Architecture
September 11, 2018

Skylines You’ve Never Seen

Having gone through the greatest economic expansion in human history, Chinese cities have expressed that transition in their skylines – an undisguised statement to the West that ‘we can do it bigger and better.’  ‘Better’ is subjective, ‘bigger’ not so much.

Quora contributor Martin Andrews assembled contemporary photos of China’s Tier 1 cities in his answer to the inquiry: “What are Chinese cities like compared to western cities?” He begins with shots of Vancouver as an example of what impresses him about western cities, and then notes: “Vancouver has a metro population of 2.4 million and there are 64 Chinese cities with a population greater than one million that really puts things into perspective.”

Here are just a few of the skylines that, I expect, most of us will find totally unfamiliar.

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From The Atlantic, via PT correspondent Michael Alexander, one of two dozen artful (and depressing) images of the aftermath of China’s bike share boom.

The fallout of a burst bike-share bubble in China has left the country with millions of abandoned bicycles piled into “graveyards”—such as this one, photographed on April 14 in Nanning—that cities are still sorting through.

…In a few cases, plans have been announced to refurbish and distribute some of the bikes to smaller neighbouring towns; in others, wholesale recycling has begun, and bicycles are being crushed into cubes.

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China has a problem in their real estate market where vapid speculation has increased prices.

As Reuters has reported, a record 200 property-tightening regulations were implemented in early 2018, designed to cool the market.

But demand has continued in cities with lower property values; despite the supposed reforms, housing prices have escalated even faster to June 2018, and demand for housing has resulted in over three years of  progressive monthly price increases.

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From South China Morning Post, via Thomas Beyer:

A Chinese carmaker has launched a vehicle sharing service in Shenzhen by offering a special deal on rental prices that works out cheaper than bike sharing.

GoFun, a car-sharing platform backed by state-owned Shouqi Group, said has put 300 new energy vehicles into service in the southern Chinese city, considered to be China’s Silicon Valley. 

The rental cost is just one yuan (US$0.16) per kilometre plus 0.1 yuan per minute, which works out at about half the cost of using Chinese ride hailing service Didi Chuxing. However, new customers can take advantage of a special deal of one yuan for three hours of driving, which is even cheaper than bike-sharing services in the city.

“It is a common strategy for technology companies to use low prices or even free services to attract new users,” said Zhao Ziming, a senior analyst at Beijing-based consultancy Cyzone. “The price will go back to normal when the companies gain a certain market share.” 

Carmakers like Shouqi Group are looking to develop vehicle sharing services based on the assumption that future consumers would rather make short-term use of those assets than owning them outright. In February, Didi Chuxing teamed up with 12 Chinese carmakers to develop an electric-vehicle sharing platform.

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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.”

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Here are some notes I took (and for which I am responsible for their accuracy).

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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.

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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 TimesChinese 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.

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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.

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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

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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?

 

 

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Ian Young has produced another remarkable story for the South China Morning Post.

The implications are profoundly disturbing.  Not only is the real-estate market disconnected from local supply-and-demand considerations but increasingly the ability of the City to plan for its residents looks to be threatened.  When the West End plan was being considered a year or so ago, no one imagined the deal outlined below: a 60-storey tower priced out of the realm of even affluent Vancouverites, valuable accommodation being left empty, and unimaginable pressure being put on the West End and its affordable housing stock.

This will only add to the seismic forces that are building just under the surface, waiting for a political earthquake to shake the status quo – that sense that our leaders, public and private, are incapable of responding or, at higher levels, do not care about the consequences.

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Stampede: the inside story of Vancouver’s wildest property deal, gone in 7,200 seconds  . It was in fall last year that Bruno and Peter Wall received an offer too good to refuse.

The prominent Vancouver property developers behind Wall Financial Corporation had spent C$16.8 million (HK$102 million) to buy two ageing walk-up apartment blocks on adjacent lots on Nelson Street in 2013. They had big plans for the downtown site: a glittering 60-storey residential skyscraper, taking advantage of the location within the city’s West End Community Plan, where a building could rise 168 metres tall under new zoning. The project was dubbed “Nelson on the Park” and the Walls turned to favourite designer Chris Doray to come up with what they hoped would be a new Vancouver landmark.

But now a consortium of investors was proposing something even more remarkable.

They would pay the Walls C$60 million for the site alone, which had just been valued at C$15.6 million by BC Assessment. The huge profit was impossible to resist, and the sale was completed in late January.

