There are a lot of aspects that are to be taken into consideration before investing in overseas real estate which may lead to many arising questions regarding the local protocols, property availability, right area, price range, legal procedures, payment policy, taxes and stamp duties and many more!
These are the 5 questions that we think you must ask yourself before buying any property overseas, whether it is your first purchase or you’re just looking to make your next investment.
Why do you want to buy a property? Do you want to buy a retirement home for you and your partner? Or an apartment for studying and working family of 4? Do you want to buy a piece of land or an office building? The answer to all these questions is hidden in your purpose of buying the property. While a cosy beach house may be the perfect option for a retired couple who is looking to buy a second home, that might not be the best choice for a family with students and white collars. If you want to purchase a home, you’d probably prefer a new place that is in a nice neighbourhood and has easy access to employment, institutions, and other important places. But for commercial or industrial properties, the neighbourhood does not really matter a lot, you would want to be looking for something that can be utilized in several ways, will generate incomes, and is affordable.
2. Location and space
We know that different countries are famous for different reasons. For example, tropical developing areas are more suitable for vacation or retirement, whereas developed cities are mostly for people who are still in some stage of their career or student life. These points will help us decide which cities or states of which country we should aim at, for which we need to do a lot of research and that brings us to the next point.
Laws and regulations vary from country to country, state to state, and even city to city. As a foreigner, it is the most crucial part before making any investment. Some countries do not even allow foreigners to own property. So, before moving forward, we need to confirm whether we’re allowed to make an investment in the targeted country. If yes, then what are the regulations? How different is it from one’s homeland? What are the tax policies? Is it the same throughout the nation? What about licenses and permits? How long does it take to process the application? Is the property a lease-hold or a free-hold? What are the metric units? What happens when you are not there? Is the place safe enough? Is the local law going to give any kind of protection to your property in your absence?
Before making any decision, there should always be market comparisons and backup options in terms of pricing. It might be hard to get all the boxes checked but money undoubtedly is a major factor in any kind of investment. It is not only limited to currency rates and overseas transfers. It also involves extra taxes that can vary from place to place and can actually amount to a huge figure. Buying a property overseas means managing finances in two different countries and it is very difficult to manage the finances of a country that you do not reside in. To handle finances overseas smoothly, investors often tend to hire a professional.
Click here to look at an example of securing exchange rates
Once you’ve found your perfect property that fulfils all the necessary criteria, this is when you need to take a short pause and ask how the future looks like for the property you chose. How is the market now and how is it going to be in the next 10 years? How is the growth now compared to the past decade? How are the upcoming years looking like for the type of property you want to purchase? Is the demand high or low? Is the growth strong or soft? How big is the scope of growth? Is it already a well-developed city that will have a stable market in the next few years or is it going to see a rapid change?
With these questions, you can understand more about your preference and what is the scope of your property search. By knowing which are the most relevant factors to consider it makes your property search so much easier, ultimately making your property investment journey a much more enjoyable journey.
At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.
Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.
Digital real estate pioneer Zillow had 22% revenue growth through online sales
New real estate technology company Opendoor Technologieslost nearly half of its market value
Why Cathie Woods?
Cathie Wood, the founder and CEO of ARK Investment Management, is a star stock-picker, who identifies large-scale investment opportunities. She focuses on investing in “disruptive innovation” centring around robotics, artificial intelligence, and blockchain technology, etc. Wood is an important voice when it comes to talking about platforms and technology that will dominate our future, and she is of particular interest especially among millennials for her digital savviness and deep understanding of future trends. If she is, she would be the perfect advocate for current PropTech companies and their mission.
What is PropTech?
Let’s imagine how our lives would be without technology. Well, It is purely impossible as technology plays a fundamental role in our lives. Since almost every industry in the world utilizes technology to streamline operational processes and improve workflow, the real estate industry is no different.
PropTech (also known as property technology) is the application of technologies in real estate. It uses Big Data, Artificial Intelligence, virtual reality, and machine learning, etc.
Here at Denzity, we use Big Data technology to reduce uncertainties to help you make better decisions in your home search journey.
Wood’s Proptech Investment
Wood’s focus on disruptive innovation is inspired by a unique investment thesis. It suggests we underestimate the value of innovative companies emerging now that will one day shape the entirety of industries and our way of life – including how we do real estate.
While PropTech has been used as a buzzword for some time, in recent years there has been serious endeavours to build platforms that actually may have an impact on the real estate industry. Wood’s firm invests in themes such as Artifical Intelligence, FinTech, IoT, etc. themes that emerging PropTech companies are capitalising on. This is no wonder she has made the following companies her stock picks:
This is why Wood decided to invest in Zillow (NASDAQ code: Z), a pioneer in the digital real estate industry. The company offers a platform that handles real estate transactions and services. Amidst the global pandemic, its revenue has grown by 22%, and the adjusted EBITA metric has climbed to an all-time high. This highlights the company’s future profitability and opportunities ahead.
Similarly, Wood decided to invest in Opendoor Technologies (NASDAQ code: OPEN), an app platform that enables people to buy and sell their properties freely. The platform collects a 5% handling fee of the property’s total asset value. Although the company is facing the headwinds of COVID-19, it is preparing for a comeback. The property boom driven by the pandemic should be able to assist the company to further expand its businesses. Therefore, it is believed that the existence of Opendoor Technologies would potentially eliminate the need for real estate agencies as time proceeds.
