CBP Previews Luxury Market Meeting (3-12-10)

8/9/2019 CBP Previews Luxury Market Meeting (3-12-10)

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Luxury Market Update

Coldwell Banker Pacific Properties

Previews Specialist MeetingMarch 12, 2010



2009 Sound Bites• Coldwell Banker Pacific Properties has consistently led the market

in luxury home sales. In 2009, we closed $160,000,000 in luxuryhome real estate volume for our clients. That’s more than twice that

of our closest competitor and more than that of our next threecompetitors combined.(Source: Honolulu Board of Realtors®)

• Coldwell Banker Previews International handles an average of $76.7million in luxury homes sales every day.(Data based on closed and recorded transaction sides of homes sold for one million dollars or more as reported by the U.S. COLDWELL BANKER® franchise system for the calendar year 2009. $USD.)

• Previews specialists participated in nearly 11,971 transaction sidesof million-dollar plus homes, equating to $22 billion in sales volumein 2009.(Data based on closed and recorded transaction sides of homes sold for one million dollars or more as reported by the U.S. COLDWELL BANKER® franchise system for the calendar year 2009. $USD.)



2009 Sound Bites• The Coldwell Banker brand has a global reach, with offices on six continents, 49 countries

and territories. There are more than 700 Coldwell Banker offices outside of the United States

and Puerto Rico. Coldwell Banker has a presence in the following: – Aruba Australia Bahamas Belize – Bermuda Canada Cayman Islands China – Colombia Costa Rica Dominican Republic Ecuador – Egypt France Guatemala Honduras – India Indonesia Ireland Italy

– Jamaica Japan Kuwait Lebanon – Malta Mexico Netherlands Antilles – Nicaragua Panama Peru Puerto Rico – Romania Saudi Arabia Singapore South Korea – Spain St. Kitts/Nevis St. Martin Turkey

– Turks & Caicos USA United Arab Emirates Venezuela – Vietnam Virgin Islands

(Source: Coldwell Banker Real Estate LLC, as of 12/31/09)



36

14

4 53

0 12

44

21

0

10

20

30

40

50

$1M-$1.99M $2M-$2.99M $3M-$3.99M $4M+ Total $1M+

Oahu SFH $1M+Unit Sales by Price Range

January - February

This Year vs. Last Year

2010 2009



11

34 36

80

18

0

20

40

60

80

100

$1M-$1.99M $2M-$2.99M $3M-$3.99M $4M+ Total $1M+

Oahu SFH $1M+Months of Inventory by Price Range

February 2010

Months of Inventory



47

30 1

0

10

20

30

40

50

$1M-$1.99M $2M-$2.99M $3M-$3.99M $4M+

Oahu SFH $1M+Units in Escrow by Price Range

February 2010

February-10



$40,354,999

$13,050,000$11,760,000

$5,500,000

$5,000,000 $5,000,000

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

Coldwell Banker Choi Int'l Realty

Executives Oahu

ReMax Honolulu Carvill & Co Caron B Realty

Total Closed Volume $1,500,000+

January - March 11, 2010



Will the newly-rich Chinesebuy real estate in Hawaii?

Dr. Xiaojun WangDepartment of Economics

University of Hawaii at Manoa

March 12, 2010

For Previews Luxury Homes



Sino American Trade Development Association

Real Estate Summit and ConventionApril 10-12, 2009, Beijing



Current Trend in China’s Macro Economy• The global economic recession has so far only had small impact

on China’s growth momentum. Annual growth rate has droppedfrom over 10% to 8-9%.

• With government’s $586 billion stimulus package, economicgrowth is expected to continue. The government also tries toboost domestic demand in order to make up for the exportsdownfall.

• China’s nominal GDP per capita is only about $3,000 in 2008,but income inequality is huge and there is a significant and fastgrowing elite/newly-rich population.

• Real estate price in parts of Beijing, Shanghai, Hangzhou arealready comparable to that of New York, San Francisco, and

Honolulu, if not even higher.• Anecdotal stories abounds on how the newly-rich buy luxury

good, such as expensive cars.



The Newly-Rich: A Headcount

• By the end of 2007, 0.03% of the population, i.e. 415thousand Chinese has individual assets in excess of$1 million USD. The number increased by 20% fromthe previous year.

• The number might be grossly underestimatedbecause of grey income, under-reporting, and under-valuation of the Chinese currency.



China’s Domestic Real Estate Market• Most people agree that there is a housing bubble in

China.

• Because the government is the largest beneficiary ofthe bubble, it might be a long-lived bubble.

• Just recently the government has begun a new policy todiscourage investment purchase of second home,requiring 40% down payment.

• The government controls the real estate market bycontrolling credit extension from the (state-owned)

commercial banks.• It is by and large a market economy, but it is also amarket economy that is heavily controlled or influencedby ever-changing government policies.



Economic Forecast

• Newly-rich are desperately looking for investment

opportunities, including oversea investment in realestate.

• There are already stories about Chinese buyingexpensive properties in the US, Canada, Australia,

etc.• They are looking at both residential and commercial

properties. For example, Hawaii hotels.

• Rising domestic real estate price and a strongcurrency will certainly drive more Chinese into theforeign real estate market.



Things to consider• Visa

• United States is on China’s ADS list since 2008.

• Popular tourist routes are (1): East coast + West coast;and (2): (1)+Hawaii.

• But, if they own a home in the US, what visa do theyneed to visit their foreign home, is it easy to get that

type of visa, and if it is possible to immigrate.• Foreign exchange

Current account convertible

Capital account non-convertible

But the policy is relaxing. Getting the required amount of USD is not a problem.



Buying Homes:Differences between US and China

• When you buy homes in China, you don’t own theland, the state always own the land.

• Despite long-term lease on the land, breach of suchcontract is very common.

• Private ownership, including land, is more secure inthe US.



Selling Points, Bundle Services• Children’s education

• Medical service/clean environment

• Vacation home/tourism

• Our uniqueness: it is part of the greatest nation in theworld, while it has a strong Asian presence and also closeto Asia. (Hainan Airlines Beijing to HNL approved by US

Dept. of Transportation on Oct. 2009)• Bundle with travel agents (home and foreign): including

schools, hospitals, and real estates in the tour for potentialbuyers.

• Bundle with real estate management companies for short-term renting or subletting, and maintenance.



Where to Target?

• Newly-rich are concentrated in a few big cities:

Beijing, Shanghai, Guangzhou, Shenzhen, etc.

• DBEDT has an office in Beijing.

• Instead of setting up our own offices, maybe we can

work with other companies, organizations, etc. whoalready have offices in major cities in China.



Communication and Consumer Media

• Participate real estate events in China!

• Running TV ads (use a local agent)

• Newspaper ads (use a local agent)

• But, one must know what features would attractChinese buyers and what they are looking for.



How to prepare for the Chinese Wave?

• Can local banks provide mortgage loans?

• What documents potential buyers have to prepare?

• Go over the procedure of purchasing, explain thedifferences, avoid surprises down the road.

• Exchange rate risk• Real estate price fluctuation

• Government policy risk

• Property maintenance cost

• Any tax benefits?



Exampleshttp://www.cilps.cn/2007/chinese/visitors/enews_2007_06.htm

CBP Previews Luxury Market Meeting (3-12-10)

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