly advancing urbanization in combination with equally increasing GDP per capita leads to sustained demand for new housing. As a matter of fact, housing prices on a national level are rising at around the same rate as the GDP per capita. However, it is still difficult for some people to buy an apartment.
Most Chinese view housing not merely as a commodity, but as an investment in an ever-appreciating asset and people invest a large part of their savings in real estate. For the government, the real estate market is equally important. Housing is in fact a key part of the national economy, and local governments also generate 20 to 40% of their fiscal revenue from the sale of land rights. Furthermore, a considerable part of all bank loans in China is property-related. For these reasons, the development of the real estate sector is crucial for economic stability and the government is making considerable efforts to control and stabilize the market.
In terms of international Real Estate investment, the capital investment into residential & commercial projects from Mainland China is at an all-time high with total Chinese global offshore assets tripling from $6.4 trillion in 2015 and expected to reach $20 trillion by 2020.
The Evolution of the Real Estate Market in China
In the past 20 years, China’s real estate market has experienced its most prosperous development. Land purchase has also become an important source of financial revenue for many local governments. The housing price increased so rapidly, especially in larger cities, that the government had to take measures to restrict investment.
With the slowdown of China’s economic development and gradually saturated market, people are also afraid of the burst of the real estate bubble. While the real estate price in smaller cities tended to stay stable or even decrease, there is still growth potential for real estate prices in larger cities, especially the first-tier cities. China’s consumers are increasingly interested in the high-quality real estate products built by leading real estate developers.
In many Chinese cities, real estate prices have reached breathtaking levels. In these markets, it is not very likely that the appreciation of prices will continue at the rate it did in the past. More likely, prices will rise at a slower pace. In case of economic uncertainty, moderate price corrections might also occur. At the same time, prospective buyers are focusing more on quality, as many of them already possess property and now want to improve their living conditions. For the foreseeable future, it appears the secondhand market and property-related services will continue to gain momentum in this environment.
Chinese house prices are not facing the same doom-and-gloom forecast as some analysts predicted, according to Bloomberg. New regulations by China’s central bank have led prospective buyers to stall rather than cancel their plans for a home purchase, and that can only be good news going forward.
The impact of Covid-19 on China’s real estate market
To look at the impact of COVID-19 on the Chinese real estate market during the Covid-19 pandemic, it is essential to consider some historic patterns. Because of the Chinese Spring Festival in late January, sales are usually slow at the start of the year.
In fact, sales volume for January and February together typically is equivalent to the average monthly volume during the rest of the year. As a matter of fact, the real estate sector in China was strongly affected during the lockdown and the following months. However, after the lockdown companies were able to start their business again, recording a slight growth in house prices in the main cities.
According to the official data released by the National Bureau of Statistics of China, China’s real estate investments in the first nine months of 2020 increased by 5.6% on an annual basis, with an increase in investments in residential properties. Slowly recovering from the Covid-19 pandemic, China saw its growth skyrocket to 38.3% between January and February 2021.
Recent changes in China’s real estate market have largely been driven by Beijing. Recently, the central government has taken a very cautious approach to this industry out of fear that it is overheating. The state has instead focused on promoting economic growth elsewhere while waiting for the macro economy to recover before giving attention back to this sector. When things do improve though, it will happen quickly with no need for any targeted stimulus from authorities at all
Real Estate Companies in China
In this really competitive market, a few companies were able to stand out, each generating billions of yuan.
When it comes to real estate development, China’s largest company is Country Garden Holdings. In 2020 alone they generated a sales revenue of over $750 billion yuan; their closest competitors were Vanke, Evergrande Group, and Sunac China Holdings.
Growing Investment In Foreign Real Estate
Preferred Investment locations
The United States is still a major destination for Chinese investors, despite some recent commercial issues. In 2018, of the total foreign investment in U.S. residential real estate- 25% came from China’s buyers! Chinese buyers are starting to shift their investment in residential real estate from the US Pacific Coast and California (40% of transactions). Chinese investors have been looking for new tourist hotspots like Singapore, Portugal, and Australia.
Chinese property investors have been buying up properties in Portugal and Singapore, preferring the locations to America, Australia, or Britain as tensions over trade continue.
