“Crazy But Also Real”? – Foreigners Bringing In 4 Million, 30 Million, 100 Million…

This story is archived here, for the record, without judgment regarding its veracity. Regardless of whether it is true or not, it is at the very least of interest as being reflective of current talk. -vreaa

unicas at RE Talks 10 Mar 2011 9:56pm“Just to share what I see in this market, it is crazy but also real. I met a young girl today at a client’s office in Richmond. The girl’s parents are in China and are close friends of my client who told me the family is rich and girl needs some tax advice. When I walked into the meeting room, the girl was playing her iphone. she is in her early 20s, no make up, no LV handbag etc. We started to chat, she said her family is facing a big problem. She said when they landed in Canada, they only declared they have $4 million dollars worth of overseas assets, meaning they can only bring up to $4 million into this country without paying tax. She said her family did that because the immigration consultant told them not to declare too much. But in fact they need to bring into Canada a lot more. I asked how much more, the girl said at least $100 million. I asked what happened with the 4 millions that you can bring in tax free, she answered she got the money already and she bought condos. She did not say how many, but said one is in coal harbour. She said her parents will only get the maple card but have no intention to move to Canada. She is going to college here. She said she will get her citizenship and leave Vancouver in 3-4 years , mostly likely return to China. I asked why you bring that kind money here if you have no intention of living here. she said money is safe here. And she can manage it even she lives in China. I asked what you do with the $100 million here, she said they will invest, may be buying land, house etc. She asked in great details what other way they can bring the money in Canada and told me her mom will come to Vancouver in April and will discuss with me more.  When the girl left, I saw her drive a BMW X5, not a big deal in Richmond, but $100 million? I now regret I married too soon. Since I became independent accountant, |I have dealt with two other clients who are worth over 100 mil, one is about to leave Canada as non resident this coming May and go back to China when their daughter graduates from UBC.  You don’t meet this kind of rich people everyday. The most money I was consulted to bring into Canada was $30 million before I met this girl. But new comers with a few million dollars? There are tons…..”

Another story, in a similar vein:
Marco911 at RE Talks, 12 Mar 2011 8:25am “Had dinner with a good friend of mine who works in immigration and said that there is a waiting list of approx 46,000 mainland Chinese with an individual liquid net worth of no less than $4.5 million. He works closely with a few realtors, one of who was also with us at dinner. That realtor said that the only people buying right now for the most part, are mainland buyers.”

25 responses to ““Crazy But Also Real”? – Foreigners Bringing In 4 Million, 30 Million, 100 Million…

  1. When I was growing up in a south east asian shithole, my mom would sometimes lament that our fellow Canadian expatriates were ruining the market for domestic services (we all had maids, gardeners and drivers) by paying salaries that were exorbitant compared to rates paid by the indigenous middle class. Having been born and raised in a post ww2 occupied SE asian shithole herself, she knew the language and was in the unique position of being able to correctly price the market for such services. I guess the free market economy is a harsh mistress.

    On a different subject, has anyone else noticed that there’s a shortage of tomatoes and eggplant in the Lower Mainland? You cannot order any manner of eggplant dish in any szechuan restaurant anywhere.

    • 4SlicesofCheese

      Could be because of the crop freeze in Mexico.
      I had lunch at Phat deli this week and they had a sign saying due to the crop freeze in Mexico, prices of some veggies have gone up 200%. They raised the prices to reflect that.

    • Are we confusing the price of services with the price of housing rentals and the purchase price of housing?
      I wasn’t aware the nature of these good/services were similar.

  2. Reminds me of stories in London of rich Russian and Middle Eastern oil barons with untold riches buying up Chelsea property. Just wait until they “discover” Vancouver.

  3. This begs a question. Why are these filthy rich Chinese lining up to drop money on some of the most overpriced real estate in the world? I mean, surely even someone from out of country can see that $2 million in Van West buys you a sh*thole. The world is filled with “safe” countries where the living is equally good (and the weather is likely better) and where $2 million buys you a palace.

    I’m far from a financial expert – maybe there’s some advantage for these ultra-wealthy Chinese in buying a property today that’s soon going to be worth 25% less? Damn. Something is seriously fishy here. Where, for example, were these supposed mega-millionaires five years ago (hell, even one year ago, even three months ago) when their money could buy substantially more? Suddenly there are tens of thousands of them going absolutely insane over Vancouver precisely when housing prices are at the very peak? Like I said…very fishy indeed.

    • For the purposes of this response, assume that the anecdote is true and that many offshore buyers do really have a net worth of $10m. Then:
      – who cares if $2m only gets you a shithole house. It gets you land that you can build a nicer house on.
      – a 25% decrease in prices of your $3m property is not a big drop in your net worth.
      – 5 years ago, they may not have had a net worth of >$10m. The Chinese economy hadn’t fully boomed yet, and the Chinese property bubble hadn’t fully inflated yet.

      Lastly, Chinese people are attracted to Vancouver because:
      – it is unpolluted, unlike large Chinese cities which have major pollution problems
      – it is a “prestigious” place to have property because it gets high international rankings. (Whether you personally place credence in these rankings is irrelevant.)
      – it has the best Chinese restaurants outside of China
      – there is already a huge body of Chinese residents here, so the new residents can feel they fit in
      – you don’t need to speak English to live here — it’s easy to find a Chinese-speaking lawyer, a real estate agent, an accountant, etc.
      – the Canadian government will bend over backwards to give them a visa

    • I can only speak for the States, but it is difficult to get a visa here. Immigration is restricted by quotas, not actively encouraged. My impression is that Canada encourages immigration to a much greater degree than many other Western countries.

