The unprecedented vote to separate UK from Europe has caught many investors flat-foot genuinely looking for an offshore place to park their money; and with BREXIT now inevitable, Canadian real estate fits the bill.
Investment migration is nothing new
Our broker and Senior Vice President-Sales Jim Burtnick opines that the move to Canadian shores needs not be immediate. However, with the passage of time many especially those who are in commercial real estate from UK and from other countries, will disembark on Canadian shores. Jim forecasts that the first to relocate will be organizations that have had offices and also Canadian companies who have satelite offices in the UK.
According to Jim such kind of investment migration is not a new phenomenon:
Whenever there is political instability, deterioration in law and order or a war like situation, we see investors moving their wealth to safer and stable places. I have seen rising interest in Canadian properties during Arab spring in Egypt; currently investors from Turkey too are keeping a keen eye on Canada. Similarly quite a few French companies shown increased interest in Canadian commercial real estate.
Jim notes that Chinese investors have flooded both Toronto and Vancouver markets and with BREXIT their number is bound to increase. And when they come, they will come to stay. Jim says these investors are in Canada for a long haul and that “investing in real estate is not short term, unlike stock market.”
The new investors might be influenced by BREXIT related changes, but Jim thinks it is Canadian political stability that will help and go a long way in influencing potential investors to park their capital.
Politically Canada commands immense trust as we recently had elections and have had a majority government. This speaks volumes about the stability and steadiness of our socio—political system that infuses confidence among current as well as potential business ventures.
You might also be interested in: the Best Toronto Neighbourhoods to Invest in Now.
Vancouver’s new tax doesn’t scare foreign investors
Richard Silver also echoes Burtnick’s ideas that Britain’s vote to leave the European Union has created political and economic confusion. This will result in many scouting for secure investment options and Canada will be in their top of the list priorities:
Canada has always been a safe and extremely profitable haven for those investing in real estate. Brexit will encourage scores of foreign buyers to purchase properties in Canada.
According to the Bank of Montreal, chief economist Douglas Porter and senior economist Robert Kavcic, the interest rates of Canadian real estate market will be all time low because of Brexit. But this will not affect foreign buyers because they are buying the property in cash.
On Metro Vancouver decision that foreign buyers will pay an extra 15 per cent in property tax fees on residential real estate, Richard states the buyers will focus on other close areas:
This will be a gain for other cities in British Columbia like Surrey who do not have a similar restriction. Foreign investors will be focusing on these places that are at par with Metro Vancouver in terms of amenities and facilities.
According to Richard, same thing would happen if Toronto decides to implement a similar tax.
If it happens then beside Toronto, there are other places such as London which are equally attractive when it comes to education and quality of living and have comparatively much cheaper real estate market.
You might also be interested in: Richard Silver Talks About the Foreign Tax in the Globe and Mail.
When will Brexit effects show?
Sherille Layton, who is a Sales Representative at Sotheby’s International Realty Canada and our expert on condos is originally from London, UK feels BREXIT being only a recent phenomenon, it is premature to predict how it will eventually affect the Canadian real estate market:
There has been a steady flow of UK investors to Toronto up till now. The recent political shift in England has not resulted in either increase or decrease in their number,
Sherille holds, the British government is well aware of the potential situation where because of political instability several investors will be wary of investing in the real estate or might try to move their investments to other countries like Canada. Sherille thinks that sterling will not be as strong as it is now and it would be worth watching how much would the demand be to buy properties in Canada, especially in Toronto, Vancouver and Montreal.
Majority of buyers from UK are interested in condominiums and Sherille says Sotheby’s is working hard to promote Toronto not only to buyers from UK but also from other parts of the world:
In a recent Sotheby’s International global networking event in Las Vegas, Canada was represented by a strong team of 70 real estate agents who were part of 2,400 agents. We presented Toronto to teams from UK, Europe, and Dubai. They were intrigued by our booming real estate industry and expressed genuine interest in doing business with us.
Factors such as political and economic solidarity and security play a crucial role in determining the stability of any real estate market. Canada excels in all of these aspects. Great Britain’s exit from European Union will not be immediate. It will however, be an exciting wait and watch game. In this unfolding of significant global developments, Canada will not be a mute spectator. It is bound to be a credible and strong destination to lure and attract UK investors who plan to move their businesses overseas.
You might be also interested in: [TED Talk] What Does ‘Brexit’ Mean?