Media OutReach

2017-09-13 10:00

CUHK Business School Research Reveals How Cultural Background Affects Chinese Immigrants' Overseas Property Investments

HONG KONG, CHINA - Media OutReach - September 13, 2017 - Our world is becoming flat, and moving abroad for better opportunities is increasingly common for people. However, when people choose to move to another country, will they give up their own cultural identities and thus assimilate into one single culture in the new country, or will they remain their own culture traits by congregating together as a way of finding support in a new land?

 

The answer is the latter, according to a study conducted by Prof. Maggie Rong Hu, an assistant professor from the School of Hotel and Tourism Management and Department of Finance of the Chinese University of Hong Kong (CUHK) Business School and her collaborator Adrian D. Lee from the University of Technology Sydney. The study indicates that Sydney's newcomers are more likely to choose properties located in neighborhoods that are more culturally similar to their own culture of origin. They are also willing to pay a price premium for properties in locations with shorter cultural distance.

 

And among those newcomers, people from East Asia, particularly Chinese, are most likely to choose to live in a community, which is closer to their culture of origin and more willing to pay higher prices for houses in such neighborhoods.

 

"In our study, we find that an individual's cultural background is indeed an important factor on housing prices," says Prof. Hu.

 

According to Prof. Hu, globalization promotes the integration of societies and has provided millions of people with new opportunities. As a result, megacities with culturally diverse residents, such as Sydney, London, Los Angeles and Toronto, are becoming the new norm, yet little is known about how the interaction between these people and their host country's culture affects their personal and financial decisions, particularly in housing markets.

 

As such, their working paper "Melting Pot or Salad Bowl: Cultural Distance and Housing Investments" examined whether the cultural background of property investors and cultural differences of the neighborhoods influence their housing buying decisions, in terms of location and price.

 

In the paper, the 'melting pot' metaphor describes the fusion of various religious sects, nationalities, and ethnic groups into one distinct people, while 'salad bowl' describes different ethnic groups, rather than assimilating, retain and coexist in their separate identities, just like the different ingredients in a salad.

 

"We would like to find out in a city with diverse culture, whether the 'melting pot' theory dominants or the 'salad bowl' analogy holds true. In other words, whether the different ingredients are all mixed together to make one dish or each ingredient also retains its own characteristics in the bowl," she says.

 

The Study

For the purpose of the study, the researchers targeted Sydney, Australia's largest and most culturally diverse city, where immigrants have made up a large component of its population. According to the statistics from 2011 Australian Bureau of Statistics Census, 57 percent of Sydney urban respondents are non-Australian or British origins.

 

The study looked at individual housing transaction data of the Sydney Metropolitan Area from 2006 to 2013 from Australian Property Monitors, one of the Australia's leading national suppliers of online property price information to banks, financial markets, professional real estate agents and consumers. The dataset includes the transaction price, transaction date, property address, buyer and seller names, and relevant housing characteristics.

 

In addition, the researchers also utilized the data in 2006 and 2011 from the Australian Bureau of Statistics Census, namely the demographics of a suburb, to examine the ethnic composition in Sydney. The data shows that Sydney's top five ethnicity groups in 2011 are Australian, Chinese, Irish, Italian and Arabic.

 

Then, they introduced a term 'culture distance' to gauge the cultural difference between a housing buyer's culture of origin and the culture of neighborhood of a property. They calculated the cultural distance by adopting the six-dimension culture framework introduced by Professor Geert Hofstede, which is widely used in social science research.

 

In this framework, a score on the scale of 0 to 100 is assigned to each country along six dimensions: uncertainty avoidance, individualism, power distance, masculinity, long-term orientation and indulgence.

 

For example, Australia and China differ significantly on several dimensions, particularly on individualism and long-term orientation (see the diagram), according to Hofstede (2001).

 

Using a complex mathematical formula, the researchers reveal that the average cultural distance score over the entire sample is 1.99. Naturally, Australian investors have the lowest average cultural distance score of 1.35 across all ethnic groups. The average cultural distance score for Chinese homebuyers is 2.50. The higher the score on the cultural distance measure, the greater the cultural difference between a buyer and a neighborhood.

 

So how does cultural distance between the homebuyers and the neighborhood influence home buying decisions?

 

Cultural Distance Sensitivity

As expected, the study finds that cultural distance is an important determinant of property investors' location choice and transaction price.

 

To be specific, housing buyers are more likely to choose properties located in neighborhoods that are more culturally similar to their own culture of origin. And they are more willing to pay a higher price for properties in locations with shorter cultural distance.

