Vancouver is one of the top three places chosen by Asian shoppers to purchase a second home, the other two being London, UK, and the Australian coasts. Colliers International, a global real estate brokerage firm, reports that their property department alone turned over more than 1.3 billion Yuan in property investments by Chinese investors in the first half of 2011, which amounts to nearly $200 million CAD.
The increased demand automatically causes the prices of houses, condos, and even lofts in Vancouver and Greater Vancouver to appreciate, which is great for those of us who already own property in the region. However, unless we understand what prompts Chinese investors to spend their money on and invest in Vancouver forhouses, we will not be able to make our own informed purchase decisions. Will this financial influx last? Might investors decide to sell in mass in the future? In other words, does it make sense for locals to invest in Vancouver properties as well?
The Vancouver house market has a distinct advantage over the rest of Canada. It’s captured in the much-repeated phrase “location, location, location.” The proximity of the east coast to Asia makes it a prime location for property investors from that continent.
There are several factors that incentivize Asian investors to shop for houses abroad. The most important factor is that Chinese regional government’s place a cap on the number of houses that a single family may own in the largest cities. This artificially frees money designated for property investment and diverts it to other regions or other countries. And, if one must buy abroad, why not buy on the coast of the closest country?
What’s more, foreign nationals make up a relatively large proportion of all luxury real estate buyers and invest in Vancouver, as well as London. Well over half of all high-profile transactions in the most prominent areas of these cities involve overseas investors.
Even if this incentive ceases to exist at some point, we do not expect massive withdrawal of Chinese investors from foreign markets. This is because foreign investment is a great way to diversify one’s asset portfolio and shape one’s tax burden in one’s favor. Offshore investments are often exempt from (or shielded from) inheritance taxes, which allows investors to pass along their considerable wealth onto their descendants without losing a large chunk of it each time. Some of the investment strategies will protect all the investors’ wealth to any form of capital gains from taxes as well, to allow them on turning over their wealth above efficiently and build it up faster in the process.
The result of this heightened demand was a 12 percent increase in average home prices in 2010 and another increase in 2011 and 2012, which is good news for our regional economy, isn’t it?
Vancouver will likely continue to see growth over the next few months and a balance out of market trends. So, keep your eye out if you are interested in property there and don’t forget to get Vancouver Real estate Agent.
Those top local real estate agents would find you the right home to buy in this wonderful buyer-driven housing market in Vancouver. Please visit Vancouver West Luxury Real Estate sites for more details.
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