Investors are fleeing from the seeming instability of the market’s regulatory regime
Vancouver’s rapid-fire introduction of new regulations that target foreigners is pushing away more and more investors towards Toronto, observers warned.
Among these rule changes, speculation levies and a wealth tax on homes have had the most impact, discouraging a significant slice of foreign capital, CBRE Ltd. stated.
The recently proposed Landowner Transparency Act – which will compel corporations, trusts, and partnerships to reveal ownership information – is also cited as a major factor scaring off investors.
“You have policy changes on a snap, on a whim,” CBRE Ltd. executive vice president David Ho told Bloomberg in an interview.
“Investors typically look at stability in a market and this is not stability.”
Figures from CBRE showed that from the $1-billion-plus volumes seen in 2016 and 2017, foreign investment in Vancouver sharply plummeted to just shy of $350 million in 2018.
For perspective, Toronto surpassed its 2017 volume with its $526 million in Asian investment last year. One of the market’s noteworthy 2018 transactions was the $256-million deal for an office building, purchased by Chinese private investor Tigra Vista Inc.
Ho also attributed the shift to Toronto’s healthier demographic spread, which is largely comprised of immigrants and millennials. A significant proportion of these two groups is participating in Toronto’s burgeoning tech and financial services market.
“That spells money because young people have to consume, they’re growing families,” Ho explained. “That’s a huge advantage against the Vancouver market, which is more of a retirement market.”
Avison Young principal Bal Atwal added that Chinese investment activity in Vancouver “had always been predicated on land, placing bets on land, whether it’s old shopping centres or office buildings even -- they see underlying development and land value.”
“They’re looking at Toronto now because they’re seeing a better arbitrage on that than they are here.”