No doubt Wood is quite optimistic about the PropTech outlook. Being a top-tiered seasoned investor, anything in her portfolio must have done something to deserve to be there. With that said, however, is Wood is a very long term investor, and her time horizon is something many investors need to get used to. Given current turbulent conditions in the market, it’s good to understand how it’s affecting her current investments in these PropTech companies, and how she is seeing past that:
Higher Interest Rates
The world came through from a low interest rate period due to COVID-19. As the pandemic starts to get under control, Wood expects the interest rates to rise and the stock market has already shown some signs of panic. The Federal Reserve fluctuates between yes or no on interest rate hikes. Especially when Jerome Powell, the Chairman of the Federal Reserve, admits the huge uncertainty in the economy as the country recovers from the pandemic. This leads to people moving their money in and out of the stock market, bringing huge fluctuations.
The rise of the annual interest rate is one of the major factors that influence investors in both real estate and the stock market as it indicates how much they should pay for the amount of mortgage or the leverage they used. Unlike others who panic when interest rates rise, Cathie Wood believes that the adjustment of interest rates would not be a big deal as we were used to about 2% of interest rate before the pandemic. It just takes time to adjust back into the mood.
The increase in interest rate also leads to a loss in revenue for new real estate technology companies such as Opendoor Technologies. The company has lost nearly half of its market value during these days. However, The Federal Reserve has reassured the public about the central bank’s commitment to keeping a loose monetary policy. They stated that the interest rate would not rise in a short period until late 2022 or early 2023. Therefore, Opendoor Technologies should have time to get back to its peak price. As online real estate trade is the mainstream in the future, buying this stock for a long hold is recommended.
Wood and the Future of PropTech
While we can’t say how best to avoid losses or make short-term gains in the market today, we can all learn from Wood’s determination not to be distracted by current trends and focus on the future picture. PropTech has made significant gains in the past few years, but it has so much more to offer, and we have yet to see the force that will alter the industry forever. Staying true and studying the long-term trends like Wood will help us see that PropTech isa certainty and coming alive.
Locally (in Hong Kong), you can start being involved in the shifting calculus. Associations like PropTech Institute (PTI) and our own company – Denzity – are seeing these trends and capitalising on the moment. If you are an interested real estate company that believes it’s time to make a digital transition and stand out in a crowded digital space, Denzity has the solution to help you do it within a day. And finally, check out PTI for more recommendations to help you on your PropTech journey. Like Wood, make the big bets today and own the future.
Now that you’re here…
At Denzity, we often emphasize the importance of real estate agencies moving online. If you are keen to learn more about online transformation and digital marketing, feel free to subscribe to our channel and stay tuned for more real estate industry content and updates.
Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.
Portugal rewards eligible homebuyers with EU Citizenship.
Investing in another home abroad is increasingly common.
However, foreign ownership poses unknown challenges. Foreign laws, business cultures, and currency exchange rates are just a few potential considerations in the property ownership cycle.
1. Familiarize Yourself with the Location, and the Property
Experience with the location is a must. What country are you most familiar with? Whether you previously worked abroad or are simply hoping to buy into an energetic market, here are a few considerations:
Where are your overseas family members?
Where did/will you and close contacts attend university?
Certain property can come with a management fee. The more amenities, the higher the fee. This pays for security, maintenance, and other services that add value to your property. Whereas a fund may see a rate between 0.5% and 2%, property management fees can run between 8% to 10% of rent.
Property managers will help find tenants, conduct local compliance, and ensure that the investment remains in good quality. The more properties in your portfolio, the higher the benefit of bringing in more help to run your operation. Even for a single buy-to-let property, a property manager will help take the load off your shoulders if you spend most of the year in another country.
For a more in-depth article about hiring a property manager, read more here.
A majority of people tend to rely on family to manage their assets and other essentials. Compared to relying on a property manager, keeping it within a circle of trusted relatives can build up individual skills, strengthen reliability, and potentially save cost.
Especially if the portfolio is limited to one or two properties, it may be the wiser choice to leave a spare key in the hands of an overseas cousin or uncle and have them be your local attaché. However, if the stakes are considerably higher, hiring someone to handle matters professionally may be the better choice.
4. Streamline your Payment Method
As a property manager, there are a variety of payments wide and small that require a smooth financial system. It easy to get overwhelmed with payment processing times, exchange rates, and constant notifications – especially when your bookkeeping will regularly handle the below fees:
Mortgage Due Dates (if applicable)
If using a property manager, offload payment processing to them. Otherwise, research into cost-effective money transfer options, set up a local bank account, and contact local financial professionals.
Whether it is for retirement or investment income, the number of international buyers is constantly growing due to globalization, availability, and affordability. And as far back as 2017, Investopedia reported a 19% leap in the overseas property market.
For more reading on overseas investment, check out IP Global’s piece, here.
Now that you’re here…
At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.
The UK offers relative stability and transparency, with London at the core of it’s market as one of the major metro areas of the world.
A hub for overseas property investment, the demand foreign buyers have been responsible for as much as a 20% increase in prices. The city is home to millions of immigrants and is often the primary choice of investors due to its geographically convenient location and growing scope of opportunities.
A quick history…
Pre-pandemic, Prime Central London (PCL) prices suffered due to “higher rates of stamp duty and political uncertainty,” cites a 2019 Knight Frank report, pushing the average price for existing homes below their 5-year average.