 

In other words, there is a negative relationship between cultural distance and housing price. The greater the cultural distance between a homebuyer and a neighborhood, the lower the housing price is in the transaction.

 

According to the study, if the cultural distance between a homebuyer and the suburb decreased by 1 unit, which is approximately the difference between the average Australian and average Chinese property buyers' cultural distance in the sample, housing price rises by 1.1 percent or AUD$7,382.

 

Asians and Home Culture Preference

What's more interesting, the study reveals that home investors from different ethnic groups display varying degrees of home culture preference.

 

"Investors from Asia display a greater degree of home culture preference, compared with European and Australian buyers. Particularly, Chinese are most likely to pay higher prices for houses in neighborhoods which are closer to Chinese culture," Prof. Hu points out.

 

The study shows that if the cultural distance between an Asian property investor and the neighborhood decreased by 1 unit, the housing price increase about 2 to 4 percent, whereas the effect is only about 1.3 percent for Europe housing investors.

 

Why is that the case? According to Prof. Hu, people from Asian countries, such as China, India, Malaysia, The Philippines and Vietnam, are more recent migrants into Australia, and thus have stronger cultural bonds with their countries of origin, and may display stronger home culture preference.

 

However, Europeans came to Australia relatively earlier compared with Asian immigrants and their cultural difference is relatively smaller, so they are better adapted to the local Australian society and their ties to their countries of origin are weaker.

 

"Cultural distance sensitivity or home culture preference is weaker for more established ethnic groups than recent migrants," says Prof. Hu.

 

It is worth noting that China has become one of the top sources of immigrants to Australia in recent years and there is a huge new wave of Chinese investment into the Australian property market. Their appetite for the country's properties grows quickly.

 

According to The New York Times, Chinese investment in Australian real estate has increased at least tenfold since 2010; Chinese investors have purchased up to half the new apartments in downtown Sydney.

 

Policy Implications

As the study suggests homebuyers are willing to pay a premium for culture proximity, Prof. Hu believes that it has important policy implications on social diversity and urban planning.

 

Recognition of foreign migrant's inherent desire for cultural preservation is the first step towards a better understanding of foreign migrants and local communities, according to her.

 

"Awareness and respect for the housing investment preference of different ethnic groups would facilitate efficient urban planning," she says.

 

"We document the natural occurrence of cultural and racial segregation through individuals' housing investment decisions in Sydney. And we believe that a similar phenomenon could be observed in other migrant cities with diverse culture, such as San Francisco, Toronto or Vancouver," Prof. Hu concludes.

 

Reference:

Hu, Maggie Rong and Lee, Adrian D., Melting Pot or Salad Bowl: Cultural Distance and Housing Investments (August 31, 2017). 28th Australasian Finance and Banking Conference.

 

This article was first published in the China Business Knowledge (CBK) website by CUHK Business School: https://goo.gl/mY7Vap.

 

About CUHK Business School

CUHK Business School comprises two schools -- Accountancy and Hotel and Tourism Management -- and four departments -- Decision Sciences and Managerial Economics, Finance, Management and Marketing. Established in Hong Kong in 1963, it is the first business school to offer BBA, MBA and Executive MBA programs in the region. Today, the School offers 8 undergraduate programs and 13 graduate programs including MBA, EMBA, Master, MSc, MPhil and PhD.

 

In the Financial Times Global MBA Ranking 2017, CUHK MBA is ranked 36th. In FT's 2016 EMBA ranking, CUHK EMBA is ranked 37th in the world. CUHK Business School has the largest number of business alumni (32,000+) in Hong Kong - many of whom are key business leaders. The School currently has about 4,400 undergraduate and postgraduate students and Professor Kalok Chan is the Dean of CUHK Business School.

 

More information is available at: http://www.bschool.cuhk.edu.hk or by connecting with CUHK Business School on Facebook: http://www.facebook.com/cuhkbschool and LinkedIn: https://www.linkedin.com/school/3923680/.

 

About China Business Knowledge (CBK)

CBK is a portal belonging to the Chinese University of Hong Kong (CUHK) Business School which provides easy access to the China-related research conducted at CUHK Business School. Through feature articles, mini case studies, discussions and a research paper database, CBK aim to narrow the knowledge gap between China and the rest of the world, providing in-depth knowledge and practical tips about doing business in China. Free content is available at http://www.bschool.cuhk.edu.hk/faculty/cbk/index.aspx or by connecting with CBK@CUHK on Facebook: http://www.facebook.com/CBKCUHK, Twitter: https://twitter.com/CBK_CUHK and LinkedIn: http://linkd.in/1B8cGdU.

