They’re even more into home ownership than the Irish, they love their Dublin 1 apartments but won’t want to live at number 4. Sinead Ryan looks into the motivations of the Chinese property buyer in Ireland
– 13 December 2013
HEAD to any big property auction these days and there’s an excellent chance you’ll find more than a smattering of Chinese bidders present.
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At the most recent Dublin “monster” auction by Allsop, sources said around 30 active Asian buyers were present. It may not seem like much in among an audience of 1,000, but given that there are in the order of 40,000 Chinese nationals living in Ireland, it is becoming obvious that they currently make up a disproportionate percentage of both the domestic and commercial property market.
In a prior auction where more residential properties were on offer, a number of bidding sessions saw young Chinese couples bidding against one another. In the main, they were bidding for city center apartments, largely in the Dublin 1 area, as well as city shop premises.
According to Karl Deeter of Irish Mortgage Brokers, which acts for many Chinese home buyers in Ireland, a good number of Chinese nationals who now live here originally came on student visas but liked the country and settled down.
“The mentality of home ownership is very deeply rooted in China. They’re more like us in that respect than, say the Germans. But they don’t have the need for so much personal space that we do. They’re used to close-quarter apartment living so they’re happy to buy up many of the smaller properties that Irish people wouldn’t. The whole area around Gardiner Street, Mountjoy Square and Dorset Street in Dublin is Little Chinatown. They want to live bang in the city center and they want to be able to walk to work”.
Many of the property types that Irish buyers are often shy of are also bought up as staff accommodation for Chinese entrepreneurs. “Where we would do up an apartment house and make a 10pc yield, they’ll let it as is and make 20pc,” says Deeter.
It’s now an important market for estate agents even though securing a mortgage can be more difficult for a Chinese national living here.
“Clarifying employment or visa status is vital, as is verifying finances. Chinese bank statements can be difficult to interpret here in Ireland and many clients are entrepreneurial in nature, making lots of money in a short time,” adds Deeter.
All overseas applicants must show a “Stamp 4” visa granting residency and employment rights. It is difficult to get and an absolute must before a loan will be considered.
Deeter adds: “There is a natural distrust of financial institutions in China but they have a huge savings propensity. It is normal for the Chinese to save 25-30pc of their income every month which means they are approaching a bank with much larger deposits than we would. They also will continue that trend and often overpay their mortgage”.
Interest in all things Chinese peaked during the visit of President Xi Jinping last year where the visa issue was discussed but many Chinese report it still difficult to obtain one.
Once those boxes are ticked though, the conversion rate is no different to any other borrower, adds Deeter.
One frustrated Chinese businessman who didn’t want to be named, has been living in Ireland for 13 years and says his countrymen and women would buy even more properties here if the Irish Government offered temporary visas as a matter of course.
“We’re not just here for the property”, he says.
“You have fresh air and green land. We like to buy and value is excellent. We’re working hard, making money but why can’t Ireland be like the UK or Canada? The mentality is old-fashioned. The government needs to make the visa situation easier, offer two-year temporary visas to property buyers. We want to live here, pay the taxes, but honestly, you need to open the mind, and do the maths.”
Just like the wealthy Irish, at the other end of the scale, top-end Chinese buyers like to buy in the salubrious city suburbs where prices topping €1m are sought. The Kang family recently paid €20m for Fota Island and other corporate buyers are snapping up properties in excellent locations with what they see as good investment potential.
Buyers are currently making an impression both at the lower and top end of the market.
Most of the Chinese nationals who are purchasing are based here in Ireland but the hugely inflated property prices back home in China (where property is among the only channels for investment) mean that parents of students studying here will often take the chance to invest outside of their home country. Ireland, which is proximate to the UK and where prices recently hit rock bottom, makes a perfect target for purchases.
However, Chinese nationals are also extremely choosy about what homes they buy to live in. Irish estate agents can often be baffled when a Chinese couple turns down one seemingly perfect abode after another.
What the agents don’t know is that that they are often considering the principles of Feng Shui (pronounced Fung Shway), a hugely important consideration for Chinese purchasers when the residence is for the family’s private use.
Feng Shui is the study of how the environment shapes behavior and fortune and channels energy (see panel). Most Chinese nationals will stick stringently to its principles when buying a home, or at the very least will not consider property unless it can be renovated or arranged to be compliant with the main tenets of the philosophy.
For a Chinese home buyer it is critical to have floor plans and room layout aligned in a ‘bagua’ or energy map to promote well-being. The Feng Shui ‘Trinity’ are the Bedroom, Bathroom and Kitchen and their placement within the home is of the utmost importance.
Irish homes can often fail to measure up, so agents have to be careful when offering properties.
Tom Barrett of Savills who lived in Hong Kong for a number of years says that the concept is widely adhered to — along with a deep sensitivity to numbers.
“The pronunciation of the number four in Chinese rhymes with “death” or “failure.” Many Chinese try very hard not to have their addresses or telephone numbers contain it or the number 14 which stands for ‘sure to fail, sure to die’.”
The number three however, rhymes with “growth,” and eight “prosperity” which is welcomed by business people. It is probably no coincidence that the last four digits of the telephone number of the Ritz-Carlton Hotel in Shanghai is 8888.
Barrett says of his experience, “There was no fourth, 13th or 14th floor where I lived or worked. I lived on the 21st floor but it was probably the 17th in reality. It does matter to them”.
He sees Chinese and wider Asian buyers eyeing up Dublin because of its proximity to London. “For them, London is the center of the world and many are based there, but they’re going for long-term good value from where they can easily commute to look after their property interests and Ireland is ideal.
“They are intelligent buyers and snapping up commercials for less than they would cost to build. We’re part of the overall globalisation of the property market and we really should be rolling out the red carpet at the airport for these guys.”
When Xiao Zhang came to Ireland in 2009 to work as a medical scientist in Cork, location was vital to him. “We don’t have relatives here but we wanted to live somewhere convenient to schools, hospitals and shops. We are five minutes outside the city center and our four-bedroom detached house which we bought in 2012 for €280,000 would easily cost €2-3m in China.
“My friends at home think I’m a millionaire. I never thought I’d own a house in my life. In China the property bubble is so high the most I could afford is a small apartment in a high-rise building. There is very good value here”.
Zhang and his family plan to stay in Ireland for good and he recently signed for a second property, also in Cork, a run-down house he plans to let for his “pension plan”. He says he has time and energy to do it up himself.
He found the mortgage process frustrating. “Credit is very tight. The banks said they would treat us like anybody else, but I had to pay a higher deposit of 15pc instead of 10pc and my visa was checked very carefully to see I am working here freely and have the right to.”
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