Property in popular neighbourhoods fell up to £200/sq foot below average: Hyde Park, St John’s Wood, Chelsea, South Kensington, Kensington, Belgravia, Knightsbridge and Mayfair in PCL ranged between £1,000 to less than £2,000/sq foot.
Covid-19 made an immediate, obvious impact throughout 2020, with an initial crash followed by volatility, spurred by quarantine and mass uncertainty. However, in March of this year – 2021 – property transactions were the highest in a decade in Prime Central London. In other words, the property market was at its most active in the last 5 years.
Price growth began at the beginning of 2021, and demand will continue to grow as travel eases, vaccines take effect, and investors realize the opportunity to break in before supply is snatched up at a premium.
London remains a strong investment location for capital appreciation assets.
Wile London is on track to recover from its a recent turbulent timeline, smaller metro areas and submarkets are increasingly being viewed by investors for their higher yields, watch our quick video on that – here.
For more information on London, there are easily accessible market reports from the London Datastore – a public database – here.
This just the beginning of the conversation
At Denzity, we publish personal finance and investment articles for the young professional. If you have any questions and comments, write them below or reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.
This variation among asset classes means different ROIs based on your risk profile and long-term goal. For example, Even in the famously expensive London market, there is a wide variety of prices.
2. Extensive Transport Infrastructure
With over 70 airports, 40 major ports, excellent rail links, and toll-free motorways, the UK offers residents strong transport links. The connection between suburban and rural areas rank high among EU members and are only strengthening. On top of domestic railway lines, Eurostar also links the UK to the rest of Europe.
In May 2021, the Transport Minister has revealed plans to inject £401 million pounds into transport infrastructure. New stations will be built along the northern Transpennine route, especially between Leeds, Manchester, and York, along with upgrades between York and Church Fenton.
The respective locations’ real estate prices will mushroom as the investments in infrastructure are realized over the next few years, and have already seen surges in market energy.
3. Post-Covid Bounceback
Despite a new stamp duty for non-residents, property firm Strutt and Parker is predicting higher transaction volumes than last year. In fact, they have released a five-year forecast which estimates up to 35% growth.
On top of that, Prime Central London’s lettings have seen a YoY decline of -6.7%, compared to a worst-case prediction of -10%. While market indicators do not match pre-Covid peaks, they indicate a slow return that still offers an opportunity for investors to break in.
The sector can see continued government support through planning system reforms and increasing demand for new-builds between homebuyers and investors.
4. Strong International Community
The UK and its popular metro areas have consistently attracted foreigners. So much so, that King’s College research shows foreign investment is responsible for prices being 3 times higher than they otherwise would be.
The country is home to millions of immigrants and is often the primary choice of investors due to its high level of internationality. In fact, only 20% of investment volume is purchased by UK citizens. In the same 2021 JLL market report, the research breaks down the purchaser nationality into the following percentages:
Hong Kong: 12%
Czech Republic: 10%
The markets of the “new normal” are on a shaky recovery, though still offer plenty of options for professionals to invest their hard-earned cash. Going forward, policy changes in EU relations or stamp duty is sure to impact property prices, and our future publications will keep you up to date on property trends to be aware of in the UK.
Now that you’re here…
At Denzity, we help international investors find their next property. If you have any questions about your next purchase, reach out to our team, here. Stay tuned for more location-based articles, investor focused content, and listings from our clients.
Welcome to our very first Denzity Insights episode!
One of the key skills you need to have when it comes to real estate investing is to learn how to envision how a city develops over time. We are kickstarting the series with Ivan Ko, Chairman of RECAS. I had met him at a PropTech event in Hong Kong a few years ago. Since then, Ivan has been an advisor to me and has helped me mould what Denzity is today. In this episode, he describes how a real estate developer needs to do on a daily basis, how the audience can understand what it is like to be a real estate developer and why we need more real estate experts.
As it can be difficult to catch some minor errors, transcripts may contain a few typos or inaccuracies.
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Alright, let’s get back to the transcript of the show.
Darren Wong: Hey Ivan, thanks for coming in.
Ivan Ko: Hey, Darren, how are you?
Darren Wong: Very good. Very good. Today is a very exciting time for me because as I said before: the whole journey with Denzity started with you. So it’s something that I’ve been waiting for for a long time and then it’s just interesting to have this format to talk to you more about your experience, your whole career and even something that I know you want to tell all the audience about, the real estate sector.
Ivan Ko: Yeah, I think that’s very flattering to me that you said your journey started from me. And I think it’s good that I can have this chance to kind of not walk through with you, but at the same time, see you grow with your Denzity ideas and also get the fundraise and now get started. I think this is a big time.
Darren Wong: Oh, yeah. I hope so.
Ivan Ko: Even though Hong Kong is facing a very tough moment, I think we can all get over this, especially in the real estate market, I think. And in any case, Hong Kong’s real estate market is going to be as popular as it was. So I think you did the right thing, and I do hope that your Denzity can be a global platform instead of just Hong Kong.
Darren Wong: That’s a lot of—, that’s a lot of stress on me now. But then for the audience who don’t know who you are, would you mind telling the audience more about your background? And also what you do?
Ivan Ko: Oh, yeah, why not?
I started doing real estate in 1993. And I started in the real estate agency from Beijing. I did that for seven months and then I was headhunted by Beijing developers. Ever since then, I started doing real estate development. I started doing real estate right from the beginning in Beijing, not from Hong Kong, even though I was in Hong Kong at that time. And then subsequently, I was made a GM of a piece of real estate development company in Beijing and after the whole development—, and that was a big, big opportunity for me. I was young. I think I was only 30 or 32. So that was amazing. And at that time, I realized we were the first group of people doing development in Beijing from outside. So at that time, we had something high. We had been doing this not Soho, but then the previous one of Soho. And then, later on, I started to do real estate development also in Hong Kong with another listed company.