OFDI (Outbound Foreign Direct Investment) has skyrocketed, in barely a decade Chinese OFDI went from virtually nothing to over $100 bn per year which has fuelled this dramatic growth.
OFDI (Outbound Foreign Direct Investment)
The Chinese strategy for international expansion is developing, and it’s led to a surge in outward foreign direct investment. However, China’s outward direct investment was 158.29 billion USD and went down by 19.3% in 2017. China’s outward investment continues to play an important role in the global FDI market, ranking at third place behind the US and Japan in terms of investment flows.
Chinese OFDI, like other aspects of China’s economic reform, has its own characteristics. One of the most interesting aspects of Chinese OFDI is how companies with no apparent advantage/power often invest in developed countries to grow their business strength. For example, China invested 10.2 billion USD into European companies in 2017—a 2.7% increase from 2016
Investment into overseas residential/commercial real estate has hit a record $33 bn, rising by more than half in 2016. Most notably, this accounted for a third of the total OFDI that year. This investment strategy is especially lucrative and safe for Chinese buyers.
This is not surprising when it comes to residential developments. With rising standards of living, priorities around education and lifestyle shifting to the forefront of investors’ minds, as well as a depreciating Yuan. There is no doubt that China will be a major mover of capital into Real Estate for many years to come but how do you attract investment to score a slice of this pie?
Reach out to China Real Estate Investors: Online Leads/prospect Generation
China now boasts a 65% internet penetration rate with over 940 million Chinese users connected online. There are approximately 350 million ‘middle-upper class’ individuals active online in China daily. To generate qualified investment prospects from the top wealth bracket (for example the upper 25 million) you need to develop a comprehensive digital strategy.
Why? Because the Chinese Market is unique & developed under its own set of conditions. The development of global, digital technology coincided with the accumulation of levels of wealth in China. Online research became more deeply entrenched in the investors’ minds, regardless of the traditional commission-focused, sales network of agents.
A different approach to the Chinese Real Estate Market
In China the answer for lead generation is digital, this is one of the most online-centric environments in the globe & Investment is no exception, there is a strong culture of online research with the average user spending 1.5 hours per day browsing for information.
The traditional commissioned focus sales network of agents is not redundant in China. Indeed an online strategy supports their sales efforts BUT relying solely on third-party sales certainly has its issues.
Chinese Sales Agents don’t do Marketing
Firstly sales agents do not do digital marketing, they build offline networks which severely limits exposure without an online presence. It is difficult for an agent to sell a project in such an online-focused society without online exposure, even after a personal recommendation Chinese investors will typically research online via Baidu.
Real Estate in China: Working with a local partner = a lack of control
Secondly, we have heard countless complaints first-hand of a ‘race to the bottom, that is poorer quality service, price-cutting, and ruthless sales tactics at any cost. Outsourcing to third parties in this way does not allow serious Real Estate professionals control over customer service, their brand image, or management over further prospective buyer references.
Direct leads generation & digital marketing is the most efficient approach in China
In China, the best use of sales agents is to support direct online lead generation. The figures speak for themselves, a comprehensive campaign can drive 100 leads per month, and a sales agent typically provides between 1-3. You also then have control of customer service and the sales conversion process, many firms such as DAMAC, RS Properties, and Douglas & Elliman all built Chinese customer service teams to handle conversion directly. Higher lead figures & direct, in-house sales increase the likelihood of conversion.
Direct lead Generation = more control
The discerning investor buys into the reputation of your brand. You need to be reputable and visible on the right platforms, direct lead generation via your own website and accounts allows you to control that first impression (you are not just a page in a portfolio), rather you have a strong identity in your own right.
Referrals will benefit you in the Chinese Real Estate Market
Over-reliance on sales networks can be dangerous for any serious Real Estate firm seeking to seriously penetrate this market. Building a Chinese customer service team in-house allows you to control communications, importantly you can also benefit from investor referrals and re-direct interested parties for your own listed projects.
A third party, the sales agent has no loyalty to provide referrals to you, rather they remain a gatekeeper with the power to push sales in one direction or another, most typically just based on commission. To take the most referrals you must increase commission rates.
