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PUBLISHED : Tuesday, 29 January, 2013, 11:10am
UPDATED : Tuesday, 29 January, 2013, 11:44am

Rich Chinese buying property overseas draw resentment from locals

Property investments in Britain, the US, Canada, Australia and Singapore pay off for Chinese buyers, but locals are apparently growing increasingly impatient and unhappy

BIO

Amy Li began her journalism career as a crime news reporter in Queens, New York, in 2004. She joined Reuters in Beijing in 2008 as a multimedia editor. Amy taught journalism at Southwestern University of Finance and Economics in Chengdu before joining SCMP in Hong Kong in 2012. She is now an online news editor for SCMP.com. Amy can be reached at chunxiao.li@scmp.com, or follow her on Twitter @AmyLiSCMP
 

A taxi diver in Toronto said he remembered seeing Asian-looking men lining up in the rain outside a new residential development, two days before its grand opening.

Intrigued, he approached them and asked some questions.

Many turned out to be Chinese students lining up for interested buyers for some quick cash. Most of the others he tried to talk to were Chinese nationals who couldn’t speak a word of English.

“It was the most mind-blowing scene I’ve ever seen in my life,” the unnamed taxi driver later told his customer, Chinese businessman Zhu Weijun, himself an investor in Canada’s property markets.

It's not just Toronto that was feeling the impact of a stream of wealthy Chinese. Another residential development of 150 units in Canada's New Westminster sold out within two hours of its opening. It turned out 40 per cent of the buyers were Chinese, said a report.

Zhu and many other wealthy Chinese who buy properties overseas feel increasing resentment from local residents, according to a report by China's Oriental Outlook magazine. 

“The locals now blame the Chinese for skyrocketing property prices," said Zhu.

The number of wealthy Chinese investing in overseas property markets rose sharply after 2008, a time when many countries were hit with a housing market crisis, according to the report.

Seeking a high return for their cash, those investors favour countries including Britian, Canada, the United States, Australia and Singapore.

The investment has been more than satisfactory for them:

Prices in downtown London rose 14.7 per cent between 2009 and 2011; prices in Vancouver have increased three to four times in the past decade; Toronto prices have increased 7 per cent annnually in the past six years; prices in Austrialia have doubled every seven years, said the report.  

“Usually the property prices in areas well liked by the Chinese buyers will go up even if prices of other areas in the same country are going down,” said US-based investment consultant Li Chuntao.

But locals are apparently growing increasingly impatient and unhappy.

“Taxi drivers became suspicious and unfriendly the minute I told him I am Chinese,” said Sheng Mingchang, a Chinese investor who has bought houses in different countries.

Sheng said he had learned that contrary to what the Chinese had expected, many locals are not grateful that their properties are gaining value.

“The locals now have to pay a higher property tax  after the appreciation, which means they will sacrifice their vacation budgets and skip more movie trips because of the foreigners' buying,”  he said.

“Local polititians and newspapers quickly pointed out it’s the Chinese who are to blame,” Sheng added.

