Immigration wave drove booming real estate market
By Martin van den Hemel - Richmond Review
Published: July 08, 2011 10:00 AM
Updated: July 11, 2011 8:22 AM
Real estate marketing guru George Wong isn’t surprised by findings of an Urban Futures study last month that claimed that only 0.4 per cent of the roughly 55,000 homes sold in Greater Vancouver last year were purchased by foreign investors.
The report, authored by economist Ryan Berlin, claimed that based on the addresses provided by purchasers, only 195 out of 55,512 home sales were to foreigners.
Wong, whose Magnum Properties has assisted with sales at Quintet on No. 3 Road and River Green next to the Richmond Olympic Oval, believes that a surge in immigration late last year and earlier this year—and not foreign investing—led to the property price boom.
A large proportion of these immigrants have been very wealthy, scooping up new homes in which to establish their families, while buying investment properties as well, Wong said.
The number of buyers holding foreign citizenship has been low at his two high-profile projects, accounting for only about 55 of the 500 condos and townhouses sold.
Wong said he doesn’t consider a landed immigrant to be a foreign, whether they are freshly minted or have been here for decades.
And therein may lie the confusion.
While the majority of sales may be to those of Asian descent, relatively few are non-residents.
And the vast bulk are investing locally because they are in the process of moving here upon immigration.
Wong’s experience seems to corroborate Berlin’s findings.
“There’s very little hard data out there that shows foreign investors are indeed having a significant impact on our real estate markets,” Berlin told Black Press last month.
But local realtor Austin Kay still remains doubtful, dubious that the 0.4 per cent figure is accurate.
Many foreign buyers already own real estate in the Lower Mainland, and are using those addresses when completing real estate transactions. Others are likely using local lawyers when making investments, masking their influence.
But informal information from realtors suggests the influence of foreign buyers is greater than the Urban Futures study indicates.
Rosario Setticasi, president of the Real Estate Board of Greater Vancouver, said an informal survey completed monthly by realtors suggests a more accurate figure for foreign buyers may be 3 to 3.5 per cent region wide. That number spiked to 7.3 per cent last month in the board’s region, which stretches from Whistler to Maple Ridge. And when focussing in on Richmond alone, that number could be still higher, though there’s no way to tell for sure, he said.
The board has observed the real estate market in Richmond and the west side of Vancouver heat up over the past six to eight months, he said.
Based on the 300 to 500 responses received from the pool of 10,000 realtors, the board is able to extrapolate those figures to reach a number estimating the impact of foreign investment on the region, he said.
Lily Korstanje, sales director at River Green, said her team is able to discern where buyers are coming from through the course of the sales process, when they get to know their clients better.
She said in order to accurately gauge the impact of offshore investing, there’s a need to define what constitutes a foreign investor.
Many buyers work in Asia but have their families living in the Lower Mainland and spend their earnings in Canada and have a local address.
Others are truly foreign investors with no local links, and conduct their business through a local lawyer, for example.
Then there are those who establish a numbered company in B.C.
Knowledge about where buyers are coming from is important for a realtor to be successful, Korstanje said, so she sees the benefit of looking into this issue more closely.
Trend spotting enables realtors to customize their marketing toward where the majority of their clients are coming from.
If there’s a sudden wave of investors from Russia, for example, that information would assist realtors in researching what types of homes and neighbourhoods they would like to live in.
Berlin said the study only looked at figures through the end of 2010.
If the situation has changed—there’s anecdotal evidence that the market heated up in Richmond last November, after the Chinese government began to put restrictions on property flipping—since last year, the study wouldn’t capture that.
“We’re trying to advance this discussion,” Berlin said. “Anecdotal evidence doesn’t give a real indication of what’s happening. This is just meant to be a starting point.”
Wong suggests that tracking precisely when immigrants come into the country would be helpful.
He believes that towards the end of last year and earlier this year, a wave of wealth immigrants buoyed the numbers.
And with this type of immigration coming in waves, it’s possible the next wave won’t come until prior to the Chinese New Year in 2012.
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http://www.bclocalnews.com/richmond_southdelta/richmondreview/news/125224069.html
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