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www.Buy2Greece.com – China’s retirees: an emerging force in global property markets

340 million – that’s the forecasted China’s greying demographic aged 60 and above by 2030.1

That’s an increase of 175 million from the current count of 165 million Chinese retirees1 – a figure that not only exceeds the current population of the US2, but also makes them an emerging force in global property markets that will amount to one of the world’s largest consumer base.

More importantly, this massive market of China’s silver generation has equally substantial funds at their disposal.

Older Chinese are sitting on a hefty share of the $2.4 trillion in savings3 planted in China’s banks4, having lived through China’s boom years, benefited from rising incomes, and capitalised on China’s fast-growing property markets.

Already, their wealth is already impacting global property markets, albeit indirectly. Chinese insurers, custodians of billions of RMB in retirees’ pension and insurance plans, are steadily channelling their cash piles into global property markets, investing $3.1 billion in overseas real estate in H1 20165, and with a further $73 billion expected to follow by 2019.6

China’s silver generation more globally savvy and discerning

Aside from insurers, individual retirees – or those planning for future retirement – are now becoming much more active in global property markets, in part because their horizons are broadening.

The waves of outbound tourists from China, which numbered 120 million in 2015 and is projected to hit 139.2 million this year, are becoming more globally savvy as they get to know more countries around the world, and older generations are well and truly part of this outbound trend.

The China Outbound Tourism Institute estimates tourists aged 60+ accounted for 5 million trips in 20157 and China Britain Business Council estimating a US$34 billion potential spend from this age group.8

In fact, another recent Citi report revealed that outbound tourism by Chinese elderly have skyrocketed as much 217% last year alone.9

Increased awareness of overseas opportunities gives retirees more options to build an overseas lifestyle as well.

57% of Chinese high net worth individuals (HNWIs) prefer to retire in a home of their own, in preference to care homes.10

This is because times are changing, and no longer are China’s rich and wealthy completely adhering to the Confucian ethic of filial piety, whereby Chinese children take care of their elderly parents when they are unable to care for themselves.

Instead, Chinese HNWIs are now in pursuit of independence after retirement, an option that came about due to a growing awareness of the pressures placed upon their children – most who are a single child born under the one-child policy – as well as a desire to not burden them, if possible.11

And for this silver generation, ‘independence after retirement’ translates into living away from their children as they search for relaxed and enriching lifestyles that come hand-in-hand with plenty of travelling around.

 

Healthcare a top focus for China’s elderly

That said, with China’s dubious environmental quality, many Chinese retirees are on the lookout for an overseas property with access to both top quality medical care and attractive living environments while jet-setting around the world.

In fact, Chinese spent $10 billion on medical tourism in 2015 alone, of which Chinese retirees are an important part of this market – and it’s this growing market that is helping to spur property investment in destinations famed for medical treatments, such as in the US.

50% of China’s HNWIs cited healthcare as their primary concern and main topic of interest for 2016.10

Asides from lifestyle concerns, Chinese retirees are also generational investors who also want to ensure that they are providing for the next generation.

According to research from Bain & Company, Chinese high net worth individuals factored inheritance, children’s education, and life quality as three of their top five wealth objectives.12

With this in mind, an overseas property in a suitable location not only offers a Chinese retiree a unique opportunity to meet their lifestyle aspirations, but also provides both a springboard for their children and grandchildren to enjoy overseas educational opportunities, as well as securing a high-value asset which they can pass on to the next generation.

Connectivity, easier visas, and better pension access broadening retirees’ horizons

Even as Chinese mentality is changing, so is the world to make it easier than ever for Chinese retirees to seek an overseas retirement.

Today, China has become more closely connected with the world, driving what Boeing expects will be a 3x increase in total passengers travelling between China and the US alone by 2021.13

This factor, together with expanding international transport links from China’s lower-tier capitals, will open up many more opportunities for travel, and make it more feasible for retirees to split time between bases at home and overseas.

Countries all over the world are opening their doors to Chinese investors too. Recent moves by Singapore, Australia, the UK, and the US to increase multiple entry visa validity for up to 10 years – plus the raft of ‘golden visa’ residency programs offered by locations such as Portugal, Spain and Greece – all mean that Chinese retirees are now spoilt for choice when it comes to choosing overseas retirement locations.

Interestingly, China’s government is making it easier than ever before for retired Chinese residents living overseas to claim their pensions as well.14 Previously, a convoluted claim procedure meant that many overseas-based Chinese retirees gave up seeking their pensions. However, this policy change now recognises their overseas status, thus giving them greater confidence in supporting themselves overseas.

