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Chinese Housing Boom Propels Licensed Home Sales

The Chinese real estate market continues to grow into 2017, despite government measures to curb home prices and avoid a housing bubble. Average home prices are projected to increase 4.1% year-on-year and property investment could grow by 5.4% in 2017, according to Reuters, citing a state-owned newspaper report. Meanwhile, new construction is expected to grow by 6.2%, according to the Chinese Academy of Sciences.

The reasons behind the boom? Population growth and an influx of internal immigration to China’s cities are just one part of the equation; the yuan’s depreciation and U.S. rate hikes mean that property is quickly emerging as the top “safe” investment. While other countries’ oligarchs are snapping up properties in London and New York, the Chinese are looking closer to safeguard their money as well as show off their status. To that end, the affluent are continuously exploiting government loopholes—one recently closed trick involved couples filing for divorce in order to purchase multiple properties. Despite increased regulations, it’s unlikely that housing growth will dampen dramatically.

And because these properties (usually apartments) also function as status symbols, owners are renovating and decorating at astonishing rates. TLL estimates that retail sales of licensed home furnishings, housewares, and domestics will continue to increase in China—the product category grew 11.7% in 2013, and is expected to continue to grow at similar rates into 2017. In contrast, the category grew just 1.2% worldwide and 2.0% in the U.S./Canada in 2015.

While the trend amongst the mega-rich has been tourism shopping—buying goods from luxury stores in the U.S. and Europe—foreign brands are targeting the increasingly affluent middle class online. Relaxed import rules for cross-border ecommerce sales led to a 60% jump in retail sales in 2015, according to Chinese research firm Analysys and web-only retailer JD.com. Analysys forecasts that commerce sales of foreign goods will grow another 40% by 2018, and that outbound tourism will continue to grow beyond Asia and into more far-flung destinations like the U.S., ANZ, and other destinations.

What all this means is that Chinese consumers are being exposed to foreign brands at an even greater rate; for those moving into the domestic Chinese market, the opportunities for brand recognition are higher. But expanded opportunities in ecommerce also means that brands don’t necessarily have to partner with department stores or develop brick and mortar locations to seize business opportunities.

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