Global boom lifts gloom
Overseas sales see opportunity spike for agents in HK
Cooling measures imposed by the government have definitely taken the steam out of the local property market, causing a slowdown in transactions and halting, for the time being at least, the runaway escalation of prices. Not surprisingly, the decline in deals and attendant revenues is having a marked impact on the business of most real estate agents - but not all of them.
Those specialising in selling overseas properties to Hong Kong-based investors are seeing something of a boom as new clients look for alternative opportunities and potentially better returns in other markets.
"We have seen a 10 to 20 per cent rise in inquiries on a daily basis over the last few months," says Mei Wong, regional director for international residential property services with Jones Lang LaSalle. "It is probably fair to say that the worse it gets in Hong Kong, the busier we get as a department."
For far-sighted investors, putting money into overseas residential property makes sense for any number of reasons. It is a way to diversify a portfolio in terms of asset type and geography. It may offer more regular and reliable appreciation in value than the stock market. And it can serve family needs or as a steady source of income, if rented out.
"People obviously look at the fundamentals of how best to utilise their money," Wong says. "But we also see other factors driving their decisions."
Parents want a base for children who are - or may be - studying at university or boarding school overseas. Couples who have married and started a family later want to invest in something solid and affordable, which they can buy while their credit standing is good and pay off before retirement. And the general economic climate - low interest rates, easy mortgage terms, favourable exchange rates for certain currencies - makes now a good time to act.
"For reasons like these, the majority of clients are looking at London," Wong says. "These days, a lot of people in Hong Kong regard it as a safe haven and, besides the financial aspects, they are attracted by the wide choice of schools and universities. Sterling is weak at present, especially in comparison with currencies like the Canadian and Australian dollars, and the UK tax situation and legal system are both clear and transparent."
Other options are also seeing renewed interest - major cities in the US, properties near a central business district in Australia, Thailand, Malaysia, and even Japan, spurred by the falling yen. But investors are advised to be aware of resale opportunities, especially for small projects and outside prime areas.
Knowing the characteristics of different overseas markets and the technicalities of concluding a sale is no small challenge. Therefore, firms involved in the sector insist on high standards and have well-defined requirements for hiring and training.
"We see ourselves more as consultants because each country, each development may suit different clients and different budgets," Wong says. "With first-time buyers, we go through all the tax and legal implications, giving them the full set of facts and figures they should be looking at before making any kind of decision."
Running the largest international property department in Hong Kong, Wong sticks to certain principles. New staff should have a close link with markets they initially focus on, having either lived, worked or studied there. Ideally, they should be fluent in English, Cantonese and Putonghua, in view of increasing interest from mainland-based buyers. A few years' experience in the property business is a major advantage. And candidates should be ready for long hours if that is what it takes to get the job done.
"To do well, you need interpersonal skills, sales ability and in-depth product knowledge - for example, where to buy a good bed in London," says Wong. "You can't sell effectively to a client who knows more than you. Our agents need to listen, so they can understand and anticipate the client's requirements, and assist in every aspect of the search for the right property through to completion."
That service extends to recommending banks and solicitors, explaining contract terms, monitoring construction progress and milestones, and giving advice on leasing out. The whole process can stretch over many months, since it is not just to sell the property, but to ensure the client is satisfied each step of the way.
"These are things which agents who work in the local market don't necessarily do - they sell in a different way," Wong says. "So we look at candidates very carefully and consider how they will represent us. Our team is quite diversified, with people who have worked for developers and others who came straight from university, but all receive the training they need to perform as expected."
The firm's basic approach is to recruit good people as and when they find them. Several have already joined this year, and with business strong, demand for high-calibre recruits should be constant.
Cherrin Loo, director and head of China international residential for Savills, notes that staff in Hong Kong can sometimes transition from local to overseas sales, but such a career move is comparatively rare.
"It is a different spectrum to learn about and understand," Loo says. "Sales and marketing skills are needed, but detailed knowledge of overseas markets [takes time to acquire]."
For "traditional" markets like London, Vancouver, Toronto or Sydney, potential buyers can therefore be ahead of an agent whose real expertise is in West Kowloon or Taikoo Shing. And if, as is now happening, Hong Kong-based investors are looking beyond residential properties to the commercial sector overseas, they want to deal with advisers who are not hoping to learn as they go.
"It is difficult for any local broker to just jump into overseas sales," says James Hall, CBRE's regional director for international project marketing in Asia. "It is a niche market, very service-focused. Investors want to deal with a person who has relevant experience."
When hiring, Hall's priority is to assess the benefits each candidate could bring to the team. He reviews their background, education, and ties with other international cities and what, for example, they know about the public transport system and general amenities there.
New recruits should have experience in residential property or accounting, the latter enabling them to interpret and explain the tax implications of a transaction, which can be particularly important in countries like Australia, Hall says.