A greying economy but a golden opportunity

Powerful demographic trends, an increasingly outward looking customer base, and improving links between China and the outside world are aligning to create a high-potential market of Chinese retirees looking abroad for property.

Furthermore, Chinese retirees have money to spend – China’s state-run Research Centre on Ageing forecasts total expenditure by Chinese retirees to reach RMB1 trillion by 2050.15

So agents, it’s time you tailor your offerings to suit China’s older generation. Here are three ways how:

  • Educate them: An overseas investment is a huge step, particularly a Chinese investor with little knowledge of property sales procedures in new countries. So, be sure to manage expectations by including a step-by-step breakdown of a sales process as part of your product pitch, outlining fees and levies clients will expect to pay as part of the process, and explaining terms associated with a property, e.g. freehold, tenancy.
  • Put yourself in their shoes: While they may be commonplace in the UK, US, Canada or Australia, most Chinese – particularly the older generation – haven’t grown up with gardens, garages or pools. So do some research to find out what features may appeal to them, and make sure you put features like this front and center in your pitches to add more allure to your properties.
  • Highlight local facilities: Health and education are a huge concern for China’s silver generation, so be sure to offer details of medical, wellness, and educational institutions in the local area. Chinese investors are looking to tick as many boxes as possible with their property purchases, so pack your pitches with as much relevant information as possible.

Chances are, strategies like these can win you interest, trust, and completed deals from China’s retirement-minded property investors, so good luck with your promotions, and here’s to a golden return from China’s greying economy.

Sources: 1. Brookings Institute: China’s one-child policy at 30; 2. US News: US population in 2015; 3. Naked Capitalism: The puzzle of China’s rising household saving rate; 4. Wikipedia: List of countries by GDP; 5. Fortune: Why Chinese investment in overseas real estate has more than doubled; 6. SCMP: The Chinese are coming: Insurers expected to pour US$73b into overseas properties; 7. COTRI: Elderly Chinese, a market segment of increasing importance; 8. China-Britain Business Council: China’s silver consumers; 9. Citi Report on SCMP: Goodbye tour buses and loud hailers: Chinese tourists now choosing the more personal approach; 10. Hurun Report: Retirement Planning & Healthcare of Chinese HNWIs 2016; 11. Jing Daily: China’s rich opt for luxury nursing homes over filial obligations for aging parents; 12. Bain & Company/China Merchants Bank: China Private Wealth Report; 13. Boeing: Current Market Outlook: 2015-2034; 14. China Daily: Simplified process helps Chinese retirees in US get pensions from overseas; 15. SCMP: Navigating through China’s grey economy

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Buy2Greece.com – How global visa changes are building a $450B Chinese tourism bonanza

By 2025, Goldman Sachs predicts 220 million tourists from China will spend $450 billion annually.1

This makes Chinese one of the most lucrative targets in the global economy – a fact recognised by governments across the world that are loosening visa policies, introducing extended visas, simplifying application processes, and cutting fees in order to compete for this highly lucrative market.

Established markets up their game

Travel and hotspots long favoured by Chinese tourists, such as the United States (US), Japan, Australia, the UK, Canada, South Korea, Singapore, and Europe, have all recently made sweeping changes to their visa policies to make them even more attractive and accessible.

While policies differ by location, the underlying changes can be broken down as follows:

  • Longer visa validities: Visas with ten-year validity – like those offered by the US2, Singapore3, Canada4, South Korea5, and Australia6 – have become much more common. Typically with a 3-6 month maximum stay per visit, these visas reduce the hassle of repeated applications for Chinese travellers and offer long-term access.
  • Simplified application processes: Online application processes and the removal of requirements for reams of supporting paperwork have made applying for visas much easier. Additionally, embassies from countries such as the UK7, Finland8 and Denmark9 are increasingly upping the ante by going to where the applicants are and opening up more visa centres across China to make ease and speed up visa applications for Chinese.
  • Reduced fees: Governments have made it cheaper than ever before to get a visa. The UK, for example, has cut the cost of a two-year tourist visa from £324 to £85 to entice more tourists, and other countries have also reduced their fees to cut the cost of application.

More importantly, these policy changes appear to be paying off. A prime example is Japan, whose government relaxed requirements for three-year multiple-entry visas and started offering five-year multiple-entry visas for high-income groups during early 201510 – China arrivals in Japan doubled to 5 million in 2015, compared to 2.1 million in 2014.

 

Broader horizons see Chinese tourists growing more adventurous

However, the growing populace of Chinese tourists is an increasingly varied bunch with a widening range of locations filling up their bucket lists.

As such, even countries not usually considered as standard tourist hotspots, such as Iran12 and Israel13, are also making their plays to catch a share of China’s outbound tourism market.

