Real Estate Industry tries to reassure market that Chinese investors still active in the Lower Mainland.

Real Estate Industry tries to reassure market that Chinese investors still active in the Lower Mainland.

The Fairmont Waterfront Hotel has, for the past two days, been the site of the Western Canada Hotel and Resort Investment Conference.
 
This little confab bills iteelf as ’36 hours of power-packed action providing answers and insights into what’s relevant in today’s market, identifying uniquely Canadian challenges and ascertaining how we can position ourselves for the future.’
 
Since this is Vancouver, the topic of HAM (or Hot Asian Money) is of keen interest.
 
With all the doom and gloom stories about Vancouver’s housing bubble bursting, some industry experts came to the conference to talk about Chinese entrepreneurs and to reassure everyone that HAM continues to invest in Vancouver properties – and not just in high-end holdings.
 
Graham Kwan, CEO of Character Capital Inc. (a strategic investment firm) told the Huffington Post that:
Most Chinese investors don’t buy lavish $18 million mansions, preferring ‘more discreet’ homes and transactions in B.C.’s Lower Mainland
The thrust of the Kwan’s presentation was that HAM is continuing to invest here and is doing so for the long term. Not only are they investing, many Chinese investors are making Vancouver their primary home. Concerns that HAM will liquidate their Vancouver holdings are unfounded because these Lower Mainland homes are not just ‘investments’.
“There’s the show side of real estate, the trophy homes. But look at Burnaby, look at Richmond, look at West Vancouver and an increasing number of Chinese families buying into those markets.”
Kwan points to the expansion of Chinese supermarkets as a sign of where investors’ families are actually living.
 
Ian Gillespie, head of Vancouver developer Westbank Projects Corp., said that one-third of the luxury Fairmont Pacific Rim condo-hotel tower was sold last year to people in China – as residences and not investments.
“They’re not coming in to speculate, throwing money at things. They’re not trying to flip. They probably flip less than anybody.”
Roque Hsieh, a partner in KPMG’s real estate tax practice in Vancouver, told the conference that his foreign Chinese clients look at social and political stability as factors in their investment decisions.
“In the face of the cooling B.C. market, my clients are not liquidating anything and are very bullish in the long term.”
So why all these efforts to re-assure regular Canadian investors that the all important HAM (which underpins the Vancouver market) is not going away?
 
As faithful readers know not only are local real estate sales statistics grinding to a halt, but local media have been hammering away at the fact that Chinese buyers have all but disappeared from our market.
 
The absence of Asian buyers has meant all that is left are local buyers and with the tightening of mortgage regulations, that local buying is drying up too.

This one/two punch has Vancouver real estate on it’s knees.

Hence the efforts to re-assure that HAM has not left.

This becomes especially important as locals watch as the economic situation in China becomes more desperate by the day. Many are wondering if the ability of Chinese to invest excess capital here is rapidly vanishing – with good reason.

 
As noted today on the blog World Housing Bubble, about 80% of speculators from the prefecture-level city Wenzhou (in southeastern Zhejiang) have been trapped by their property investments that have recently depreciated 30 to 50% from levels in 2010.
 
The Hong Kong newspaper, The Standard, reported these Wenzhou-based property speculators are likely to go broke in the not so distant future due to the plunging value of their assets purchased during the peak of the country’s last real estate boom.
 
China Nation Radio said:
“They will be insolvent either selling the houses or holding them.”
According to The Standard newspaper, Wenzhou wheeler- dealers are known as the most hardcore of the property speculators – often overextending themselves by investing at home and overseas (in markets like Vancouver).
 
Their speculative activities domestically have been blamed for soaring real estate prices in China, where they have been nicknamed “locusts.” 
 
The Standard notes that China’s latest home boom – or bubble – commenced at the end of 2008, when the country launched a series of stimulus measures to weather the global economic crisis. Hot money poured into the burgeoning real estate industry as a result of an investment of 900 billion yuan (HK$1.11 trillion) out of the 4 trillion yuan stimulus package into the sector, amid easy borrowing in a loose credit environment.
 
Many Wenzhou entrepreneurs who dabbled in the city’s property market now find themselves in a dilemma. Ye Tan, a renowned financial commentator China notes:
“Due to rising borrowing costs and the continuous decline in home prices, Wenzhou’s speculators can hardly avoid insolvency.”
The Standard reports that in Chongqing, one Wenzhou investor dumped 90 apartments onto the secondary market, saying he needed to liquidate.
 
The great fear is that as more and more Chinese entrepreneurs find themselves in similar positions, the need to liquidate will extend to foreign holdings in cities like Vancouver.
 