So that was the path that I did for almost five years: real estate development in Hong Kong and, and also Beijing. Then, later on, I moved on to set up my own real estate finance company, which is a mortgage company I set up in a joint venture with IFC, the World Bank, and Deutsche Bank. At the time, we were doing real estate mortgage, I mean, residential mortgage underwriting business in Beijing, and that was also very pioneering. We’ve been quiet for a few years, but we were preparing everything: the market, the industry and the standards for standard securitizations of mortgages. But even today the securitization law hasn’t come out yet. So basically, we then closed down the business and I moved on to do real estate fund management and things like that. So I have part of my career in real estate development and part of the longer part, the later part of it being real estate finance or real estate fund management. Later on, I set up a joint venture with Macquarie capital doing real estate funds management into Macau. So now yeah, that’s where I am.
Darren Wong: That’s a long list of things. And then I think that when I met you, you told me a lot more about what you’re doing afterward too and that’s amazing. So to keep them all in the background, right, so I met Ivan through a property tech event like three, four years ago in 2016 or 17’. And I was running around trying to figure it out about property tech and how to do the business. Ivan was the only guy that talked to me afterwards. He had really good questions to ask the panellists. And then, I was just like, now I want to learn more about him, and the more I knew about your background, I was like, holy crap. I was just a junior-level guy that met you and everything. I was like, “Wow, I was talking to one of the pioneers out there.” So it’s something that is interesting, right? Because you talk a lot about your history, how you first started, you know, how you transitioned slowly with different parties and stuff. If you’re thinking back, is there a history? Is there a time where you think that like, that’s the golden time or something that you’re excited about among everything you have done?
Ivan Ko: Oh, well, certainly. I think it was the best timing because in the year of 93’,
94’ it was just the beginning of foreigners being able to invest in real estate projects in China and via debt companies in China. They don’t have office buildings; they can only brand hotel properties, hotel rooms as their offices, can you imagine? And I still remember at that time when I completed my first pre-sale—, because that was just an empty piece of land and we had to draw and solve the building of the office, the oil and gas company came to us and they wanted to buy the whole floor. I was talking about just using these drawings to talk about how much the price is and that and then later on when we received the payment, they paid all cash. $20 million, we had to count the cash one by one.
Darren Wong: Wait, with like two suitcases, holding it and being like.
Ivan Ko: No, the whole room. The whole room was filled with renminbi notes.
Darren Wong: Really? Wow okay
Ivan Ko: And so that was very interesting. I still remember that I had to pretend that I didn’t want to sell the property to them. And they were so keen.
You know at that time I was responsible for marketing and sales. So that was the golden moment. Later on, when we moved to 97’, 98’, the Asian financial crisis, we had a bit of change in the market. Because previously it was the commercial market which was very, very in demand
in Beijing and in other cities in China and then in 98’, 99’ it shifted to residential. It slowly shifted to residential, because at that time people started to have their own savings; they have money and they want to buy their own properties instead of living in a quarter assigned by their
state enterprises. So then the whole market changed, and then the property market in mainland China just took off. So that was the real golden period for almost like 20-30 years.
Darren Wong: Mmhmm. So after all that, how do you lead back to Hong Kong then? Because like, obviously, you have a real estate development firm in Hong Kong, and others among other many projects you’re doing, how do you lead back to Hong Kong in the end?
Ivan Ko: Oh, well, in fact, I did five years in the Beijing real estate development company, and then I joined a listed company in Hong Kong. They both have a portfolio in Hong Kong and also a portfolio in mainland China. So I started doing real estate development in Hong Kong, even though I haven’t long stayed in mainland China for ten years, but I still flew to Beijing on a weekly basis for 10 years. Can you imagine?
Darren Wong: Wow, that’s crazy!
Ivan Ko: I was young. And so yeah, every Monday and Tuesday, I flew to Beijing. And then every Friday night I came back. So is very like I always told my friend’s dad I’m doing the Silk Road between Hong Kong and mainland China [laughs].
Darren Wong: [laughs]
Ivan Ko: Literally all the way back and forth every single week. That must be hectic! That’s I don’t know, like even for me once a month or once every two months I’m tired already. I don’t know how you do that every single week. That’s crazy.
Ivan Ko: Well, it was very enjoyable.
Darren Wong: Really? Oh good, that’s great then.
Ivan Ko: It was very enjoyable yeah. Because when you see the market, when you meet the people, when you know that—, at that time in the year of 94’, 95’, no one knew how to do real estate development in Beijing. We were the first one. And Sun Hung Kai people and Henderson land people, they were there. But also, everyone didn’t know how to do it, including the government officials in Beijing. They don’t know how to do it. So we had to think about how to do it. And then I told my colleagues, I have several Hong Kong colleagues working with me at the time and I told them that “Hey, let’s face this, no one knows how to play this game.” And every day we have to go up to the stage and fight with the contractor, the vendors, and a couple of officials.
Every daywe are being punched, bleeding in the nose and then the next day we have to go up and fight again because no one knows how to do it. So finally, a year later, you will be very, very well versed with what’s going on and how to do it, how to talk to people, what will be prioritized and what should be back in the queue and so it’s very interesting. Very pioneering.
