On April 14, UBC’s Centre for Urban Economics and Real Estate (CUERE) and the Centre for Chinese Research (CCR) co-hosted a panel session – “Global Real Estate Investment: The Vancouver-China Nexus.”
Here are some notes I took (and for which I am responsible for their accuracy).
RICHARD KOSS from the International Monetary Fund, on “The Outlook for Global Capital Flows.”
Negative value for other assets and low interest rates has resulted in a turn of capital to real estate. The increase in home prices has been modest in most countries – but not in global cities (of which Vancouver is apparently one). There are signs of stress in cities that are dependent on commodity producers – like Perth, Australia.
House-price booms were previously a topic of benign neglect, but that era ended with the events of 2008. Yet we still don’t have the information we need, nor are there tools for moderating housing booms, though some modest efforts for affordability are being made at the local level.
DAVID LEY, geographer and a professor at the University of British Columbia, on “Global China. Capital outflows and overseas real estate.”
Canada has had the most lenient immigration program to attract capital and capitalists.
Initially immigrants came from Hong Kong and Taiwan. Now they come from China (PRC) – a highly unequal society – where they are desperate to get money out. (See also this article from the New York Times: Chinese Cash Floods U.S. Real Estate Market). The amount was $676 billion in 2015.
Vancouver has created a trans-national market to serve PRC investors. Vancouver real estate is a global asset.
SHAO LONG LI, CEO and President of Modern International Ventures, on the “Vancouver China Nexus.”
Chinese prefer that 60 percent of their investment portfolio in real estate.
Vancouver is attractive because of western-style living and eastern culture. It has, among other things, a high-quality education and an established social welfare system.
Foreigners now have easier accessibility to mortgages in Canada than in China.
TSUR SOMERVILLE, Director of UBC Centre for Urban Economics and Real Estate, on Chinese immigration and Vancouver housing.
Chinese immigration is one piece of a complex transition. The smallness of Vancouver magnifies the impact.
Something very different happening in single-family housing in Vancouver than, say, South of the Fraser, whereas condominium prices are in lock-step throughout the region.
Housing prices have turned down in Hong Kong and Sydney.
The end of investor program saw a drop in the local high-end market – but that does not explain the increase in Vancouver housing markets across the board.
Is it the decrease the value of the Canadian dollar?
Never have we had low interest rates and speed of capital flows like this. The next three years will not be the same as last, even with Vancouver’s resort-city attraction
David Ley made two important points in the panel discussion after presentations:
- Why is there continued denial of the impact of foreign capital. There is data.
- We’re seeing the danger of having no federal and provincial housing policy since the mid-1990s. Why are they not addressing housing? Why the overwhelming silence?
To which Tsur Somerville wondered:
- Will the lack of action, given what people are saying about the housing issue, unleash the Trump-like supporters among us?