“A large number of Chinese people who’ve come over recently, their experience with capitalism is that everything goes up forever, because it has for the last 20 years in China, so they have that mentality.”

From ‘Canadian real estate – a piggy bank for Chinese investors’, by Kerry Gold, G&M, 10 Jun 2011, excerpted here for the chronological record –

Late last month, a 153-unit condo development in New Westminster sold out in two and a half hours. More than 400 potential buyers lined up for the sales day. For every unit sold, there was at least one back-up offer made. There was nothing overtly special about the project, which will be completed by fall 2012.
… for reasons only understood by the increasing number of local realtors who have learned to target the Mainland Chinese market, it held an irresistible allure to the new Chinese buyers looking to invest their money in the Canadian housing market.

Earlier this year, the Bosa Sovereign hotel-condo tower in Burnaby sold out in two days, largely due to the new Asian market. And last week, people began lining up in the rain on Wednesday for a shot at one of the Quintet luxury condo towers being built in Richmond City Centre. Organizers handed out blankets and WiFi cards so the 80 people in line could stay warm and watch the Canucks game while they waited for the sales office to open Saturday morning. The builder sold more than 270 suites that day, with 30 suites held back for a later release.

Landcor Data Corporation compiles B.C.’s most comprehensive real estate statistics. President Rudy Nielsen had long known that Mainland China was driving the Vancouver market, but he had yet to prove it with numbers. In Landcor’s first-quarter 2011 residential sales summary, one of Landcor’s senior analysts, from Anhui province in China, examined luxury sales in Richmond and Vancouver’s west side, and identified the number of buyers with Chinese names. The analyst found that in 2010, more than 74 per cent of buyers were most likely from Mainland China. It’s imperfect methodology, but it at least lends some statistical support to a trend that has so far been based on anecdotal information.
“Yes, the realtors are correct,” Mr. Nielsen concludes in his report. “China is coming and it likes what it sees.
“They’re arriving with fortunes intact, especially in the Lower Mainland, eagerly buying their own bits of the good life and helping buoy up real estate prices.”
Many do not want to live in the condos or even rent them out, say the realtors interviewed for this story. They want to have a safe haven for their investment in desirable Canadian cities, in a country that is economically and politically stable.
“You could almost say it’s a ‘land bank,’” says Mr. Morrison.

Vancouver marketer Cam Good recently helped sell out an Etobicoke development called Westlake, which, he says, was largely snapped up by Mainland Chinese buyers. Mr. Good has taken his marketing strategy one step further. He says he’s the only Canadian realtor to open offices in Beijing and Hong Kong, directly marketing projects in White Rock, Squamish, and the Toronto area to Chinese buyers who want to protect their new found wealth by tying it up in Canadian real estate.
By opening offices in Hong Kong and China, Mr. Good aims to beat his competition to the source.
“In China, it’s relationship based. The North American market makes buying decisions by looking for specialists, like appraisers, inspectors, realtors, whereas a Chinese person is more likely to make buying decisions based on trust,” says Mr. Good.
Simeon Garratt heads up the Hong Kong office. He usually lives in Vancouver, but was raised in China and speaks Mandarin and some Cantonese. Mr. Garratt understands not just the language, but also the culture. Canadian real estate is simply a better deal.
“If you look at the cost per square foot here, it’s a bargain to buy here in Vancouver,” said Mr. Garratt, prior to leaving for Hong Kong.
“I mean in Beijing, you are going to pay over $1,000 a square foot for anything nice. And that price is top end in Vancouver, for the best you can get.”

Dan Scarrow, vice president of corporate strategy for Vancouver-based Macdonald Realty, believes that an office based in Asia is more useful for getting listings than selling condos.
“Having an office there is more a ploy to get listings with developers,” says Mr. Scarrow, who speaks Mandarin. “You are not going to sell many units in China. The Chinese are like any other buyer. They need to see the project to buy it.”
He also believes that the new Chinese buyer is fuelling the Vancouver market because they believe in the appreciation of real estate.
“A large number of Chinese people who’ve come over recently, their experience with capitalism is that everything goes up forever, because it has for the last 20 years in China, so they have that mentality.”

1. More very prominent mainstream coverage reciting the China-is-buying-everything meme.
2. Interesting opinion that China offices are largely important to attract local developers rather than for sales themselves.
3. Is this ‘real’ demand or momentum speculation? (if the latter, look out below once the market blips).
4. ‘Land bank’?? Our homes as a traded token? If true… (shudder). – vreaa.

12 responses to ““A large number of Chinese people who’ve come over recently, their experience with capitalism is that everything goes up forever, because it has for the last 20 years in China, so they have that mentality.”