I feel very excited.
Darren Wong: That’s something that I want to talk to you about. This whole interview, because a lot of people don’t know what a real estate developer does. And frankly, these are the things in our industry that were like, even before I got into a real estate firm like holy crap, it was not that easy. There’s a lot of things to do and it’s something that I want to do more these kinds of videos and then, you know, for us, right, I think that we can have your whole journey, like a three to five hours video. So easily as something that I will focus on is more about your firm, what do you guys do and everything to give the audience a better picture?
So what’s a typical day for example right, today for you and your team in a real estate development firm?
Ivan Ko: Well, usually every single project, no matter big or small, every one of them, they have problems every day. You never know, sometime in the daytime, you hold your meetings with your colleagues and talk about this working procedure and the drawings, the
variation orders, (variation order is something that you have to amend the drawings, amend the work) and then carry on with the construction and then maybe in the afternoon, you have to meet with the contractor and then, later on, meet the supplier or these creditors and talk about the price and then, later on, you have to meet a government official or banker to talk about the mortgage financing. How are you going to provide a mortgage retail buyer? And then at the end of the night, you might end up with a client. Then you have to meet them because most of the time in real estate development in Beijing or Mainland China, government officials, bankers, vendors, contractors, clients, they all want to meet the general manager of the development company.
If they don’t meet you, they won’t take action. That’s the big difference between doing real estate development in mainland China and in Hong Kong. In Hong Kong, real estate development is very easy. You just call the consultant in and tell them what you want and discuss it with them. And then after the meeting, all the consultants just go to the government liaise with the government department and the government department does not have to see me. Not for one single meeting, no. They just deal with the AP, an architect, and surveyor and things get done.
It’s very comfortable doing real estate development in Hong Kong and the problems that you face, I mean, those are out of expectation problems. You don’t expect problems, like one day when we were doing the demolition in our site in Beijing on Finance Street, a contractor called us and said, “Oh, we have a problem here.” So then we went down to the site to see what the problem was. And it was an old lady sitting on the caterpillars machine. And she said that she doesn’t want to move so we called the police.
He said, “No one can ask her to move.” And then finally we gave her some money, and because she thought that we were disturbing her life. (She’s one of his neighbours. So we have to give her what we call 干扰费(ganrao fei) (interference) fee to compensate for the disturbance we have caused to her and her neighbours. So then she went away and we could carry on with our work.
So very interesting every day you have problems pop out and you never know what that problem will be. And that’s my development’s work.
Darren Wong: You make it sound like everything— my life is easy, it’s a lot easier. I thought it was hectic but sounds like you’ve done a lot more. A lot more real problems to deal with compared to me.
Ivan Ko: Well, real estate investment is very different. Real estate development is kind of like you have to be on top of the situation every day, and you have to expect anything you don’t expect.
Darren Wong: So this is something that’s interesting, right? Because as a developer, like I see as someone who’s at an early stage, they already see a long term of what’s going on because it’s risk is very high compared to like, my work before in real estate investing where I can be like, “hey, there’s 1000 projects out there. I don’t have to be the early stage,” versus the developer, they take a lot of risk and obviously the reward compensates for everything else.
So back in the day, right, like, obviously, Beijing or Hong Kong, you know, it’s very easy to see now, but back in the day, obviously, they aren’t as developed. So how do you assess and compare different projects when you’re bidding and stuff like that?
Ivan Ko: Well, we have to always look at where in China, you have to first of all, look at which city, because some cities have a rare, very good market depth. For some of them they don’t. Like Beijing is very good. Shanghai is very good. But when you go to 大朗 (Dalang), or 沉阳 (Shenyang), it’s very different. And the culture, the way they do it, their local practices can be very different. So you have to first of all, understand which city you are focusing on and then whether the market is deep enough, and then how will the government do and whether they are credible or not. And whether you have the relationship there.
As you know, in China doing business in China, you always have to have a good relationship; it’s what they call 关系 (guanxi). Yeah, and or you have a good local partner. So those are the few things. Certainly the normal things here are location, location, location, and market study, things like that. Those are normal, normal things.
Darren Wong: Because I found from hearing it right, even though obviously, the audience are not all with the developers, but then if I’m an investor too, there is some takeaway right away. My head was like, “Hey, you got to understand which city you want to go for.
What’s going on? Who do you know? Do the local players actually understand the culture and opportunities and do you, working with them, actually rely on them to work together as a team?”
So I even find from viewing the audience, they might not be a developer who does stuff, but I think the audience would hopefully learn from that. And for people who are not in the sector, right, how would you explain to them how to understand, to envision that community development, because I think as a developer, you have to really envision what kind of space; how people interact with the space, what kind of things would happen around the neighborhood? So I want to know what you think about that.
Ivan Ko: For this, that’s very important because it goes along with the first decision. The first decision in real estate development is the most important decision. It’s to buy the land. Which land does one want to buy, and why does one want to buy it? And if that decision was right then everything subsequently will be easy. If the first decision was wrong because you bought the wrong piece of land, no matter how hard working you are, or what remedial measures you take, you’re not going to correct the wrong decision you made in the first place. So, basically, you will have to look at the environment, the neighbourhood, and also all kinds of these building regulations or planning regulations associated with the land.
