Chinese investment in Canadian real estate set to increase in 2016



Chinese investors are getting hungrier for real estate in Canada, where foreign demand has fuelled record price gains and made million-dollar homes the norm in cities such as Vancouver.

Inquiries for Canadian homes on Juwai.com, a property search engine that lists real estate around the world for Chinese buyers, jumped 134 per cent in the first quarter from a year earlier, according to the Shanghai-based company. The figure tracks the total number of queries sent to the agent, developer, or seller of a Canadian property listed on the website.

The increased interest indicates that Chinese investors may be seeking to move money abroad amid instability in the country’s economy and stock market, even as the government clamps down on capital flight. A Juwai survey of real estate agents who work with mainland Chinese buyers found that 55 per cent expected international property purchases to increase as people sought a safe haven for cash. Canada, particularly the cities of Vancouver and Toronto, has long been among the top targets for property investors from the Asian country.

“Barring any big changes in the environment, we expect Chinese investment in Canadian real estate to increase in 2016, and the impacts of that investment to be spread more widely as these buyers move into new markets,” Charles Pittar, Juwai’s chief executive officer, said in an e-mail. If the government loosens capital controls at any point, “you can expect more Chinese investment in international property markets,” and Canada could get a share of those funds, he said.

China’s Shanghai Stock Exchange Composite Index has tumbled more than 40 per cent from a June high and in August the country unexpectedly devalued its currency. President Xi Jinping earlier this year tightened the noose to prevent capital outflows, and the country has rules that Chinese citizens can move only $50,000 abroad annually, yet those are sometimes flouted.

“Sure it’s tough to get your money out today. It may be tougher tomorrow,” said Thomas Davidoff, associate professor specializing in real estate at the University of British Columbia’s Sauder School of Business. “Vancouver is attractive. In the long run, your asset is protected. You feel safe about the asset, which is going to be critical to somebody in” a country such as China.

In Vancouver – where the average home price has jumped almost 40 per cent in five years – Chinese demand is concentrated in the luxury market, according to Malcolm Hasman, a high-end real estate agent in the city. Chinese buyers this year have purchased about three-quarters of the properties for sale in West Vancouver, where the average price of a detached home is $3.1-million.

Mr. Hasman said he has sold about 15 homes worth at least $8-million each so far this year, including a waterfront 6,600-square-foot penthouse in the Coal Harbour neighborhood, listed at $19.8-million.

“This year is busier than last year,” said the agent, who said it’s common for him to see multiple bids on homes as pricey as $10-million. “I just don’t see any slowdown in Chinese money driving the Vancouver market.”

Chinese investment also has soared in countries such as Australia and the United States. Chinese investors doubled purchases of commercial and residential real estate in Australia to $18.4-billion (U.S.) in the 12 months through June, 2015, from a year earlier, according to that country’s Foreign Investment Review Board. In the United States, they surpassed Canadians as the top foreign buyers of homes, with $28.6-billion of deals in the 12 months through March, 2015, data from the National Association of Realtors show.

The total value of all Canadian properties that Chinese made inquiries for almost tripled to $14.9-billion in 2015 from $5.6-billion in 2014, according to Juwai. The top city by total value of properties searched was Toronto, where it more than tripled to $7.4-billion. In Vancouver, the second-most in-demand city, it more than doubled to $2.5-billion.

Quebec had the biggest jump in interest, with $764-million searched, more than triple the 2014 value. The biggest motivator for foreign buyers was education for their children, Juwai’s data show. In British Columbia, where the biggest city is Vancouver, about one-fifth were motivated by investment, lower than the 26 per cent of Toronto buyers.

Canada is trying to find just how much foreign investment exists in the real estate market. Canada Mortgage & Housing Corp., the national housing agency, estimates that about 10 per cent of new condominiums bought in downtown Toronto belong to non-residents. In Vancouver, Chinese buyers account for about 33 per cent of the market, according to “back of the envelope” calculations by National Bank of Canada.

The government has increased its focus on the opaque market. The province of British Columbia will require home buyers to disclose their citizenship, while the federal government has given Statistics Canada half a million dollars to research foreign buyers. CMHC has ramped up its search for the data, working with brokerages, the tax agency and the country’s money laundering police.

Also on The Globe and Mail



CMHC: Foreign condo ownership concentrated in downtown Toronto
(BNN Video)

Courtesy: The Globe And Mail

10 thoughts on “Chinese investment in Canadian real estate set to increase in 2016

  1. Why would Christy Clark and her friend Rich Coleman the former realtor do anything about Chinese Foreign Investment in British Columbia. After all Christy has a home in Point Grey which is practically the centre of this un-checked foreign investment. Did I mention that Christy lost her seat in the last provincial election, losing to NDP’s David Eby.

  2. And in other news, Christi Clark announced British Columbia will be changing its name to New China to help the transition and make our new residents feel more at home.

  3. Government at all levels have failed on this issue. Non-Canadians are buying up our homes and immigrants who buy homes don’t stay and get more benefits than they pay into. This smacks of either corruption or incompetence, or both. Tax and regulate now and no benefits to wealthy immigrants who play the system and pay no taxes as their spoiled kids drive BMWs while Mom and Dad are back home working and quite often Communist Party members.

  4. If I needed a place to live in Vancouver I would just move into one of these unoccupied million dollar foreign owned houses. Do you hear me homeless people of East Hastings Vancouver? Generate a fake lease agreement and just move in- become a squatter. Housing affordability problem solved. I’m sure Chip Wilson won’t mind his new neighbours in Point Grey.

  5. They’re already coming in droves. Weekly buying trips. They love our weak laws that allow them to do as they please. They especially appreciate our building departments that genuinely want to please the offshore purchasers. Zoning policy is so malleable for those with the money.

  6. [the country has rules that Chinese citizens can move only $50,000 abroad annually, yet those are sometimes flouted.]

    “Sometimes?”

    At the risk of sounding like Donald Trump, it sounds as if China is sending us its criminals — money-launderer­s at least. And who knows how they made the millions they illegally ship out of their country — with the connivance of our banks — to buy up Vancouver and West Van?

    In the past, Chinese immigrants have helped build our country and have become good citizens. Now we have dodgy scofflaws pouring in contraband cash that corrupts our real estate industry and our financial institutions.

    I can imagine Chinese billionaires telling each other, “Oh yes, the Canadians are just like us: they’ll do anything for

  7. Hey Toronto, take a good look at price in Vancouver for an indication of where you are headed. Just don’t expect any level of government to admit that overseas earned/sourced money has anything to do with sales or price.

  8. if the government wants to fuel a racist backlash then just keep on doing nothing about foreign money like it has

  9. Let me Excellent, more “poverty level” women and children living in million dollar homes for tax paying Canadian citizens to support when they avail themselves of free education, free health care and subsidized utilities. Great plan Christy Clark to displace potential tax paying citizens from Vancouver houses in favor of non taxpaying non citizens. This will work out great! What could ever go wrong?

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