Increased interest from Chinese investors in 2016

THINK OUTSIDE THE BOX:  Although it’s good to see foreigners feeling positive about making an investment in Canada’s real estate market, is this good for Canada in the short and long term?

The unremitting strength of Canada’s real estate sector has made it a top global destination for foreign investors, and the brakes don’t seem to be kicking in any time soon as a recent study predicted greater interest on the part of Chinese investors this year.

A survey commissioned by Juwai—which is China’s largest international property portal—revealed that 55 per cent of realtors who often work with mainland buyers are expecting an increase in purchases made by Chinese nationals in 2016.

This exodus of capital stems from continued volatility in the Shanghai Stock Exchange Composite Index, the study added. The Chinese stock market declined by more than 40 per cent from a record high in June, which spurred a currency devaluation from the central government in August.

“Barring any big changes in the environment, we expect Chinese investment in Canadian real estate to increase in 2016, and the impacts of that investment to be spread more widely as these buyers move into new markets,” Juwai CEO Charles Pitter stated in an email, as quoted by The Globe and Mail.

Among the Chinese investors’ top destinations is the luxury housing segment of Vancouver and Toronto. Both cities have been long acknowledged as the strongest and most attractive real estate markets in Canada.

Chinese would-be investors inquired about $14.9 billion worth of Canadian properties last year, a three-fold jump from $5.6 billion in 2014. Toronto accounted for $7.4 billion of the 2015 figure, while Vancouver interest stood at $2.5 billion.

The increased attention stands in stark contrast with current mainland regulations that stifle the outward flow of capital. Per Chinese law, citizens are permitted to move only $50,000 abroad every year.

“Sure it’s tough to get your money out today. It may be tougher tomorrow,” University of British Columbia associate professor Thomas Davidoff said.

“Vancouver is attractive. In the long run, your asset is protected. You feel safe about the asset, which is going to be critical to somebody in [a country such as China],” Davidoff, who works with the university’s Sauder School of Business, added.

Ephraim Vecina      18 Apr 2016

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