You will have to imagine, because during the time when you buy the land, it may be an old house or have old properties sitting on land where you have to imagine the future. How are you going to put a beautiful building there and have it be welcomed by your neighborhood, or people that you want. And so the next thing is you have to imagine what you want to do
with this piece of land. So you have to talk with the architect, and talk with several architects, not just one, because one architect can give you some ideas, because architects are very creative. They have done a lot of different projects at the same time so they might be able to give you some ideas of what others are doing, what is the trend, and how you can save money, these kinds of things. So talk to the architect, talk to surveyors, and maybe talk to your competitors. Competitors would also like to tell you their story because they are not doing the same project as you are and because everybody is unique within a location. No two projects are the same, even though they might be neighbored to each other.
So basically, you can have a lot of information coming to you and then you get the feedback to examine this and that. And then finally you come up with what we call the “positioning of your property.” What do you want to build? What’s the image that you want to give? And then what design you want to have. For example, would the composition of the commercial element be together with the residential element, or how would we want the traffic to flow, that sort of thing.
Sometimes you don’t have the ideas so then you have the architect propose them to you as a developer. So as a developer, being the main core of the value chain, you have a lot of people helping.
Darren Wong: Mmhmm. That’s good. I think that’s kind of exciting. Thinking about that in my head, like how things are working. And, you know, it’s a lot of things that have components combined together, that is hard to explain. So this is kind of good to give us like an overview. So from all those experiences and a skill you have learned, for example, envisioning the future over the years in the real estate market right, you started from Beijing and Hong Kong and I know there have been other places as well. How do you transfer those skills to other places? Are there any similarities within places like work differences, when you go to different areas to focus on different types of people, and therefore different groups of experts and so on?
Ivan Ko: Well, once you acquire the method and you have done the full cycle then you know how to do it in other countries or another place. Basically, the methodologies are the same, but then in different markets you prioritize different things. For example, in certain markets you prioritize relationships first. Whether you can find the right partner, the right banks, or the agents that will help you, and then in other markets, you start with the asset first. Meaning that you have to find the right piece of land first. And that’s not the rest of it. So if you have different markets, you have different priorities. The second thing is whether you will be able to put together a capable team to help you, that is also very important. Otherwise you wouldn’t be running around resolving problems, which is very difficult. And so, basically, I think, once you have gone through the whole cycle, you know, if there is a project in London or New York or in Japan, Tokyo, you know the way. Sometimes we use top down, that means the analytics goes from the top, macro view and then the micro, and then down to the site and then the neighborhood. Other times we go from the top up. So it all depends on the market.
Darren Wong: I see. I think that so far I’m getting like a crash course about real estate development. That’s actually pretty interesting. And I only have because I know you’re busy only a couple more questions because something that even in my head, I have to ask you in this format for the audience, right? That’s, you know, I’m sure I said before no audience is going to be a real estate developer, they would be an investor. So what kind of tips and advice would you give to the audience who wants to participate in early stage real estate projects for example, early stage that maybe is you know, like half a year from a CA and stuff like that. What kind of advice do you have for them?
Ivan Ko: Well, always you’ll have to use your eye to see what the property or what the project is. Never do it on paper. Never believe in paperwork because real estate is something that you have to visit the site yourself. Do it many times: daytime, nighttime, in the morning, you’ll find different stories about the neighborhood, about the environment. Maybe you can talk to the neighbors, see what feedback you will get. Sometimes you hear some very old stories, which might be relevant to you.
And sometimes some people might be able to tell you what will happen in the neighborhood in the future. So you’ll have to be almost treating it as your new baby that you’re going to see him or her, every moment when you are free or even when you are not free you still have to look at it and check out this and that. So doing real estate development or real estate investment is different from doing securities or buying bonds, that sort of thing. For those kinds of financial investments, you can do it on paper. But doing real estate investments and development, especially development, you will have to do it on your own by yourself in person. Don’t rely on paperworks. You’ll have to see the real thing, that real situation, the environment. And then the second thing is always be prepared to roll your sleeves and do whatever it requires you to.
Never be afraid of talking to the contractor or delegate everything to your subordinate to deal with the property agents. Get to the frontline; get the feeling; get the touch, know the details. Sometimes you might have to use your street wisdom. So yeah, a lot of things to learn and no matter how many years in real estate development you have been in, you’ll always learn something new, something you don’t know. So every day you prepare to learn something, or to get to know something that you are not aware of, or you don’t know. So this is very interesting because consumer behavior is always changing. And you have to get a very close touch of what’s going on in the consumer, in your talents, in your target audience. And then at the same time, product design, the building design, it’s always evolving. The use of materials, the space planning, the flow, the mood, that sort of thing. It’s very exciting and I would advise anyone who is always curious, keen to learn and willing to learn, hard working, go into real estate development. This is the most interesting industry, among all others.
Darren Wong: I can feel a lot of passion when I hear you talk about your work. It sounds like, you know, because we’re in the same industry, we know how hard it is, but then it’s very rare to find someone like you that still has so much passion for doing this for so so many years. So that’s something that is very, very good to hear from you. So something that is interesting when you mention about being at the neighborhood, at the site, like you know, how we’re interested in proptech ourselves. So do you think technology such as virtual viewing or drones to check out a neighborhood can help investors understand the investment better, and how far do you think technology is from like, mature so far?
Ivan Ko: Well, I think the technology that is available can help a lot in real estate development because we don’t necessarily need to go to the site. We can fly the drone and look at the progress. I remember when I was doing the peace project in Beijing, we had to rent an office close by so that we could look out from the window and see the progress of the project every day.
