News Article - Mainland China pours wealth into B.C. housing
courtesy of Globe and Mail
Steve Ladurantaye in Toronto and Kerry Gold in Vancouver
From Friday's Globe and Mail Published on Thursday, Jun. 10, 2010 10:23PM EDT Last updated on Friday, Jun. 11, 2010 10:34AM EDT
As Vancouver’s once hot real
Foreign money is flooding into China as the economic recovery spurs demand for its manufactured products. Exports increased almost 50 per cent year-over-year in May, helping ease worries about a slowdown in the world’s workshop.
China’s citizens have been told not to spend their rapidly increasing savings in the national real estate
“The government's efforts to cool the property market here in China have really thrown the market into confusion,” said Patrick Chovanec, a business professor at Beijing's Tsinghua University. “People have started buying gold, and it could be that some of the more mobile class of people are looking abroad for real estate buys.”
And it’s not two-bedroom bungalows that are being snapped up – it’s high-end luxury properties that are out of the reach of many Vancouverites. Even as the broader market softens, luxury sales are on track for a record year.
“Out of the nearly $200-million [worth of real estate] we’ve sold so far this year, I’d say 50 per cent was sold to Mainland Chinese,” said George Wong of Magnum Projects. “There’s a growing middle class and a growing wealthy class. And they have become the fuel to our real estate.”
Mr. Wong travels to cities such as Beijing and Shanghai to showcase West Coast properties, and his trips have led to sales. He said Chinese buyers account for about half of the units bought at a downtown condo development called Harbour Green, where the average unit costs $5.5-million.
“That’s the most luxurious and exclusive condo in Canada,” he said.
While Vancouver’s real estate market rebounded sharply from recessionary lows and helped lead the country’s economic recovery, sales fell 10 per cent last month compared to April. After a year and a half of double-digit growth, monthly sales are suddenly 27 per cent lower than they were at the market’s pre-recession peak in 2007.
But even as new listings flood the market – 7,000 in May alone – the average sale price decreased a scant 0.4 per cent to $590,662. Those closest to the market attribute the stability to Chinese buyers looking to relocate or for a residence while doing business.
“There are over 3,000 Chinese families who migrate to Canada under the business category every year,” said Vincent Chen of Visas Consulting Group, who helps families move to Canada from his office in Shanghai. “At least 60 per cent of these families choose Vancouver to settle down – and a major part of them will buy property there, sooner or later.”
In a survey released earlier this year, ReMax said foreign buyers were buying luxury properties across the country. Many intend to immigrate, the report said, but others seek affordable investments.
While Canada's rapid housing recovery – a 5.2 per cent year-over-year gain in 2009 – stoked fears of a bubble, other markets have been even hotter. Over the same period, prices in Hong Kong gained 27.6 per cent while those in China gained 25.1 per cent.
Brokerages are hiring translators and tailoring their websites for overseas clients.
Century 21 launched a Chinese version of its Canadian website earlier this year. At Realtor.ca, the public face of the Canadian Real Estate Association’s Multiple Listing Service, site visits from China come third after the United States.
Celia Liang came to Canada a decade ago to open a restaurant in Golden, B.C. She is now in Kelowna working as a translator for a local agent.
“My experience has been, in the last two years, I am seeing more Chinese come,” Ms. Liang said. “These aren’t Canadian Chinese. They are from China.”
Ms. Liang said Chinese buyers are here to settle down, raise families, and get away from the congestion and overcrowding of many Chinese cities.
“The thing that will make people buy property is they have to want to move to Canada – that is the thing, for them to want to invest in another country and not their own,” she said. “They buy property here not for investment, but because they are willing to move here.”