With direct lead generation, what you save on commission you invest in marketing strategy to dramatically increase lead numbers (hot in 2020)
Use Digital Tools to be successful in China’s real estate industry
One of the key parts of your brand is its reputation. It is undeniable that all around the world a brand’s reputation is important and can have a significant impact on your sale, but it is even more important in China where everyone is always connected to the internet. With your online presence comes your e-reputation. In fact, investors are not only buying your properties, but also the reputation of your company. Your brand needs to have a strong identity and you need to be visible on the right platforms.
Real Estate professionals need a Chinese website
Having a Chinese website is one of the first steps in your digital strategy if you want to do business in China. It’s vital that it be written and formatted for simplified Chinese because most people from there are not fluent English speakers so they won’t even look at it otherwise! And, this is also an important step to rank higher on the Baidu search engine results page (SERP).
If you can, why not try to optimize your website for computer users and smartphone users? In today’s society, most of the Chinese population is using their smartphones as primary online research tools.
Lead Generation: Contact Form
The two main ways to make contact via the site should be a traditional ‘lead generation form’, in China it is also advisable to embed QR code links to drive traffic directly to your WeChat account as an additional method of contact.
You can also note the benefit of the ‘Baidu Live Chat’ Tool. This allows you to make contact while investors browse your content, portfolio, etc. Rich content equals longer time spent browsing and a greater likelihood of contact via live chat tools.
Lead Generation with Baidu SEO
Search Engines are the heart of Chinese Real Estate Researching. Baidu rankings are as important as your Google ranking. Search on Google and you will find only the most reputable players in the industry in the natural results, in China it is no different.
As the most popular search engine in China by far and the 5th most consulted website in the world, Baidu is simply a step you can’t skip in China if you want to sell real estate. You must know that 75% of all property and investment research is carried out via Baidu. In order to master Baidu, you will need first to optimize your website for it to be ranked on the first results of Baidu. Moreover, you can also display and advertise your company as Baidu is like an open window on the internet.
Your website will have to be optimized & audited on the ‘back end’ (meta tags/descriptions/titles, etc) for the most effective SEO (Search Engine Optimization).
Tips to rank on Baidu:
- 8-10 pages
- Keyword repetition in line with selected keywords
- A static site, i.e avoid videos and complex graphics
- Internal links to other relevant pages
- Clear and interesting content
- You can also put your Wechat QR Code on your website
How do you rank higher in the natural results on Baidu?
- Content is king, quality Chinese content is rewarded with higher positioning
- Backlinks are vital, other reputable sites with the ranking need to link to your site
- Meta Tags/Descriptions/Title Keywords need to be in-line
Natural results are where the most serious prospects are generated. Discerning investors will research via Baidu extensively before coming to any decision.
If you want more information about Baidu, you can check our complete guide on Baidu SEO. Also, if you have more inquiries or questions, do not hesitate to contact us.
Promote your Real estate Agency in China with Baidu Paid Ads
why such an emphasis on Baidu? Because it’s a powerful portal for investors. Consider that 75% of all property and investment research is carried out via Baidu. This is China’s largest search engine and you must be highly visible and reputable here.
In Real Estate PPC (Pay Per Click) is actually very effective from my experience. It drives highly qualified, knowledgeable, and specific inquiries. Think middle to bottom of the lead funnel.PPC will place you at the top of search feeds based on a pre-determined selection of Chinese keywords.
With PPC the most important aspects to consider are:
- Keyword Bidding Prices
- Link Monitoring
- Ad Copywriting
- Quality Feedback, Reporting + Analysis
There have been fears in China of ‘click fraud’ (i.e. competitors falsely clicking on web pages to drive up numbers). A quality agency needs to monitor click-through rates to ensure they do not suddenly ‘spike’ or dramatically alter.
WeChat – a nurturing tool for your real estate leads
Wechat is a must-have for every real estate agent as they will mainly communicate with their customers on WeChat. Chinese do not use emails as much as we do, most communication is done via WeChat. On Chinese real estate portals like Anjuke.com & Fang.com, 95% of buyer inquiries leave WeChat contact details instead of mobile numbers.
Post properties for sales or market updates on your feed for potential buyers and investors. They will be able to chat directly with you in private, in group discussions, but also by sharing moments on Wechat. As a matter of fact, WeChat is the best way to access new markets and clients, as well as to form good public relations.
