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Opinion

Chinese buyers of property in Canada and the US must stop flaunting their wealth

Albert Cheng says the flood of Chinese money buying up North American property and the flashy behaviour of some new immigrants are causing resentment and inviting a backlash

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Visitors look at a brochure during an event in Beijing showcasing luxury properties from more than 35 countries, including Australia, Canada, Spain, Uruguay, and the United States. Photo: EPA
Albert Cheng
Politically, China is the arch-enemy of the US. Ironically, as far as the property market is concerned, China is a lifesaver for North America. According to the Rosen Consulting Group and Asia Society, Chinese buyers spent US$110 billion on American real estate last year. This is the single main driving force that has enabled the US property market to recover from the 2008 subprime crisis. In San Francisco, the median price of residential property in 2015 rose by 12 per cent. It was eclipsed by Vancouver, whose market surged 25 per cent over the same period.

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Today, a detached house in Vancouver costs on average C$1.4 million (HK$8.4 million). The figure lags behind that of Hong Kong, yet it has become a major cause of public discontent in the Canadian city.

Chinese buyers have pumped an apparently endless supply of capital into North America. The phenomenon has raised eyebrows not just in Canada and the US but also in China. The Canadian media recently reported that a Chinese overseas student had acquired a mansion in Vancouver for C$31.1 million. The student owned 99 per cent of the title and managed to secure a mortgage of C$9.9 million. The Canadian press branded the mansion the most luxurious student boarding house in history. The deal has also triggered heated online exchanges in China focusing on how a student could have that kind of money at his disposal. It was suggested that the princeling in question was the grandchild of a Chinese national leader.

The wealthy in China are eager to transfer their money out of the mainland, exploiting every means, legitimate or otherwise, to do so, in case of any policy change or because they find themselves the subject of anti-fraud investigations. Sending their offspring overseas is one such insurance policy.

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Houses in a suburb located north of Toronto in Vaughan, Canada. In Vancouver, a decent house in a popular area is now beyond the reach of average Canadian salary earners. Photo: Reuters
Houses in a suburb located north of Toronto in Vaughan, Canada. In Vancouver, a decent house in a popular area is now beyond the reach of average Canadian salary earners. Photo: Reuters

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Property agents are keen to exploit Chinese buyers’ compulsion to close a deal quickly, often talking mainlanders into paying between 30 and 200 per cent more than the asking price. As a result, genuine local home buyers have been driven out of the market. A decent house in a popular residential area in Vancouver is beyond the reach of average Canadian salary earners.

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