As a continuation of my investment into the Vancouver real estate phenomena. I searched through the interwebs for details of the Chinese ponzi scheme on real estate and a reason why the Chinese would buy Vancouver instead of back in their motherland or some other place like say…. London. Since most Chinese mainlanders kept to themselves to outsiders (even to other asians) for fears of agents of red army (they have agents in all asian communities), it is impossible for me to get a straight answer. Luckily, the anonymity of Interwebs shined a bright light on this piece, which confirmed all the other bits and pieces I’ve been getting from loan officers and others related to the industry. Here’s the gem in the comment section of a great article on the globe and mail:
The author is certainly bang on when it comes to the Asian investors, at least when speaking of Vancouver. Just drive through the Dunbar, Point Grey, UBC endowment lands (Vancouver West) and see the empty houses owned by asian families and you can see that they are pushing prices up here to levels not affordable to anyone local. It’s common local knowledge that houses are being purchased up quickly. A friend of mine just listed their house and received $500k over asking in Dunbar. Asian buyers who weren’t even in country.
A friend of mine who works in lending at one of the big 5 banks has been blown away by the amount of mainland chinese buyers in Vancouver. He being from mainland china himself has given me some insightful details. He is saying that there are restrictions on people’s money in banks from mainland china and how much money they can take out of their bank accounts at one given time. A loop hole in this law is if they are sending their kids to school in an international country. The kids are coming here with the “loop hole” cash and buying up these 1, 2, 3, 4, 5+ million dollar houses plus cars, plus all kinds of other goodies. If you haven’t been to Vancouver, it blew me away when we moved here 3 years ago how many 17 year asian drivers were driving around in 150+ plus cars. The second part to the loop hole is the money can now stay in Canada and be a safe haven in case something happens in China. My friend says that if the govenment ran out of money for example, they would just go into people’s bank accounts and pull out what they wanted. A bit exaggerated China running out of money but this is the line of thinking to keep money in Canada.
A mainland chinese citizen can purchase a citizenship in canada for about $650 (source, globe and mail article written by UBC professor), this apparently is going to change to just over 1 million. But still it makes Canada an attractive place for the chinese as there is a solid population here already, it’s easy to get citizenship (compared to US) and the schools here are world class. Will this tap shut off? If it does I think you will see a circa 1995 deflation of the Vancouver housing market.
If anyone is still reading this post, a recent condo development in Richmond sold out last year for almost $1000/square foot (for those not from richmond this is insane). Where was the main show room for the condo? mainland china..
It’s nice to see someone write an article like this that isn’t from a bank or a real estate company!
well done Globe and mail..I may just come back to read a few more articles.