Chinese real estate investment slowdown likely short-lived
MICHAEL BERNARD
The Province
The Chinese government crackdown on capital flight from that country has combined with the 15 per cent foreign buyers’ tax on residential properties to dampen buyer demand in Vancouver’s sizzling real estate market.
But two senior executives at Macdonald Commercial, a real estate brokerage firm that monitors Chinese investment in Canada, say that the Chinese real estate investment slowdown will likely be a short-term trend.
“My sense is that it’s more of a struggle for Chinese investors to send funds from China now, but we are still seeing some significant income and land deals being done in Metro Vancouver,” says Tony Letvinchuk, managing director of Macdonald Commercial.
As an example of China’s abiding interest in our region, China Minsheng Investment Group recently purchased Grouse Mountain ski resort for an estimated $200 million. An unidentified banker said that Minsheng had been searching for a year throughout Canada for investments.
As well, several other significant state-related Chinese companies have set up shop in the city over the past year and are quietly buying up real estate around the province, despite the official policy, says Dan Scarrow, head of the Canadian Real Estate Investment Centre and Macdonald Commercial’s representative office in Shanghai.
Chinese foreign investment outflows — which have fallen from nearly $1 trillion in 2016 to $126 billion so far in 2017 — will continue to play a key role in Vancouver real estate in the long term, he said.
He noted that despite attempts to control capital flight, the Chinese government is simultaneously nudging the country into economic superpower status, a process which necessarily involves diversification of global investment over the longrun.
In addition, attempts by the municipal and provincial governments to cool down demand for capital flow into Canadian real estate are being counteracted by Ottawa’s continued expansion of immigration (increased to 300,000 annually), tourist (1.4 million 10-year visas issued to Chinese nationals since 2014), and foreignstudent (over 300,000 with onethird from mainland China) access to Canada.
On top of that, a critical mass of 70,000 well-heeled mainland Chinese immigrant families in Vancouver will continue to pull in seemingly endless Chinese capital to the region, he said.
“Money eventually gets to where it wants to go, despite policy efforts to the contrary,” said Scarrow.
Adds Letvinchuk, “There are so many reasons we are an attractive real estate investment destination for global capital and that’s not going to change anytime soon; and with an abundance of local equity, the commercial property sector will remain very strong.”
Founded in 1944 in Vancouver, Macdonald Commercial is the commercial investment arm of Macdonald Real Estate Group, which employs more than 1,000 people in over a dozen real estate offices across British Columbia and opened its Shanghai office in 2014. Last year, sales volume exceeded $8.9 billion while assets under administration grew to over $5 billion.
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