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likingming
Go to the US and buy their housing properties and help them out of their pains.
It is just the right time for the chinese investers now.
cleung02@yahoo.com
Examples of phenomema like thses are plenty in recent history: Arabs and Pakistanis buying London properties in the 1970's, Japanese in the USA in the 1980's, Germans in Spain in the 1990's, etc. Having grown up in Hong Kong and living overseas for 58 years, I would like to see real Chinese investors tone down their newly rich manners and respect local culture. And best that we remember the hard times we have gone through and the less well to do folks deserve to be treated with dignity.
hodfords
The root of the problem is the Federal Reserve's expansionist monetary policy.
Interestingly Hialmar Schact after taking over from von Havenstein in the 20s in at the height of Germany's hyper-inflation problems managed to stablise their economy with a new currency called the RentenMark which was backed by land rather than gold (because Germany had no gold).
We are now seeing an unspoken revival of this globally.
zreal
Rising property prices do push up municipal taxes (similar to our 'rates') in North America because the taxes are based on assessed property market values, not on rental values to which we are accustomed in Hong Kong. Also, depending on the city or county, the annual taxes could be as high as a few percents on property values, not to mention many municipalities are quite broke thus having an incentive to raise the tax percentages.
Artline500
We live in an amazing world of paper money. You can't put all of it in sovereign debt. Just take for example Amazing Thailand. Now the average Bangkok analyst rates Thai retailers using comparatives of stores per capita in countries such as Germany and Japan. If paper money flows can break the Middle Income trap for Thailand in less than one year, it's no wonder at all that it can also do magic in other places around the world as well.
andao
With the current economic policies, the PRC is exporting their problems to other countries. Instead of cleaning up the stock markets, easing capital controls, and paying higher interest on savings, the PRC restricts home purchases, which just means that those who want to invest will take their money abroad. It's a beggar-thy-neighbor approach that doesn't hurt the PRC gov much, but does hurt locals in Europe/US/Canada. As Mr. Sheng explains, the Chinese buyers just don't get it. They think people would be happy about appreciating value in homes because the Chinese look at the home as an investment first and foremost. The vast majority of US/Canadians look at a house as a place to live first and foremost. And it's very difficult to live there when, as Mr. Sheng mentions, speculative activities force up property taxes. It's very depressing that Chinese don't lobby their own government to create a better investment environment. Like the mainland moms in HK, the default response seems to be "run away" instead of "force change in the government."
babyhenry
You do realize how ignorant you are right? You do realize that it is the "western" government that is constantly complaining about a weak Yuan and would like CHina to let the Yuan float right? You do realize that once the Yuan starts floating & if it gets stronger even more yuans will be going else where right? YOu do realize that China's economy is extremely investment led already making up to an extremely unhealthy level of 50% in 2012 right? Easing capital controls so that more liquidity can float around in & outside of China, real smart? BTW maybe its just my ignorance how can one ease capital controls by raising interest rates? The only thing that even make sense in your whole gibberish is that the PRC like all gov't around the world is not PAYING an interest rates that is enough to cover inflation, but compare to the likes of the Developed world, PRC is already Paying 100% more at least.
Maybe the local population including those of HK should tell their gov't to stop turning their national currency to increasingly worthless paper. BTW the PRC is still a relatively close economic system, the exporting of problems caused by money printing simply cant match the likes of Japan, US & EU.
“Local polititians and newspapers quickly pointed out it’s the Chinese who are to blame,” - Nothing new here, they always have done so to scape the goat the Chinese to hide their incompetence.
andao
Actually, PRC was responsible for half the world's growth in money supply last year (14% M2 growth). So their money printing is far faster than anything the US (8% growth) or Japan (3% growth) could pull off.
I don't think you understand my point. The Chinese gov does not give Chinese people good places to invest their money. The stock market is a wreck, bank interest rates are very low, and property purchases are restricted. So they illegally invest abroad, it's a simple relationship. Even if the RMB strengthened and the stock market was cleaned up at the same time, why wouldn't Chinese people just invest in the local stock markets instead? It seems safer and has a lower barrier to entry than buying real estate in some far flung location. Or even if they just let Chinese people more easily invest in foreign stock markets, that would take money out of the foreign real estate market and park it in the stock market. These are simple solutions I think. What is so ignorant about that?
chaz_hen
Wonder if there would be as much resentment if the buyers were white, European descended, outside buyers?
But then again, the local government could just do what the Chinese government did when the property market got too hot in places like Beijing/Shanghai: Limit the amount of properties a "lao wai" could buy!
andao
I don't think it's racism. I think it's just in absolute numbers, the number of buyers is huge. If even 0.0001% of Chinese people bought houses in Vancouver, it would still be a huge number compared to current population of Vancouver.

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