Hong Kongers are looking to buy properties in Toronto and Vancouver as protests rage.
Financial Post July 2019
Hong Kong Investors are scouting for properties in Canada and U.K. as unease surrounding Hong Kong’s political future grows amid China’s increasing influence. As protests continue to rock Hong Kong, real estate brokers in Canada and the U.K. are fielding a flood of inquiries from investors in the former British colony who are eager to get out.
Dan Scarrow, president of Macdonald Real Estate Group in Vancouver, said many of his Chinese agents saw an uptick in interest for both sales and rentals this month from Hong Kong. One of his agents is putting off her planned retirement this year to capitalize on the opportunity.
Is a fresh wave of overseas Hong Kong Investors coming (again)?
Metro Vancouver’s reduced residential property prices must look pretty tempting to those looking to get their money out of troubled Hong Kong
So measures to cool the market have arguably “worked” – if slowing sales and reducing home prices was the goal. But has it now presented an opportunity for a fresh wave of overseas buyers to come in? Perhaps, if those buyers are really motivated. Recent political unrest in Hong
It seems that potential property buyers from Hong Kong (once again, for those who remember the early 1990s – are showing considerable interest in Canadian property. With widespread protests over the erosion of its autonomy by the Chinese government and the resulting global trade tensions, it’s not surprising that Hong Kong residents are considering the safest harbours in which to extract and park their money.
According to a recent Bloomberg article, Metro Vancouver real estate agents are seeing a significant uptick in interest from Hong Kong buyers, with more Hong Kong than Chinese people at open houses. That’s quite the reversal from a few years ago.
The foreign buyer tax of 20 percent is unlikely to be a major deterrent to a motivated overseas buyer. The 11 percent price decline for a typical detached house – which is likely to be a steeper decrease for higher-priced luxury homes – takes care of much of that tax burden.
What’s more, the Hong Kong dollar is stronger against the Canadian dollar than it was a year ago, despite the political unrest. A $3 million home in Vancouver today would cost a Hong Kong buyer just under 18 million Hong Kong dollars, compared with 19.5 million a year ago. That’s a discount of 7.6 percent. Not to mention the fact that the same $3 million home might have cost $3.8 million a year ago, which at currency rates of the time would be 24.5 million Hong Kong dollars. So the reduction to 18 million HK dollars is actually a 26 percent discount – more than outweighing the foreign buyer tax.
All of which means that our region could seem a veritable bargain, especially for someone truly motivated to get their money out of Hong Kong.
Bloomberg’s article reads, “Vancouver, where housing prices have been in a slump for the past year, maybe the first city to benefit from the upheaval in Hong Kong.”
Whether you see a fresh influx of overseas money into our property market as a “benefit” or not, I can’t help but suspect they might be right.
Hong Kong crisis could lead to a big resurgence in Vancouver’s housing market
As the ongoing political crisis in Hong Kong over the planned extradition bill to China continues to evolve and worsen, the conditions are building up for a possible mass migration of Canadians living in Hong Kong to return to Vancouver.
If protests worsen and if the extradition bill is ultimately passed, a substantial number of the estimated 300,000 Canadians currently living in Hong Kong could easily make a quick return to Canada, especially to Metro Vancouver.
And the potential influx could prompt a resurgence in Metro Vancouver’s housing market. In fact, within just the last few weeks, there has been a visible increase in interest in local homes from Hong Kong buyers.
Dan Scarrow, the president of Macdonald Real Estate Group, told Daily Hive his firm has seen a “noticeable uptick” in the number of Hong Kong buyers at open houses since the protests in Hong Kong began on June 4.
“Because these protests only started recently, I would suspect that most already have strong ties to Canada and this is motivating them to deepen their ties here,” said Scarrow.
As these are Canadian citizens, and for the most part dual citizens of Canada and the Hong Kong Special Administrative Region (SAR), they are exempt from the foreign buyers’ tax and will not be subject to the new speculation and vacancy tax.
These Canadians living in Hong Kong may also own homes in the former British colony, where average home prices currently hover at a staggering $1.63 million for even small living spaces.
Housing is in high demand in Hong Kong and as a result, Canadian homeowners there could theoretically sell their property quickly and move their capital to Vancouver to buy real estate.
Scarrow notes foreign currency exchange rules only apply to Mainland China; Canadians returning from Hong Kong and Taiwan will “have no problem moving a significant amount of money back to Canada.”