A good tactic for marketing real estate on your WeChat is to provide information about your company and the kind of properties that you sell. It is also a great platform to communicate with people who may have questions or queries about your firm.
Once potential clients have contacted you by scanning your QR code, you will be able to:
- Send portfolios / talk about investment opportunities
- Send property floor plans
- Send short videos to present your properties
- Audio/video / text message prospects
Chinese consumers differ massively from other consumers and when it comes to large investments such as real estate you should not underestimate this fact. If you decide to use Wechat for real estate, you should not initially start with the investment. A lot of Chinese consumers will want to invest because of the school’s localization or because of lifestyle. So, when posting on WeChat it may be good to start with posting about the area or the school localization. Schools are a great way to attract Chinese consumers as education in China is one of the prior factors when buying a house.
In order to attract new consumers, your posts should be interesting and well-written. WeChat H5 campaigns can be used as an effective way to engage with consumers and promote a company. A WeChat H5 campaign is interactive, for example, H5 can include external links, videos/audio, links, and mini-game…
Zhihu: The largest Q&A platform in China to Promote your Real Estate & Properties
When it comes to seeking investment opportunities there are many forums popular with the Chinese. These forums often take the form of a Q&A format with users posting questions for others to answer.
In forums such as Baidu Tieba, Baidu Zhidao, Zhihu & Tianya you can create a positive reputation through user-to-user discussions.
Zhihu, which can be translated literally as “Do you know?” in classical Chinese, is a comprehensive Chinese Q&A platform where questions are posted, answered, liked, and shared by its community of users. Launched in 2011, Zhihu stands out from its competitors by providing high-quality questions and credible answers. Zhihu reached 200 million registered users in 2018 and has over 120 million answers on the platform. It is now China’s largest knowledge-sharing community.
The tagline “Discover a bigger world”, is definitely an important source for Chinese netizens to obtain expert knowledge and insights into various topics. Thus, it is highly recommended that you go on this website, look at the different discussions, and advertise your company at the same time. If used correctly, it can be a powerful tool to sell real estate in China.
Why are Chinese Forums effective to sell Real Estate in China?
- There are many specific threads for buying a property in specific price ranges and regions with many targeted buyers both browsing and interacting here.
- Positive comments about your business come from Chinese users themselves, this helps instill trust & reputation.
- Forums rank highly on the Baidu search feed so comments and topics are highly visible.
- Forum reputation is one of the most cost-effective ways for Real Estate projects to improve their standing & reputation online.
More Paid Options to sell real estate in China
Once you have established your company in China and have a Chinese website, it is important to advertise your real estate company to gain visibility and attract consumers. However, you have to know that instead of using traditional advertising channels, you can also use social media in order to attract new consumers at a lower cost.
Douyin (抖音): Powerful algorithm
As one of the most popular short-video apps in China, Douyin is different from traditional Chinese social media platforms like WeChat and Weibo, in which the content still focuses on text, images, and longer videos. Douyin can be a powerful tool if you want to promote your real estate agency in China. For example, you will be able to find some real estate agents giving tips and advertising their company.
However, if you are interested in doing business and advertising your company through Douyin, you will need to have a verified business account. For more information, you can contact us and we will talk about your projects.
Toutiao (今日头条): the best-paid ads app for real estate agencies?
Launched in 2012 and translated as “Headlines”, Toutiao was developed by the same company as Douyin, the Bytedance Chinese tech company. Toutiao is one of China’s largest mobile platforms for content creation. You have to consider Toutiao as an effective way of gaining Chinese consumers’ attention. In fact, they are spending more time on Douyin and Toutiao than on Wechat.
Besides the most common CPM and CPC, Toutiao provides 4 innovative ways for advertisers to bid on the ad, i.e. oCPM, CPC, CPA, and CPV.
If you want to advertise on Toutiao, there are 4 ways to do so:
- oCPC(Optimized Cost per Click) is the same as CPC with paying per click, yet it additionally introduces an estimated conversion ratio based on audience behavior into its bidding model.
- oCPM(Optimized Cost per Millennium) runs on the same mechanism.
- CPA(Cost Per Acquisition) means advertisers pay only when the conversion(set by the advertiser) is completed.
