Canada’s immigration minister has rejected the notion that tens of thousands of millionaire investor migrants, mostly Chinese, who converged on Vancouver in recent years were linked to the city’s sky-high property market.
In an interview with the South China Morning Post, Chris Alexander said the government had had “absolutely no concern” about the impact of the Immigrant Investor Programme on the westcoast city’s housing prices.
The 28-year-old visa scheme, which had a backlog of 65,000 applicants, was axed by Canada on Tuesday. That was less than a week after the Post revealed how the massive queue had been created in the Hong Kong consulate, which was inundated with applications from rich mainlanders.
The dumped applications will include those of an estimated 45,500 mainland Chinese queuing via Hong Kong, of whom 80 per cent were bound for British Columbia, according to the Post’s analysis of immigration department data. The axing of the scheme has led to fears that it could shake the housing market in Vancouver, where 96 per cent of recent Chinese immigrants to BC settle.
Housing in Vancouver is rated the second most unaffordable in the world, behind Hong Kong, according to Demographia ’s* study of 378 cities around the world in nine major markets.
“We look at all factors but there was absolutely no concern,” Alexander said on Wednesday, when asked whether the government believed the axed scheme had boosted property prices in Vancouver. “We have only been admitting 5,000 or so people under this programme and our entrepreneur programme in recent years. These represented … less than 2 per cent of overall immigration.”
However when asked to clarify if he believed rich migrants played any role in the housing market, he demurred.
“Not this programme [the Immigrant Investor Programme]. Certainly the presence of Asians in our [property] markets and the status of Canada as a safe haven – a stable jurisdiction with low taxes and a highly respected, well-regulated financial sector – that has attracted investment of all kinds, and we’re proud of that.
“It would be wrong to identify those trends with the Immigrant Investor Programme, which has been responsible for a decreasing share of our overall immigration, and which wasn’t even necessarily bringing people into Canada.”
Alexander was referring to the government’s assessment that many investor migrants simply return to their former countries to continue working. He said the decision to axe the scheme was based largely on economic grounds.
“The tax returns, the declared tax returns under this programme were less than for our other economic programmes,” he said.
Under the scheme, principal applicants worth a minimum of C$1.6 million (HK$11.3 million) would receive residency visas for their family in exchange for loaning the government C$800,000 interest free for a period of five years, after which the entire loan was returned. The risk-free scheme was hugely popular among rich Chinese, who made up 86 per cent of worldwide applicants in the year before the backlog forced applications to be frozen in 2012.
About 40,000 investor migrants have arrived in BC in the past eight years, of whom two-thirds were mainlanders. Including Hongkongers and Taiwanese, the proportion rises above 80 per cent.
Alexander’s assessment of the role of the scheme in the Vancouver property market is disputed by some observers, who said the investor programme’s axing could push prices down.
Vancouver immigration lawyer Richard Kurland said he expected a substantial impact on prices and an increase in luxury listings. He said the historical role of the scheme was clear.
“Families, by way of insurance, will park capital outside the mainland [China] and Vancouver is a wonderful place [for this] … it has pushed property prices through the roof. People are buying property without using mortgages,” he said.
“If you are an investor migrant, you want to make sure the wife and children are living well. A million, a million and a half dollars might seem like a lot of money, but not in the Vancouver property market.”
He said that extracting thousands of potential luxury home buyers from the market could only send prices one way – down.
Previous studies have suggested a close correlation between Vancouver home prices and immigration during the lead-up to the Hong Kong handover. That period was also marked by high levels of affluent migration. “The data [in support of the linkage] is unassailable for the 1980s and 1990s although the situation may now be more clouded,” said renowned University of British Columbia geographer David Ley, an expert in affluent migration patterns, in an interview last year.
“The investor scheme brings in the top end of the migrant pool and clearly it is the top end of the housing market that they are buying into,” he said.
[*Update: This story has been updated to include a link to the latest Demographia study and to describe its scope]