  1. “If you look at the cost per square foot here, it’s a bargain to buy here in Vancouver,” said Mr. Garratt, prior to leaving for Hong Kong.
    “I mean in Beijing, you are going to pay over $1,000 a square foot for anything nice. And that price is top end in Vancouver, for the best you can get.”

    Doesn’t mean it’s good value within the Canadian market though.

  2. Also from G& M, June 11, 2011

    “The difference between the Hong Kong Chinese and the Mainland Chinese is immense,” says Mr. Morrison. “We are dealing with a lot of people who have a lot of money for the first time. It’s the first time some of them have been on an airplane.”

    And many of them are NOT seasoned investors or have owned property before. Which should make the bullish real estate speculators here very nervous. This is a group of people who are rushing to buy Canadian property because they have been restricted by Chinese government policy or can’t afford to buy in their own country. They too have been caught up in the bubble mania of Vancouver. This will not end well for these newly rich investors and for struggling Vancouverites desperate to get a foothold on this market. I will be very interested to see what happens here in the next 5 years.

  3. […] identified the number of buyers with Chinese names. The analyst found that in 2010, more than 74 per cent of buyers were most likely from Mainland China.

    HAHAHAHAHA.

    Sorry, but this is just too precious. So he goes by the names and that is taken as “proof” that the Chinese are coming? In BC? Which had two major immigration waves from China in the last 20 years?

    They’re not even trying anymore.

    • Exactly. Most permanent residents in Richmond have Chinese names.

    • I think they were looking at “entirely” Chinese names, so that no part of the name has been Westernized. Many of the Chinese individuals I’ve worked with have Westernized some part of their name because they’re tired of hearing it slaughtered by inept English tongues, so Westernization of legal names might be somewhat relevant for determining the first generation from the second.

      • My understanding was / is that english surnames have been en-vogue in Mainland China for quite a few years as well, so I don’t really think that’s how they “differentiate”.

      • Might not be, but it was Landcor’s methodology.

  4. Native Vancouver

    Seriously, you guys on this blog have just caught on this now? Where have you been in the last 5 years. I have a good idea of how to break Vancouver’s housing market. Take away the investor immigration process then you’ll see how fast the market collapses.

    If you think this is simply for investment you are dead wrong. We are their safe haven, somewhere that they can run to when in need (remember, china is a communist counrtry, god knows what can happen there). They want a piece of real estate here so that they have a second home, not to make money off of it.

    One last thing, this will make you shudder. Vancouver real estate may soon become a status symbol amongst the chinese elite. When that happens, we are truly screwed.

    And please stop asking questions why Vancouver, etc. To explain to you all this I would have to write an essay. You just have to trust me that when I did my research and looked at the factors that a rich chinese person would consider important, I couldn’t find another city in the world (Singapore was close) that is better than Vancouver.

    I was like you guys, but now have joined the dark side after doing a ton of research. We are fighting a tsunami of money, most of which was not made through hardwork.

    • We’re screwed, maybe – or we’ll become protectionist. With a major economic centre turning into a “land bank”, you’ll have more Peter Ladners stepping up and complaining, more political will toward looking at investment and immigration.

      • The phenomenon isn’t restricted to YVR alone, Absinthe… But the operative question is, “To what extent does this represent SafeHavenSeeking FlightCapital vs. SpeculativeMania and why?”… 😉

        [ChinaDaily] – Chinese boost London’s luxury housing market

        “Harrods Estates, a high-end realtor in London, says 43 percent of its business now comes from Asian customers, the figure was eight percent in 2008. “…

        http://tinyurl.com/3dssyba

  5. Bloomberg just posted an interesting article about the Chinese going on a global housebuying spree…

    http://www.bloomberg.com/news/2011-06-13/chinese-mount-global-homebuying-spree-as-governments-squeeze-local-markets.html

    My favourite line which shows the Chinese lack of sophistication about capitalism…

    “Chinese love the Trump,” Alcobi said. Anything that has the Trump name is good.”

    Yeah, good luck with that one my Chinese friends… Trump’s experience and your yuan will become Trump’s money and your experience.

    • One GoodLink deserves another, PP…

      [FT] – Corrupt officials took $124bn out of China

      “Corrupt Chinese officials smuggled an estimated Rmb800bn ($123.6bn) of ill-gotten gains out of the country over a 15-year period, according to a report released by China’s central bank. Around 17,000 Communist party cadres, police, judicial officers and state-owned enterprise executives fled the country between the mid-1990s and 2008, the 67-page report said. For higher-ranking officials who managed to abscond with large amounts of money, the ÛS was the favourite destination, while Canada, Australia and the Netherlands were also popular.”…

      http://tinyurl.com/6hlqvpx

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