You’ll probably be surprised to learn that among the most expensive real estate markets in the world is Vancouver, British Columbia. It ranks up there with London, NYC, San Francisco, and Miami. Foreign investment is the major driver in Vancouver’s real estate prices. The single biggest group of foreign investors in Vancouver are Chinese millionaires. They seek out Vancouver because of its large Chinese immigrant population, deep-water harbor, and access to the Pacific Rim.
Wealthy Chinese are looking for sanctuaries to park their wealth that they feel are much more stable than their home country. Vancouver real estate agent Clarence Debelle says he has a large backlog of requests from Chinese investors looking for luxury properties. And Vancouver contractors are happy to build them to satisfy the demand.
The Good and the Bad for Vancouver Residents
For Vancouver residents that owned a home before the real estate boom started, it means big increases in the equity of their homes. However, for regular Canadians wanting to buy a home in Vancouver, prices have by far out reached their incomes. Many residents of Vancouver will remain tenants for the foreseeable future.
On the other hand, the foreign real estate boom is bringing a lot of jobs to Canadians in Vancouver. These jobs are coming in the form of builders, trades, architects, realtors, and others in the real estate industry.
How Canada Attracts the Foreign Wealthy
It’s no accident that Canada attracts foreign money. The past two decades, they’ve had government programs in place specifically intended to attract wealthy immigrants. The Immigrant Investor Program was recently ended but started in 1986. The program offered visas to foreigners with a net worth of at least $1.6 million and who were willing to lend $800,000 to the Canadian government for a term of five years.
A smaller program the government offered was the Entrepreneur Program. It offered visas to foreigners intending to start, own, and manage new businesses. Still in place, is the Start-up Visa Program. This program encourages immigrant entrepreneurs to partner with private sector businesses and invest in local start-ups.
The Global Real Estate Model
We’ve seen foreign investors bringing their wealth to several major US cities. Today, cites like Vancouver are now attracting money from other countries. It won’t be wide spread but what is happening is the emergence of a global real estate market. We have long believed that local real estate markets are driven by the local economy. That may no longer be true for certain gateway cities.
During the recent Great Recession, major gateway cities on both the US east and west coasts saw real estate markets continue to thrive while the larger national market saw home values tumble. It now appears that at least Vancouver, Canada has entered the elite global real estate market.
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Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.