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VANCOUVER: The rising price tags on luxury houses in Vancouver are a sign of China's expanding wealth as Chinese buyers seek a home for cash in the face of property investment curbs at home.
There is no reliable data on how much Chinese money is flowing to Vancouver, but industry watchers say enough has gone into several high-end neighbourhoods to skew Canada's national real estate data.
Stories abound about cash buyers and of bids that far exceed asking prices.
"Placing the money is really what they're doing. They're parking it, like in a bank," said Cam Good, the president of TheKey.com, which markets property to Chinese buyers.
Canada weathered the global recession better than many of its peers, helped by steady demand for the commodities it produces, an aggressive stimulus programme, and strong, conservative banks that did not need government bailouts.
Its property market stalled, but did not crash, and prices soon rose again, with bidding wars for property in many cities. Vancouver is the hottest market.
The Canadian Real Estate Association last month revised its average price forecast up for this year because of a jump in Vancouver area multimillion-dollar property sales.
Property spending in Vancouver rose 10 per cent from a year ago in April, and the average price climbed 21 per cent to C$815,252 (RM2.51 million). The national average is just C$372,544.
Chinese money first went into real estate in Britain and Australia, and then to Canadian cities such as Vancouver and Toronto, said Scott Brown, a senior vice-president at Colliers International, who sees little chance that the trend will fade. "It is in its early stages," he said.
Brokers say the Chinese buyers often seek to advance both family wealth and education, allowing their children to attend school in Canada and learn about western culture.
Desirable properties need a large lot and rental potential.
Vancouver, on Canada's Pacific coast, has long-standing ties to Asia, both in terms of trade and investment. The 1980s and early 1990s saw a flood of money from Hong Kong and Taiwan from investors worried about political changes at home.
The current spending echoed that, but focused on residential rather than commercial property, said University of British Columbia professor David Ley.
"Their source of wealth is China, not here. They are not well-positioned to undertake economic activities here, which anyway have low returns relative to China," Ley said.
China's efforts to control rising domestic real estate prices means it may be easier for wealthy individuals to invest abroad than at home.
In theory, the Chinese government can limit capital outflow, but in reality, the wealthy find it relatively easy to avoid the controls.
Canada can also expect more competition as other countries step up efforts to lure Chinese money in.
"The jig is up. The secret is out. Everybody knows that Chinese buyers are the biggest, most active group in the world," Good said. — Reuters
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