So that is one way. It’s very physical, but now, you don’t have to do that. You can have some CCTV or IoT to see what’s going on and check. But at the same time, I think the basic element is the same: that you have to do your own investigation, your due diligence, by site visit by talking to the neighborhood, by talking to the elderly nearby to learn about the old story and things like that. And so basically, technology will help a lot, especially when we have this building information modelling (BIM), which tracks all the changes in design and budget. They are surveyor calculators. And once the architect changes the M&E, fields of quantity can change by themselves. So, these kinds of things can help make the whole process more efficient.
So technology I think does play a major part in the whole process, but, I will say putting technology into construction and real estate development is also a challenge because this is a very old industry. So as human beings who previously lived in caves, we now have our own buildings. At the same time, the practices, the cultures, it can be difficult to change. So putting in technology into a construction site, or a real estate project can be quite challenging and you have to prepare to kind of educate them and also get them on board to agree with the use.
Darren Wong: I mean, that’s why we’re here, right? We’re trying to figure this out in Denzity, obviously trying to figure out the whole research part of learning what’s going on out there. So I think this is something that echoes really strongly with what we believe in. So besides BIM, virtual viewing and stuff, like drones, what other technology and property tech, or construction tech that you know or think is gonna impact a lot for the whole real estate industry?
Ivan Ko: Well, most of the time it’s the IoT or the surveillance systems, the facial recognition for property management. Also, robotics being used on construction sites for dangerous, or some very difficult work, where the human cannot get into. So those robotics can be another one. I always imagined that one day we can have a robot to clean the curtain wall. Because cleaning the curtain wall is so dangerous. And if we can have a robot, which can play music or dance while he is cleaning the curtain wall, then people can look at the building and see all this is very interesting. So this kind of thing, I think it will change and it will kind of get to more common use.
Darren Wong: I see. I think that’d be a really good PR actually for you know to drive presale, right? That’ll be a cool kind of scheme. So that’s kind of cool. So I think I said before I know you’re a busy person. I’ve got one last question I have to ask, you know, for myself one day, like compared to today, it’s a lot harder. Is it a lot harder to be a developer and would you recommend people considering to be a developer or would you rather them try different aspects of the real estate sector?
Ivan Ko: I would say being, I mean, joining a developer is the most crucial part of this whole value chain, because as a fund manager, even though they are at the top of this betting chain, they are not the organizer. The only major organizer is the developer, because they have to organize a lot of different resources: the land, the people, the bank, the consumer, the contractors, government officials. They have to deal with many things. So they organize all these together, and then they kind of divide the risks into a different section, and shifts the risk from their own to other parties; each one takes on certain risks, like the architect, the contractor, and then the banker, they bear different risks in the whole development. So once you’ve done the full cycle, then you can comfortably move on to other positions like a fund manager, property agency, whatever, because now you understand the whole thing, and you can move on to set up your own business like a prop tech, density, etc,. Yeah I’d say it’s a very good learning curve.
The developer’s life is very interesting. You bump into different problems or different issues every day. So it’s good.
Darren Wong: Yeah, like I think that because you and I, we both know a couple people that aren’t in the real estate industry trying to get into prop tech. And for me, it’s like their learning curve is so much because real estate is not only about tech it’s about the people, about the industry, it’s about the whole machine in the world, and how can you make that one piece that makes everything works? So it’s something that echoes hard too because if I were if I weren’t working in the real estate fund, there’s no way I would even think of Denzity. There’s no way I would even consider that as an option. So something that you know, like it’s coming from you is something that is kind of interesting. So what kind of—, last thing I have, what kind of takeaway do you want the audience to have from this interview?
Ivan Ko: I think that if you have not joined the real estate industry, please join it. It is a very big industry. The value chain and the things that you can do is numerous. I mean, it’s unlimited. And I will say the real estate industry, the longer you stay in the industry, the more projects you’ve done, the better you are. Not like IT where 15 year old students can beat a senior guy and experience doesn’t come too much. But in real estate, the longer you stay, the more experienced you are, it’s better. Especially now when people might live to the age of 120. So, the healthier you are the better but at the same time, I think be prepared to learn things, because the industry is also changing. And so I think the real estate industry, get into it. If you can become an employee of a developer, then yeah, join it. That’s the best start of your career.
Darren Wong: Hmm. I feel like this is not only for development, it’s for investment too, because a lot of people like management, it’s a very big whole sector that the more you’re in you just know more and more because I know a lot of people too, they’ll tell me that like “Oh my first real estate investment wasn’t great at all.” But the more I do it, I know what I want, the more I know what to do. So it’s something that I think is so unique in this industry because the more you know, you know that there’s so much more out there and you just want to be a sponge and learn more and more. So it’s something that I think the audience will appreciate. And if people want to reach out to you to learn more about your work, how would we suggest they find you?
Ivan Ko: Oh well, they can find me through Denzity. Yeah, or they can email me or WhatsApp me. I welcome all kinds of content or connections, especially if you are interested in real estate industry or development, real estate fund management, I can offer some advice or help or whatever it is, I think this industry needs a lot of good people, talented people, and people who are keen to make a successful career.
Darren Wong: I see that’s good. I’ll obviously after this call, I’ll ask you some kind of links and stuff like that for people to reach out to you. And I’ll put everything in the show notes. And then I want to say, Ivan, I think that I want to do a long form in the future, to dive in your journey, because I’m sure there’s a lot more of your stories that you haven’t told me and the audience yet. So something that I really want to know personally, as well. And thanks for the time. I really appreciate it. And I just hope that you come on board next time again for our interview.
