Depending on who you ask, the number of billionaires in China is either 152 or 358.
Those numbers were released in the Forbes Billionaires List and the Huron Global Rich List respectively. Calculating personal wealth is an imprecise science at best, so it’s hard to say what the cause for the disparity between the two numbers is, but whatever the reason the point is clear: there is money in China, and that money needs to be invested.
So why not invest it in Canadian real estate? The truth is, that’s exactly what a lot of Chinese are already doing.
About a year ago, China’s government relaxed constraints on its citizens buying property in other countries. The amount of money flowing out of China into overseas properties reached US$18.3 billion last year, and as the loonie’s value continues to slip that can only make things more attractive to folks overseas.
“What I’m noticing lately is, with the downturn in the Canadian dollar we’re seeing a lot of interest from China in acquiring properties at reduced prices because the yuan relative to the dollar is strong,” says David Smith, partner at Oriana Financial.
“So in the last couple of months it’s like now we’ve got banners saying ’20 per cent off’ on every building in Canada.”
Now this could mean that foreign investors are just buying Canadian properties and hoping to turn a profit and there has been a lot of talk about overseas interests buying Toronto condominiums just for them to sit empty and unused, but Smith doesn’t believe that’s happening here.
“I don’t think we’re seeing much speculation in the condo market from the Chinese. I think that whole idea is more overblown than actually is true.”
This is particularly true since Toronto recently became the first trading hub in North America for China’s currency, the renminbi.
“That’s very big news for us in the financial world,” says Smith.
Hubs like this make it easier to do business with China because otherwise Chinese currency needs to be converted to U.S. dollars before being converted a second time into loonies.
“It brings a lot of money exchange […] to Toronto. So I can foresee a lot more Chinese investment in Toronto as the result of that hub being here.”
Purchasing property in Canada has many benefits for buyers from abroad, and not all of them are about turning a profit.
“People are buying residentially in order to buy those properties as part of a visa application. That’s certainly true,” says Smith. “There’s also a lot of investment around schools because these kids come here on student visas and their parents buy them properties to live in.”
So attracting Chinese interest in your properties can lead to lucrative deals for property sellers. There are many resources on the web that will help get international eyes on your property. Juwai.com is an excellent place to start. We use Juwai.com on a regular basis. It’s the number one property listing website for Chinese consumers. It has both the highest number of property listings and extensive editorial resources.
My colleagues, Jim Burtnick, Tracy An and I will be going to Hong Kong, Beijing, Shanghai and Taiwan on a trade mission in the fall of 2015. At the moment, we are making connections with REALTORS in those locations as a part of the preparation for our trip..
Title photo by: H4vok_13