While most residential real estate developers in Metro Vancouver are confident that the current tsunami of Mainland Chinese investors and buyers will keep coming, some are warning that it is dangerous to count on it.
Such off-shore buyers are credited with driving home prices on the West Side of Vancouver and Richmond into "the stratosphere", according to Cameron Muir, chief economist with the BC Real Estate Association, who chaired a panel at the Vancouver Real Estate Forum last month. Figures show that the average house price on the west side is now $1.8 million and has topped $1 million in Richmond for the first time.
"This trend is deep," said Chris Philips, president of Fairborne Homes Ltd., who recently toured China including "small cities with 10 million residents." Philips said he was told there was a three-year lineup for Chinese residents trying to get Canadian visas. Fellow panellist Jennifer Podmore-Russell, real estate advisory leader at Deloitte Touche, noted that B.C. "gets 47 per cent of all investor-level immigrants and 90 per cent of these settle in Vancouver." Such immigrant investors must prove a net worth of $1.6 million and post an $800,000 five-year bond with Ottawa. Last year, 5,500 such Asian investors came into Vancouver, among 40,000 immigrants, the majority from China.
But Philips added a caution, which was echoed by other forum speakers. "The [development] industry is betting big on the Chinese buyer," he said, "and it is risky." A change in China policy toward residents taking money out of the country, an Egypt-type revolt or simply too-high prices in Vancouver could slow or stop the wave, forum delegates were told.
from Western Investor, May 2011
