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It is easy to find recent comments in the Canadian media about the effects of foreign buyers of residential real estate, especially those from China.  Canadian media may focus on Canadian markets but, to understand both sides of the market, perspective requires you to look outside of Canada.  (Given the increasing internationalization of the real estate industry [1] [2], it is a wise idea to scan foreign media anyway.)

The lesson I learn is that Canada is not that special.  Buyers have many good options.  A long report by al Jazeera makes this clear.  (The South China Morning Post in Hong Kong often has comments about the Vancouver market and sometimes thinks that Toronto is interesting.)

The long report is odd in many ways (as noted next) but it makes clear that property in Vancouver Canada is competing with property in New York and Los Angeles in the US, as well as Sydney Australia and Paris and London in Europe.  The relevant competition is not Vancouver vs. Kelowna or Toronto vs. Guelph in the way that it is for local buyers.  When Canada is no longer a “good deal”, the buyers will be happy (but live somewhere else) and there will be media stories asking (with a hurt tone of voice) “Why don’t you like us any more?”

The report is odd since most of the people who were willing to talk are 20-somethings living an ultra-luxurious lifestyle even by local standards: e.g. days spent shopping and nights spent partying.  They (or their parents) own multiple properties for which a $2-million mansion in West Vancouver would be below average.  They may not like paying extra taxes but they can afford it.

Remember: China is not the manufacturing centre that it used to be (it is trying to move up the value chain [1] [2] to avoid low price competitors in Bangladesh and Costa Rica) and that, according to some reports, there are more billionaires in China than in the U.S.

Listen carefully and you can see it means for a house to be a good deal for a foreign buyer.  Partly, it is about “imported” ideas: e.g. houses designed according to the principles of feng shui or a concierge who can help with translations.  Partly, it is about things which would be familiar to anybody: e.g. unpolluted environment, good schools, opportunities.  In many cases, parents are concerned for their children.

Lots of people are exercised and vocal about how the new group of “them” will disrupt their communities.  People forget history and the ill-informed fears that each of the previous waves of immigrants (Iraqis, Russians, Hong Kongese, Vietnamese, Oil Sheiks, Hungarians, DPs, Italians, Irish, …) would disrupt local communities.  People also forget that the younger generation usually rebels against the older generation, so that separating “them” and “us” gets harder with time.

Change is continual and disruption is temporary.

PA

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