Experts say that the Canadian real estate segment has little to fear from the mainland’s tightened capital controls
While the limit on foreign currency transactions in China was lowered to $9,000 to facilitate closer scrutiny of outbound funds, fears that this development might significantly affect the foreign-investment-heavy Canadian real estate segment are largely unfounded, according to various industry observers.
Zillow senior economist Aaron Terrazas noted that while the capital they represent has made itself felt in Canadian housing, international buyers are eclipsed by more important factors (such as local buyers and existing interest rates) and “there are a lot of other things going on in the Vancouver, Toronto, Seattle or San Francisco housing market that have continued to propel housing prices upward.”
However, Terrazas added that the infusion of Chinese capital into these markets is not a trend that will cease any time soon. “The reality of the world right now is that Canadian and U.S. real estate are some of the safest high-return investments out there.”
J. Capital Research Ltd. Research director Anne Stevenson-Yang noted that the mainland’s new controls will do little to deter people from finding ways around the rules, especially since the upper crust already has their wealth stashed overseas (and are thus not covered by the new restrictions).
These remarks seemed to dovetail with the results of a recent survey conducted by Chinese international property portal Juwai.com. Mainland investment in Canadian real estate grew by more than 25 per cent year-over-year in 2016, the study found.
Chinese investors have spent over US$100 billion on overseas property investments in 2016, and Canada proved to be one of the five favourite destinations among Chinese property investors, after the U.S., Australia, and Hong Kong.
Juwai noted that based on the information that its users search for most frequently, 2017 is slated to become “another near-record year for Chinese outbound property investment, although flows will likely be lower than in 2016.”
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Toronto and Montreal are now the favoured destinations of Chinese home buyers—report
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Zillow senior economist Aaron Terrazas noted that while the capital they represent has made itself felt in Canadian housing, international buyers are eclipsed by more important factors (such as local buyers and existing interest rates) and “there are a lot of other things going on in the Vancouver, Toronto, Seattle or San Francisco housing market that have continued to propel housing prices upward.”
However, Terrazas added that the infusion of Chinese capital into these markets is not a trend that will cease any time soon. “The reality of the world right now is that Canadian and U.S. real estate are some of the safest high-return investments out there.”
J. Capital Research Ltd. Research director Anne Stevenson-Yang noted that the mainland’s new controls will do little to deter people from finding ways around the rules, especially since the upper crust already has their wealth stashed overseas (and are thus not covered by the new restrictions).
These remarks seemed to dovetail with the results of a recent survey conducted by Chinese international property portal Juwai.com. Mainland investment in Canadian real estate grew by more than 25 per cent year-over-year in 2016, the study found.
Chinese investors have spent over US$100 billion on overseas property investments in 2016, and Canada proved to be one of the five favourite destinations among Chinese property investors, after the U.S., Australia, and Hong Kong.
Juwai noted that based on the information that its users search for most frequently, 2017 is slated to become “another near-record year for Chinese outbound property investment, although flows will likely be lower than in 2016.”
Related stories:
Toronto and Montreal are now the favoured destinations of Chinese home buyers—report
CMHC: Majority of purpose-built rental apartments owned by individual investors, private corporation