Doray, a 25-year veteran of the Vancouver development scene whose design has now been shelved, said he was “astonished” by the transaction, which he said set a new benchmark for commercial real estate in the city.

“The price on this block of land has now thrown everybody in the industry out of whack,” said Doray. “The property is worth, what, C$20 million, and somebody pays C$60 million? One wonders what’s going on. Is this New York? Is this Hong Kong?”

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The scale of the purchase, orchestrated by Sun Commercial Real Estate (Suncom) – a firm that specialises in pooling wealthy investors from Vancouver’s Chinese immigrant community – was exceptional enough.

But an investigation by the South China Morning Post now reveals the strange and frantic backdrop to the transaction – including a two-hour stampede by Suncom’s investors, desperate for a slice of the deal. It is a transaction that also sheds light on the rush of Chinese money fuelling Vancouver’s soaring real estate market.

… capital outflows from China were reaching a fever pitch, as companies and individuals scrambled to send money overseas last year in record volumes ahead of a feared yuan devaluation. The Canadian dollar was also plummeting, making Canadian property relatively more affordable to yuan earners, and average detached house prices in metro Vancouver soared more than 40 per cent last year, hitting an average of C$1.8 million. …

And so, against this heady backdrop on the morning of October 12, Suncom threw open the gates for the Nelson Street sale.

The result was nothing short of a frenzy.

“The 60 million dollars project at 1065 Nelson St Vancouver’s shares sold out in two hours! Thank you very much for the supporting from all my clients!” Lau announced on Facebook on October 14. …

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Fundraising tactics used in deals involving Suncom have previously drawn the attention of the BC Securities Commission, which in January announced it was reviewing the firm’s activities, partly in response to an SCMP article about whether the firm was involved in crowdfunding. …

Keeping up with the changing ownership of the Nelson Street site has been no simple matter.

The changes do not show up in land titles for the two lots,

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China’s rapid economic rise has turned peasants into billionaires. Many wealthy Chinese are increasingly eager to stow their families, and their riches, in the West, where rule of law, clean air and good schools offer peace of mind, especially for those looking to escape scrutiny from the Communist Party and an anti-corruption campaign that has sent hundreds of the rich and powerful to jail.
With its relatively weak currency and welcoming immigration policies, Canada has become a top destination for China’s 1 percenters. According to government figures, from 2005 to 2012, at least 37,000 Chinese millionaires took advantage of a now-defunct immigrant investor program to become permanent residents of British Columbia, the province that includes Vancouver.
The metropolitan area of 2.3 million is home to increasing numbers of ethnic-Chinese residents, who made up more than 18 percent of the population in 2011, up from less than 7 percent in 1981, according to government figures.
Many residents say the flood of Chinese capital has caused an affordable housing crisis. Vancouver is the most expensive city in Canada to buy a home, according to a 2016 survey by the consulting firm Demographia. The average price of a detached house in greater Vancouver more than doubled from 2005 to 2015, to about 1.6 million Canadian dollars ($1.2 million), according to the Real Estate Board of Greater Vancouver.
Residents angry about the rise of rich foreign real estate buyers and absentee owners, particularly from China, have begun protests on social media, including a #DontHave1Million Twitter campaign. The provincial government agreed this year to begin tracking foreign ownership of real estate in response to demands from local politicians.
The anger has had little effect on the gilded lives of Vancouver’s wealthy Chinese. Indeed, to the newcomers for whom money is no object, the next purchase after a house is usually a car, and then a few more. …

“In Vancouver, there are lots of kids of corrupt Chinese officials,” said Shi Yi, 27, the owner of Luxury Motor, a car dealership that caters to affluent Chinese. “Here, they can flaunt their money.”
Some Chinese immigrants think a supercar is a poor investment, because its value decreases over time. “Better to spend half a million dollars on two expensive watches or some diamonds,” said Diana Wang, 23, a University of British Columbia graduate student who said she owned more than 30 Chanel bags and a $200,000 diamond-encrusted Richard Mille watch. …

Four years ago, to learn the value of money after her friends criticized her spending habits, Ms. Wang spent three days on the streets of Vancouver, playing homeless. She said she had left her mansion with no phone, identification or wallet, wearing Victoria’s Secret pajamas and $1,000 Chanel shoes.

While in voluntary poverty, she lined up for donated food and felt the sting of humiliation after she was kicked out of a Tim Horton’s fast-food restaurant for falling asleep at a table. The experiment, she said, gave her a new appreciation for her parents’ financial support.

“Before that experience, I never looked at a price tag,” she said. “Now I do.”

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