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Canada is real estate gold for Chinese investors

By Juwai, 01 June 2012

The influx of Chinese to Canada is set to benefit people in both countries. Kerry Gold reports for Canada MSN Money. May 31, 2012 -- While headlines across the country tell stories of the new Mainland Chinese buyer snapping up Canadian real estate, one realtor has decided to go direct to the buyers in China instead of waiting for them to come here. A few months ago, Vancouver-based Cam Good, president of real estate marketing company The Key, set up the first Canadian-owned real estate office in Beijing, with a staff of two. He has sold hundreds of homes to Chinese buyers, who are eager to buy in Vancouver and Toronto. The influx of Mainland Chinese to Vancouver is just as great in Toronto, says Good, which means property values are likely to rise in both markets. "We've sold over 800 homes so far this year, and it's only April — I think that puts us at No. 1 in the country in terms of volume," says Good, who estimates that 60 per cent of his clientele are from China. "I can't give you specifics, because it's fiercely competitive right now. Every developer is going over, trying to figure it out. One developer I met this week spent around $1.5 million in marketing over there, without results. It's definitely hit and miss. But we struck gold. I am just a bit ahead of the crowd." For Canadians who already own property, it's money in the bank because the drive for real estate will push prices and property values higher. For realtors, the new market is a godsend. For working class and middle class locals who are already feeling pushed out of the market, however, not so much. In a market like Vancouver or Toronto, where the middle class demographic is drastically shrinking, affordability is already an issue. "About 70 per cent of Canadians own, and we are much better off because of the Chinese demand on our real estate," Good adds. "Homes are worth more, businesses are worth more." It took eight months and a lot of bureaucratic wrangling to set up the Beijing operation, and so far it was well worth the effort. The Chinese market is buying up real estate in Vancouver, Richmond, Coquitlam, White Rock, downtown Toronto, Etobicoke, Oakville, and generally anywhere nice and near water. The Chinese buyer generally pays for homes outright, without getting a mortgage. Good's projects, such as Westlake Village in Etobicoke and Avra in White Rock, are mostly presales. The best marketing tool he has are the Chinese people who have already immigrated to Canada in the past decade. They are spreading the word back home about suburban enclaves such as Coquitlam, a half hour drive from central Vancouver. "Six days ago, I was in Beijing and a Chinese man asked, 'Do you have anything in Coquitlam?' It's a weird feeling, to be on the others side of the world and a person is asking about Coquitlam. But it's symptomatic of a lot of big driving factors, such as there are already so many Chinese people in Canada now, and they are my best sales people." He is getting ready to expand the office in the next few months, in an effort to beat back the Canadian competition which has grown in the last year. With China's strong economy, a growing wealthy class, and high price of housing, Canada is seen as an appealing market with a strong, stable economy and political system. In a major Chinese city like Beijing, real estate can cost $1,000 per square foot for a nice but average abode. In Canada, that amount buys you high-end property. As well, increased pollution in major Chinese cities is attracting wealthy Chinese buyers to Canada's clean, smog-free markets. "Half of them are looking for something to rent out and get a positive cash flow, and half are okay with the property sitting vacant because they like new stuff and they don't want someone to rent it out," says Good. "It's often a part of the immigration process. You see a mom over here with kids shopping for real estate, setting up schooling, while dad is back in China making money." Good cornered the Chinese market by partnering with various organizations and associations, such as business clubs, networking clubs, even red wine drinking clubs. However, his secret weapon is a 20-something realtor named Simeon Garratt, who was born outside Toronto and raised in eight different Chinese cities. He returned to Asia to go to university in Malaysia. Garratt, who travels between B.C. and China, speaks fluent Mandarin without a hint of an accent. Because he's Caucasian, he's a fascinating anomaly for their Chinese clients, who feel he is the perfect bridge between two cultures. Garratt heads up the Chinese operation. "Because I grew up there, I never studied Chinese," says Garrett. "We just spoke Chinese the way it was. I went to Cantonese kindergarten. When I speak, it just seems more natural. I have no accent." Garratt says the new Mainland Chinese wave is felt more in Vancouver because it's smaller than Toronto, but it will have an effect on both markets in terms of prices going up. "As far as immigration goes, more Chinese immigrants go to Toronto than Vancouver, but on the flipside, more investor immigrants come to Vancouver," says Garratt. "Some people say, 'this can't go on forever,' but so many people are waiting to apply to come here. There are 35 million people here and over one billion people there. If even one per cent of those people come over, it's enough to fill up Canada a few times."