Continental delight proves hard to resist

Chinese snap up dream homes in France, Italy and Spain - but buying them may require financial flair

For Chinese looking to buy property overseas, Britain and the United States are the shop windows they have always looked in first, but prospective buyers are now increasingly casting their eyes in other directions.

Real estate agents say that China's rich are now snapping up a diverse range of prime, high-end properties, be they vineyards in France, houses in medieval villages in Italy or beach houses along the Spanish coast.

Cici Dong, head of the Asia-Pacific desk of the London-listed real estate agent Savills, says inquiries from Chinese buyers about French vineyards and holiday houses in Italy have risen sharply over the past year, spurred by the desire to diversify investment portfolios.

"The bulk of buyers are still British and Russian, but there has been a real surge of interest in Chinese investors because of the amounts of money at their disposal and because of the expanding upper-to-middle class.

"But unlike British and Russian clients who are looking for holiday homes and villages in the South of France or Italy as a second home to live the dream, Chinese buyers are more likely to be pursuing social status or doing it for pleasure."

Over the past two years Chinese investors have bought about 30 lower-ranked properties in the world's top wine-producing area of Bordeaux, and this year China became the French region's biggest export market in terms of volume, China Wine News, an industry newspaper, has reported.

Herve Olivier, regional director of SAFER, a French government agency that oversees rural land development, says another 10 Bordeaux chateaux are likely to be owned by Chinese by the end of this year, if bureaucratic obstacles can be overcome.

However, rich Chinese have more than wine on their minds when they shop for overseas properties. Dong says there is also great interest in isolated villas, most with country views, and that sometimes have views of lakes or the sea thrown in as well.

Luca Arancio, owner of the British real estate agency Word & Buyer Ltd, who was born in Italy, said at a recent luxury overseas property exhibition in Beijing that he has received many inquiries about Italy's property market such as medieval palazzo and lakeside villas.

Houses in ski resorts, apartments and historic estates in Milan, Rome and Florence are also favored spots, and the buyers generally prefer to keep a low profile, Arancio says. Such buyers are "looking to immerse in the Italian culture and adopt the local relaxed mindset", he says.

The customers are primarily private entrepreneurs with different business interests, including real estate, manufacturing and tourism, and their tastes in Italian luxury spread to perfumes, dresses, bags and cars, Arancio says.

"Italy was already a popular holiday destination for the new economic elites in China, so it's natural that they want to have a home in Italy."

Arancio has only recently got into the Chinese market and is doing his business through a partnership with SouFun.com, China's largest real estate online portal.

Arancio's service extends to arranging for customers to sit down and have lunch with designers or engineers with the Italian luxury car maker Lamborghini, and if they want a car to be picked up and delivered to them that can be arranged, too.

The allure to Chinese property buyers of countries such as France and Italy, with their sunshine, great food and scenic beauty, is obvious, but cold economic logic is at play, too. The price of European property is reckoned to have dropped by about 5 percent over the past couple of years, and that coupled with a weak euro makes it particularly attractive, real estate agents say.

A 19th-century or pastiche modern farmhouse in a panoramic position on the hills that rise above Lake Garda between Venice and Milan, in northern Italy, costs from about 800,000 euros ($1 million) to 3 million euros.

Laurent Deleaval, CEO of Terimmo, a real estate agent that specializes in European properties, says: "Prices for large villas with a private garden, a swimming pool and a tennis court at guests' disposal certainly cost much more than small houses, but the prices have hardly stormed upward; they have remained stable or risen gently."

For Chinese investors who want to get into Italian manufacturing, buying a house in Italy can also be about more than having a second home, property agents say. Again, cold economic realities come into play: owning property in Italy may make it easier for them to legally use the highly valued moniker "Made in Italy".

While the reasons for buying a property of any sort overseas are myriad, language barriers and fears of culture shock in Europe have scared many Chinese away.

Barrier Javier Julian, regional manager for China of VAPF, a Spanish real estate agency, says many Chinese who have shown initial interest in buying beach houses in his country have pulled back citing language and cultural differences.

"Unlike the US, Spain is not an English-speaking country and it's not an immigrant country either. This is limiting the number of potential Chinese buyers."

China's foreign exchange curbs are also a problem. Chinese people are legally restricted to transferring no more than $50,000 (37,755 euros) out of the country a year, not even enough for a very modest deposit.

Nevertheless, rich Chinese are somehow still managing to get their hands on expensive European properties, and it is believed that in some cases the funds used have found their way overseas through unofficial channels.

Contact the writers at lvchang@chinadaily.com.cn and zhaoyanrong@chinadaily.com.cn

(China Daily 12/28/2012 page15)