Canadian real estate - a piggy bank for Chinese investors

KERRY GOLD
Vancouver— From Saturday's Globe and Mail
Published Friday, Jun. 10, 2011 12:07PM EDT
Last updated Friday, Jun. 10, 2011 4:01PM EDT


Late last month, a 153-unit condo development in New Westminster sold out in two and a half hours.

More than 400 potential buyers lined up for the sales day. For every unit sold, there was at least one back-up offer made. There was nothing overtly special about the project, which will be completed by fall 2012.

The two-phase development, called Eight West, is located at 21 8th Avenue in the heart of New Westminster, a traditional-design and mix of town homes and condos starting at $168,800 - standard mid-market housing for the Lower Mainland. But for reasons only understood by the increasing number of local realtors who have learned to target the Mainland Chinese market, it held an irresistible allure to the new Chinese buyers looking to invest their money in the Canadian housing market.

Bill Morrison, the marketer in charge of selling the project, says he realized halfway through his marketing plan that Chinese buyers were showing interest. Once he tweaked his focus to include Chinese-specific media, he had a buying frenzy on his hands, with a line-up around the block.

“I could have sold double that amount,” says Mr. Morrison. “We had no idea that would be the result. There was a huge demand.”

Of the 153 units sold, about 40 per cent went to Chinese buyers, and many of them would hardly be familiar with B.C.’s historic former capital city. A major marketing feature was the removal of the Harmonized Sales Tax, and while that strategy appealed to locals, it didn’t matter so much to the new Chinese buyer, says Mr. Morrison. They would have regarded the tax as little more than the cost of doing business, he says. And unlike their Hong Kong predecessors who made up the buying wave of the 90s in Vancouver, Coquitlam and Richmond, the Mainland Chinese buyer is more open to all regions of Metro Vancouver.

Earlier this year, the Bosa Sovereign hotel-condo tower in Burnaby sold out in two days, largely due to the new Asian market. And last week, people began lining up in the rain on Wednesday for a shot at one of the Quintet luxury condo towers being built in Richmond City Centre. Organizers handed out blankets and WiFi cards so the 80 people in line could stay warm and watch the Canucks game while they waited for the sales office to open Saturday morning. The builder sold more than 270 suites that day, with 30 suites held back for a later release.



Realtors looking to reap the rewards of this new market would do well to educate themselves on the specific needs of the new buyer, says Mr. Morrison, who’s been in the business for 27 years. And to reap those rewards, the smart realtor will actively seek out these new buyers with target market strategies. It would be shortsighted to take a blanket marketing approach when it comes to the new buyers, he says.

“The difference between the Hong Kong Chinese and the Mainland Chinese market is immense,” says Mr. Morrison. “We are dealing with a lot of people who have a lot of money for the first time. It’s the first time some of them have been on an airplane. They buy a little slower than someone from Hong Kong, who’s been here 20 years.

“There are so many levels and nuances within each market, you can miss out if you lump them together.”