  4. ‘Unicas’ syntax indicative ESL author/absolute numbers $CDN this instance viz. UHNW safe haven seeking/flight capital not unusual/Subject’s use of modest BMW X5 consistent with UHNW profile/CAVEAT: Ordinarily, UHNW without proprietary FT staff/’family office’ would utilize ‘private’ banking networks/services to effect international transfers/asset re-allocations (normatively through shells/trusts/holding corps/etc…). See below.

    [PrivateBankerInternational] – UBS latest to target UHNW with family office

    http://tinyurl.com/4ez6q44

    PS to Jesse, I wouldn’t worry about Sheiks & Oligarchs shopping YVR unless/until such time as Canada introduces something akin to Blighty’s lax, ‘Non-Dom’ taxation regime (whereas, UHNW’s can live there year round – but are considered non-domiciled for taxation purposes).

    • One possible reason for the increase in activity could be the relaxation of the visa rules by the Chinese government. It used to be harder to get to Canada.

      • The data indicate immigration from Mainland China is little changed over the past 3-4 years and is down from its peak. Whatever is leading to a purported influx of capital from China in the past year or so is relatively new.

  5. ” She said she will get her citizenship and leave Vancouver in 3-4 years , mostly likely return to China.”
    That’s interesting, because China does not allow dual citizenship.

    • Many are reversing their status by applying PR status in Hongkong to re-enter China, and once back in their city/town-of-origin/birth, they reapply for a residency paper. Yes, there is a loophole working in their favor.

  6. “Had dinner with a good friend of mine who works in immigration and said that there is a waiting list of approx 46,000 mainland Chinese with an individual liquid net worth of no less than $4.5 million.”
    That would be about 10% of all Chinese millionaires (according to official numbers) – all of them want to go to Canada. Riiiight…

    • Yeah, that’s an interesting number, that would mean 207 BILLION are waiting to “flee” China. I somewhat doubt that. China’s overall estimated GDP was 9.8 Trillion with 1.3 billion people living there, do the math.

      Besides, until now China does not allow the Yuan to leave the country, so people would need to exchange it for foreign currency in China.

      Even that girls family with her $100 Million in cash will have a hard time doing that without the Chinese Government noticing.

  7. Re 10% of all Chinese millionaires, if true, it may be similar to univ applications: apply to 3, hope to get in to one.

    And if it really is 10% of China’s elite applying just to Canada, that indicates wholesale fear of a political/economic collapse.

      • Or more likely corruption investigations if/when their backers falls out of favor or the central government needs to make examples of some corrupt officials. I used to hang out with a friend’s cousin who started their own company in China, did very well, and decided to immigrate to Canada. According to her, almost every single provincial official whose position is roughly equivalent to deputy ministers here have been investigated for corruption and bribery at some point. Sometimes it’s geniune investigations, other times are a result of political in-fighting. However being investigated for corruption is a very harsh process that makes corruption investigations here seems like kindergarten play. So if someone made their money through corruption and/or bribery as government officials, or building their business based on that, off course they want to get out and get their money not only in a safe stable country that not only doesn’t have an extraditionn treaty with China but also have a reputation for not sending people back to China to face corruption charges. There is only one country that currently fits the bill and that’s Canada. Within in Canada, the only big Chinese friendly city for those who don’t need to work another day and don’t have harsh winter is Vancouver. So yes the 46000 applications sounds high but if you consider all the people who got rich through illegal means and wanting to get out to a safe country, 46000 is not unreasonable actually.

        As for why they would come here to get the citizenship and then go back to China? Well that’s where they can make the money and if they do get investigated, arrested, etc because they are Canadian citizens now the Chinese government have much more restrictions on how they can deal with these people and how to proscute them. Add in some media exposure about human rights and similar exposures in Canadian media, they are hoping they can force Canadian government to step in and help them get out of China. The Canadian citizenship is basically being treated like a get out of jail free card.

  8. The Chinese millionaire “market” is akin to the .com market over 10 years ago: if Canada can tap into but 1% of the Chinese millionaire market, prices will skyrocket. Looking at the market size for Chinese millionaire consumption — and it’s not just property, it’s all sorts of goods including luxury items, education for children, travel, and re-investment into other ventures — there isn’t enough to go around.

  9. My bullshit meter is clicking in red…smoke coming out…it exploded…breathing in fallout…must find real estate agent…prices only go up forever…

  10. China now allows its citizens to transfer overseas up to US$200,000 per year per person; it used to be 0nly US$50k.

    I only have a bone to pick with this story, dishonesty and lack of integrity will reflect our society. Anyway, $4M vs $100M is a huge difference; ill-gotten or not, they soon can direct wire transfers to BC casinos.
    …………………………
    “She said when they landed in Canada, they only declared they have $4 million dollars worth of overseas assets, meaning they can only bring up to $4 million into this country without paying tax. She said her family did that because the immigration consultant told them not to declare too much. “

  11. Wealthy Chinese, using their mainland IDs, can set up bank accounts in Hongkong and Macau with no limits nor restrictions. That’s how some get around the wiring huddles and Fintrac, etc.
    In fact they, being Canadians and residing in BC, cannot set up trading accounts with US forex companies, so they rely on their Hongkong and China’s bank accounts and addresses to circumvent this. It makes me laugh that they are trading online from BC and the US forex companies do not check on their IP’s country location.

  12. As long as they don’t have CMHC insurance I am fine with it.

    If it’s true, it means that money is flowing IN to Vancouver, much of which will never leave because the market will crash.

    If most of the money lost is from locals it will kill the local economy. The more foreign money lost the better it will be for us in the long run, if the HAM props up the market for one more year, who cares? It will just fall further when it does collapse.

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