Ivan Ko: Yeah, Yeah my pleasure. And also, thanks, Darren, and I think you have a good start.
Darren Wong: Thank you.
Ivan Ko: Let’s roll it out. And make this successful.
Darren Wong]: Yeah, I hope so too. It’s been a while. So thanks, thanks a lot and talk to you next time then, thank you.
Ivan Ko: Okay, thanks. Bye bye.
Ivan Ko [33:06]：我的意思是，加入開發商是整個價值鏈中最關鍵的部分，因為作為基金經理，即使他們處於投注鏈的頂端，不是組織者。唯一的主要組織者是開發商，因為他們必須組織許多不同的資源：土地，人民，銀行，消費者，承包商，政府官員。他們必須處理許多事情。因此，他們將所有這些組織在一起，然後將風險分為不同的部分，並將風險從自己的風險轉移到其他各方。每個人都要承擔一定的風險，例如建築師，承包商，然後是銀行家，他們在整個開發過程中承擔著不同的風險。因此，一旦完成了整個週期，您就可以輕鬆地升任其他職位，例如基金經理，房地產經紀等，因為現在您已經了解了整個過程，就可以像創業公司一樣建立自己的企業了。道具技術，密度等。是的，我想說這是一個很好的學習過程。
Whenever my buddies and I are geeking out on real estate investments, we always share what we learned and why we think our projects have potential. The truth is that not many people (like us) understand how to carry out the due diligence process properly before investing in a real estate project. Denzity Forum helps you find tailored advice directly from experts.
In our previous post [https://bit.ly/343bMiV], we described how Denzity Forum works. I want to give you a better idea of what kind of experts you would need.
Good due diligence starts by finding the right experts experienced in pointing out key things to consider. Experts involved in a real estate transaction typically include brokers, surveyors, lawyers, asset and property managers, tax advisors, appraisers, financiers, developers, and so on.
Real estate in different regions carry attributes that require specific knowledge to better evaluate an investment. As the market becomes more competitive, each type of professional has specialized their domain.
For example, brokers may specialize in a specific property type, size or location, with their own strategic expertise. When facing a mountain of investment opportunities, each with a different angle, it’s important to ask questions in an inclusive community of experts to share their knowledge with you.
Whenever you post a question on Denzity Forum, we reach out to experts we have worked with or been referred to. Our goal is to find you the best quality answers. If we feel your question should have multiple sources, we invite multiple experts to provide you with different perspectives. By crowdsourcing information from multiple sources, you can make a better-informed decision of what your preferred projects are.
I can’t wait for you to start using Denzity Forum. We hope every time you visit our community-driven forum, you gain better insights and knowledge for your exploration.
If you have been
following us closely, you would know that we are big believers of the real
estate fractional ownership movement. Well, that is why we founded Denzity!
Today, I’d like to share with you the story of how we started Denzity and our
thoughts on this movement.
Our story starts from
our hometown, Hong Kong. With the city’s characteristic of free trade, low
taxation, and minimum government intervention, it has been one of the world’s
largest trading economy.
In recent years, the
Hong Kong real estate price has dramatically increased. Rent has skyrocketed so
high that life has become unaffordable. Many businesses have been forced to
close as they can no longer afford rent. Recognizing this harsh reality, the
city’s young generation have realized that owning a home will be impossible without
a sizable mortgage or with help from family. In fact, they just want to have
real estate ownership, as investment, without the need for placing all their
eggs in one basket. They wish they had the opportunity to be part of the
development phase in early Hong Kong, like their families had in the old days.
Seeing the rapid development and urbanization around the globe, they wish to
have the opportunity to invest into the future and shape the world they believe
Feeling trapped in this
vicious cycle, people have become increasingly frustrated and angry. This
saddens me. How can the younger generation, like us, ever afford to invest in
real estate and put our savings to work? I have constantly thought of how this
crisis could be fixed.
After digging deeper, I
have found the breakthrough – the real estate fractional ownership movement. It
is a new method, which allows you to invest in a real estate investment projects
with only the fractional of the property price through an online platforms.
Through this type of real estate investing, you are able to invest in a wide
variety of properties without having to deal with complicated processes such as
working with mortgage brokers, real estate agents, or contractors.
The real estate
fractional ownership platforms will also take care of the day-to-day tasks to
ensure the successful completion. Allowing you to gain the returns without the
hassle of managing your property. As these real estate fractional ownership
platforms become popular in many different countries, you can diversify
asset-backed investments worldwide with small amount of capital contribution.
This movement is the medium by which everyday investors can overcome the
traditional barriers to enter the real estate market. Starting with less than
HKD $200,000, anyone can invest in real estate. Now, we can diversify our
portfolio and lower risk by allocating capital to professional real estate
managers and platforms. Having this goal in mind, Denzity was born.
By combing multiple
platforms and presenting information easily digestible, Denzity can help Hong
Kong people and other people from around the world to have an additional global
investment gateway — allowing them to put their savings to work, something that
could not be done before. The wealth generates from real estate is no longer
barriered by the 1% who has the money to participate. This is the new way to
seize the opportunities!
We hope our effort can
make an impact to the people around us. More importantly, we hope this story
speaks to you. To learn more, please join this movement with us, Denzity. Some
of our followers have asked about our updates and we would like to share with
you next time.