 



source: CUHK Business School

人氣文章
財經新聞
評論
專題
生活副刊
DIVA
最近7天
最近30天
我要退休 . 羅國森、曾智華
退休投資—三隻鐵股
陶冬天下 . 陶冬
股市失樂園 3
星座命理
【狗年開工大吉】初五開工最好?小心生肖相沖! 3
形象UP! . 藍婷
【職場拜年要知禮!】10大拜年「職場禮儀」 2
玄來更精彩 . 黃美雲
中央肥胖有危險 五分鐘減肚腩神功 4
小薯茶水間 NEW
【開工大吉】同事利是好難逗?醒你5大必勝攻略! 5
中環人 . 溫天納
不再炒作概念的狗年股市
香港街頭美食
【口袋清單】4間深圳網紅咖啡店 自拍、喝咖啡、消磨一個下午時光 1
鬆一鬆 . 通通
【一生受用】10個實用的生活小技巧! 2
綠路閑人 . lolo
同檯食飯共修行 8
我家私房菜 . 韋太
【初七吃素】雜錦素炒 3
論盡中港台 . 岑逸飛
【2018預測】戊戌狗年,月食修刑 6
走肉廚房 . Cathy Lee
【補脾益氣】金栗芝蔴油飯 2
美女中醫 . 譚莉英
【新年暴食】減肥大計前功盡廢,綠豆海帶山楂粥瘦身急救 4
食療新意思 . 陳沛思
【消食化積】新春養生桂圓普洱茶,生熟普洱大不同 4
政經頑石不低頭 . 石鏡泉
雞飛狗走重臨?
健康解「迷」
【脾胃弱者食蒜易肚瀉!】配白飯吃可減不適?(內附健脾去濕湯食譜) 4
醫美正當時 . 張傑
傷皮膚?不能曬太陽?拆解激光美容七大常見誤解 3
娛樂情報
黃子華《棟篤特工》6天破2500萬甩「票房毒藥」 影迷齊鼓掌︰吐氣揚眉 3
我做Marketing . Michael & Derek
【職場藝術】先道歉,後鬧人!中高層人員的管理之道 2
暢所欲妍 . 屈穎妍
停一停,忍一忍 200
Member Zone
【家有柴犬 喜事常來】賞你HK$3,888開年大福袋及50份開年利是
香港街頭美食
【新年必備賀年糕】小編反轉廚房!炮製「色香味俱全」臘味蘿蔔糕(附食譜) 3
我要退休 . 羅國森、曾智華
退休投資—三隻鐵股
What's On
【拜年錦囊】史上最齊親戚關係稱呼表!「夠誠意、夠體面」賀年禮盒推介 2
政是有心 . 余君雋
不就是打入建制反建制 夠膽推港獨無膽認港獨 27
有種生活 NEW
【深入北韓】80後女生做導遊 帶團走進平壤人的生活 2
欣欣食乜嘢 . 曾欣欣
別看輕白蘿蔔 消滯增強抵抗力一樣掂 8
小薯茶水間 NEW
2018打工仔攻略 麥玲玲教你職場趨吉避凶! 4
第一桶金 . 方元
睇盤捉套路避開大戶股 調整不逞強候低吸藍籌 1
陶冬天下 . 陶冬
算法股災
鬆一鬆 . 通通
【心理測驗】你第一眼看到什麼,就決定你是什麼樣的人! 4
玄來更精彩 . 黃美雲
【對女性不利?!】超級藍血月的啓示 1
健康大晒 NEW
【救心黃金十秒】冬天應如何保護心臟?必須了解的危險信號及緊急應對措施 4
玩樂好去處
【萌犬迎新年】精選4大室內年宵!入手「至抵價」年貨美食攻略 2
抵玩自助遊
【$10,000玩7日】快閃水都威尼斯 米蘭大教堂朝聖 1
星座命理
【玄來咁簡單!】增加財富有妙法
食療新意思 . 陳沛思
【健脾化痰湯水】南瓜栗子粟米瘦肉湯 1
論盡中港台 . 岑逸飛
律政司司長的說漏嘴 12
花生味辦公室 . 玄米米
【搵工最緊要狠】同事見工技巧!跳槽連升3級不是夢
產品簡介

【家有柴犬 喜事常來】分享「喜」氣 內附摺紙教學

【etnet Bonus賞你】E-Max WearHouse 100元現金禮券

【etnet Bonus賞你】新港城中心 至型行李箱保護套