If Chinese entrepreneurs with foreign holdings in Vancouver were to liquidate en mass, it would trigger a cascading free fall the likes of which our market has never witnessed.
 
And the last thing the real estate industry needs is locals bailing on the market to get ahead of that panic.
===========================================================================================
COMMENT: 
So..what is it ? Is it HAM..or not HAM, but local buyers?
Overall, in Metro Van,  its a bit of both. 
However….it really don’t like  the use of the race card …I simply call it as I see it.
In a relative perspective, in the early 1980’s, when many in our age group were entering the work force…Richmond was out of reach for many..and this was when houses were in the high $ 90,000 range. Many were forced to move to Surrey, Ladner etc.
However, in the mid 1980’s we saw a HUGE influx of Hong Kong money…that’s a fact. While Hong Kong wound down in 1997, activity slowed down considerably only to be again have a hot local Real Estate market, as more Offshore money from Mainland China started its own exodus to BC, as Hong Kong had paved the way.
I live in Richmond, and drive all over as well. At times, my travels takes me past 3-4 high schools @ 3PM . It is beyond obvious who the main demographic is, its almost surreal .  It is obvious who is driving the market….and if that source dries up…..sellers had best face the reality..the party and money orgy is over.
IMHO, the Federal Gov’t was probably feeling heat at this issue….whereby Canadian citizens were being priced out by this foreign facet. Hence, the Gov’t set in motion, via CMHC, dramatically liberalized lending practices, and an ill -advised “fight fire – with -fire” and try to create level a playing field, but one built on a bubble of loose credit and speculation…not very sound. This only buys votes, deludes the public all is well and delays the inevitable, which is now unfolding. 
QUOTE:
So why all these efforts to re-assure regular Canadian investors that the all important HAM (which underpins the Vancouver market) is not going away?
 
As faithful readers know not only are local real estate sales statistics grinding to a halt, but local media have been hammering away at the fact that Chinese buyers have all but disappeared from our market.
 
The absence of Asian buyers has meant all that is left are local buyers and with the tightening of mortgage regulations, that local buying is drying up too.

This one/two punch has Vancouver real estate on it’s knees.

Hence the efforts to re-assure that HAM has not left.

Can’t have it both ways…so quite tap dancing. Party  is over , so admit it. It’s has been built on speculation  PERIOD. WHO is going to pay for something whose price has not only flatlined, it is now going down…ie “Buy Now or be priced out F-O-R-E-V-E-R …is now replaced by “Buy Now…and be Guaranteed to Loose $$$ how low can it go.”  This wake up call has made the term Real Estate quite TOXIC
In addition
This becomes especially important as locals watch as the economic situation in China becomes more desperate by the day. Many are wondering if the ability of Chinese to invest excess capital here is rapidly vanishing – with good reason.

 
As noted today on the blog World Housing Bubble, about 80% of speculators from the prefecture-level city Wenzhou (in southeastern Zhejiang) have been trapped by their property investments that have recently depreciated 30 to 50% from levels in 2010.
 
The Hong Kong newspaper, The Standard, reported these Wenzhou-based property speculators are likely to go broke in the not so distant future due to the plunging value of their assets purchased during the peak of the country’s last real estate boom.
 
China Nation Radio said:
“They will be insolvent either selling the houses or holding them.”
According to The Standard newspaper, Wenzhou wheeler- dealers are known as the most hardcore of the property speculators – often overextending themselves by investing at home and overseas (in markets like Vancouver).

Thus, it appears that the bubble is getting thinner and about to pop. It was all voodoo economics based on imaginary money, a global ponzi scheme. Many countries previously had restrictions on foreign ownership of Real Estate, which IMHO is a good and prudent  thing. Otherwise it is subject to abuse.  I am a very firm believer in a good solid foundation to a society, and a key part of that is housing is  a cornerstone to that. One need roots in a given community and housing allows you have them and become a member and contribute to a healthy society.  I am not saying that we should give out “free houses”, but I also think people should be given a dam good fighting chance to buy in their own city or country , and not be undermined by faceless entities who play “monopoly” with people’s futures  in some distant locale.

EXAMPLE: In my neighborhood, a neighbour had tried to sell for years….asking $900,000  for 6000 sq ft home, built in early 1990’s  and finally sold…I didn’t know he had sold …no sign…just saw a Moving Van one day. No sooner had he moved out than it was put up “for sale”…..I found he sold for approx $1.4 Million, and they new owner sare asking over   $ 3 Million…..thats how stupid this market is.

Now, the cows ….aka Judgement  Day….. are coming home BIG TIME…

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