Africa is also a case in point. Currently the fastest-growing port of arrival for Chinese tourists, Africa is seeing 80.9% annual growth in 2014, totalling an estimated 10.2 million trips.14 In fact, African nations, such as South Africa15, Egypt16, and Zimbabwe17, have all recently been falling over themselves to follow the lead of Mauritius’18 to offer visa-free entry.

Asia – the most popular destination for outbound Chinese travellers, who numbered an estimated 98 million trips to the region in 201519 – just got even more accessible too. South Korea5, Malaysia20, New Zealand21, and Nepal22 have all announced new visa policies to boost their tourist industries.

In the case of South Korea, this market is highly significant as six million tourists from China spent $22 billion last year, accounting for 1.6% of its GDP in 2015.5

South America is making a play for China too. The 16,000-km trip from China just got a little easier to handle too – following Mexico, Peru, and Costa Rica who introduced similar visa policies in 2014, Ecuador23, Chile24, and Colombia25 have all introduced visa-free entry policies for Chinese tourists as well.

Eyes on the prize: tourist spending and property investment

Make no mistake, these policies are not just with tourism spending in mind. Investment from China’s increasingly outward-looking business sectors – which grew 51% y-o-y to 115 deals in Q1 2016 to be worth a total of $82.6 billion26 – and property investors figure prominently in the calculus behind looser visa policies.

To an extent, countries around the world are taking their cue from Spain, Portugal, and other ‘Golden Visa‘ countries who went further than offering visa-free entries by loosening their visa policies in 2013 to offer residency in exchange for property and business investments.

The results have been highly lucrative for agents in Spain and Portugal:

  • Portugal: 3,165 golden visas had been issued up to March 2016, with Chinese nationals accounting for about 80% – bringing in €1.92 billion of investment, of which €1.73 billion has been in the form of property investment.27
  • Spain: Chinese investors made 363 transactions worth a total of €268.4 million euros in 2014 and 2015.28

Rapid impact of visa policy changes

With such wide-ranging visa changes and increasing openness to business from China, governments are laying the foundations for what looks like continued growth in the coming years.

Recent data from the US showed a 68% y-o-y increase in visas issued to Chinese tourists in Dec 2015 and January 2016 following the introduction of a 10-year visa shows that markets are already picking up. This is on top of the 68% surge that happened last year in Dec 2014 and January 2015.

And looking across a wider range of countries, a clear pattern emerges – easier visa policies coincide with an increase in visitors. South Africa and Egypt have seen visitor numbers double at the start of 2016, and hotspots such as the UK and Singapore have seen 20%+ annual growth in tourist arrivals from China following their visa overhauls.

Clearly, despite grand projections about the prospects and potential for outbound investment from China, such data compellingly shows that this market is growing and is already having a transformative effect on markets across the world.

Beyond that, what’s also clear from our survey of recent government policy changes is that countries are increasingly looking to compete with each other for a share of this lucrative market.

And if governments see the opportunity and are taking it seriously, then this clearly indicates that businesses – especially real estate – should too.

Sources: 1. China Internet Watch: 220 million Chinese to travel overseas in 2025; 2. SCMP; 3. Channel News Asia; 4. SCMP; 5. Korea Tourism Organization; 6. The Pie: Australia rolls out SSVF, 10-year visa to China; 7. Daily Mail; 8. Travel Daily Media: Finland targets Chinese visitors; 9. Beijing Times; 10. China Daily; 11. Japan National Tourism Organisation; 12. Huffington Post; 13. Jerusalem Post; 14. Xinhua; 15. Quartz; 16. China Africa; 17. Santa Refelo: Immigration Update; 18. Wikipedia: Visa policy of Mauritius; 19. Goldman Sachs: The Chinese Tourist Boom; 20. Yibada: Malaysia Waives Visa Requirements for Chinese; 21. News Ghana; 22. Kathmandu Post; 23. TeleSurTv: Ecuador Welcomes Chinese Tourists; 24. China Daily; 25. China Daily; 26. China.org: Chinese firms set for record M&A; 27. SCMP; 28. Galleon: Spanish Golden Visa and the international citizenship programs 29. US: International Trade Statistics; 30. Destination Canada: Tourism Statistics; 31. Sydney Morning Herald; 32. Bloomberg: Singapore is Unlikely Tourist Haven; 33. China Daily: Visa changes attract Chinese visitors; 34. Radio NZ: Visa-free Fiji; 35. Fiji Sun: A Look at March Visitor Arrivals; 36. ECNS: Tourist boom picks up; 37. UK Statistics;38. Xinhuanet; 39. Travel Gazette