- CPV (Cost Per View) only supports video ads. A view is counted when the video ad has played for 10 seconds.
Toutiao ads are cost-effective and they have better exposure because they are presented to users as news.
PR is Key to reaching out to Chinese Real Estate Investors
The most important element of a good PR campaign is to localize your project with trending news in China, this increases the relevancy of your message in relation to the reader & dramatically increases the share rate and levels of readership.
In order to run a successful PR campaign in China, you will have to take into account the trending news. As a matter of fact, it will increase the relevance of your posts and increase the share rate.
For example, news can be tied in with:
- Trending Topics & Keywords
- Breaking Chinese News Stories
- National Days of Holiday in China
- Well-known Chinese figures in your field
- Local celebrity endorsements
Be aware that PR is a major part of a campaign, so you will need to hire experts in the real estate industry to ensure that your posts are clear to understand for your Chinese consumers.
Real Estate Salons & Exhibitions in China
Following our experience in this field, it is not recommended to attend this kind of exhibition if you don’t have any visibility online. It will be expensive for you, and the ROI (Return On Investment) will be very low. If you really want to attend some exhibitions, you will have to focus first on your digital reputation on Chinese search engines as well as social media.
Shanghai International Luxury Property Show is one of the most popular exhibitions in Mainland China. It gives exhibitors a direct opportunity to face Chinese high-end buyers. Each year, the show attracts over 100,000 visitors and over 500 exhibitors who hail from all four corners of the world to showcase their luxury properties and real estate services.
However, you have to know that most of the time, people will only scan your QR code, then leave. So, those benefiting from this kind of exhibition are those who capitalize on O2O (Offline to Online). For example, Damac, one of our customers achieved that because he already had online visibility.
The Success of a Chinese TV Series About Real Estate in China
Released in 2020, the Chinese TV drama ‘I Will Find You A Better Home’ (安家) was one of the highest-rated and most popular TV series that year. It topped viewing charts for Shanghai-based Dragon Television, Beijing-based BTV, and Tencent Video – who exclusively broadcasted it online with daily peaks at more than 300 million views.
Homeownership is indeed a must-have and a prerequisite for Chinese people. According to a 2018 housing supply research report released by Evergrande Real Estate, over 60% of Chinese citizens own a house. Spending one’s life savings to buy a home is mandatory in order to start a family.
Now you are probably wondering why we are talking about this TV series in a marketing article, but in fact, this show had an impact on the real estate industry in China, receiving praise from property agents for uncovering the inner workings of the property industry. In an interview, Liu Liu the screenplay writer said that she spent 10 months interviewing home buyers. Then, the show was on trending topics on social media, and as Liu Liu says:
‘In the first few days after the series started showing, people told me the property agent industry treats the show as a textbook, learning from it on how to do marketing, sales, and how to grasp clients’. Following the journey of multiple characters, you will not only be able to discover and understand the real estate industry in China, but also some issues that Chinese people have to face in terms of housing, work, and relationships.
China Real Estate Industry Guide: To Sum Up
This market is undeniably lucrative for savvy firms but also fiercely competitive. Simply relying on sales agents is not enough for long-term growth, particularly when it comes to brand reputation. Serious players need to invest in their own online growth in such a digital orientated-marketplace. If you want to sell real estate in China, it is highly recommended to hire a native agent to help you understand the Chinese market and attract new consumers at the beginning. It will help you get familiar with the market and the needs of your potential clients. Moreover, you should consider having an in-house team, instead of a third-party sales agent, which will probably not be as reliable. Your team will be motivated by the commissions they will receive after each sale.
We are a specialist Real Estate team with 8+ years of experience in the Chinese market, we understand this target demographic and how to reach them. Please contact me and the team for an in-depth discussion on how to further your interests in China.
Over the years, we were able to enhance our services and strategies in the Chinese market. We have had several experiences in the real estate industry, as well as many successful collaborations. However, all companies are different and require a specific approach. So, do not hesitate to contact us so that we can discuss your projects to give you the solutions that you will need.
Discover some of the companies we have worked with:
- Amasia
- Knight Knox
- Damac Properties
- Ronald Serry Australian Property and read the full strategy here
- Dot Property
- IELPE