US and Canadian real estate is getting an even larger pool of foreign buyers. Juwai, Asia’s largest overseas real estate portal, is partnering with an Asian investment group. The deal, which occured last week, will make it even easier for some of Asia’s wealthiest families to scoop up overseas real estate.
The Deal
Juwai is creating a partnership with the Association of Family Offices in Asia (AFO). The AFO is a group that represents the private management of high net-worth (HNW), and ultra-high net-worth (UHNW) individuals. A HNW is someone that has more than a million in liquid assets, and an UHNW is someone with more than $30 million. Basically, they partnered with a group that represents investment offices of Asia’s ultra rich families.
The partnership would see the two create new services and products, to help facilitate the buying of overseas property. Additionally, they’ll be creating a joint institutional program. The products, and program would create an even larger foreign investment eco-system. Easier and larger foreign buying pools… What could go wrong?
Wanted: Large Blocks of Condos For Asian Investors
Confused what that means? Carrie Law, the CEO of Juwai, gave us some of her insights on the deal. “This partnership will ultimately mean more high net worth investors from China and other parts of Asia can successfully source and acquire property in the U.S. and Canada,” explained Law. Also adding “Just this week [last week] we are meeting in Hong Kong with a large group of these investors to showcase selected properties, with prices that range from $20 million more than $200 million.”
This also means some interesting things for the development community. “Because these are high net worth investors and investment consortiums, we’re talking about things like large blocks of units, large developable sites, commercial property, and trophy residential assets,” she explained.
So, Like… What Does That Mean?
This is good news, or bad news, depending on who you are, and what your relationship with real estate is. Luxury sales and developers are going to see the largest benefits. If you’re an agent or developer in Canada or the US, the pool of potential luxury buyers got much larger with this deal.
In terms of supply, developers will have access to more development funds. We’re already seeing developers unable to fund their projects locally at pre-sale. Instead, they’re turning to cities like Hong Kong, and Singapore, to find investors. These aren’t just projects in Toronto and Vancouver either. We’re seeing projects in “affordable” markets like Edmonton, Calgary, and Halifax being sold overseas.
The bad news is for buyers, since this could add more middle people to the process. Increasingly, developers are turning away from local pre-sales, and looking at overseas investor events. These glitzy events, which cost up to US$100,000 a pop to host, can sell out whole buildings in just a night. The process is much faster than having to deal with hiring sales people, and sell to locals one at a time. Since these investors aren’t charities, you’ll have to pay a markup once they finally sell back into the market.
Investors aren’t stupid, they aren’t going to overpay or enter markets with a significant amount of uncertainty. Canadian developers are adding large incentives to try and attract these clients. This appears to be indicative of a slower adoption, in my opinion. After all, why add incentives if the units are being picked up at market price? So this may or may not add anything to Canadian buying pool, we’ll have to wait and see.
The only thing we know for sure, is the financialization of real estate is getting stronger. Increasingly, homes are being seen as an investment, and not a place to actually live. This has consequences, but you can’t really hate on overseas investors. If you see buying a home as a good investment, so will non-resident investors. After all, they depend on locals having the belief that homes always go up in value. Without that, they would have no market liquidity, and would then have little appeal.
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Good. If Canadian politicians are going to make it harder for locals to buy, why not let foreign buyers pick up the extra units?
Driving developers out of business by making it harder to secure funds won’t work well. They can’t expect the developers to take a loss, because they can’t figure out how to create well paying jobs to the region.
If you’re talking about B20, OSFI doesn’t care about the housing market. Their job is to make sure banks don’t over-extend by giving out stupid mortgages. “Making it harder for locals to buy” was just a side effect, and a necessary one. Of course creating higher standards to meet will push some out of the market, while forcing others to buy less house. How else could it possibly work?
It is a fool’s policy to have people purchase residences when they have no intention to live there. That only makes the properties temporarily worth the high Development Value but when there actually physical human beings turn out not to exist, you have a glut of bankrupt projects. Why is it so hard to understand that attracting investors for housing projects for which there is no actual demand by human beings for living space is absurd?
The environment we created was going to be exploited eventually. People are getting desperate and sometimes the truth is too hard to stomach.
Canada and the US need to ban foreign ownership, it’s getting ridiculous. New Zealand’s already doing it, we should follow.
https://www.stuff.co.nz/national/politics/99827575/law-to-ban-foreign-home-buyers-to-be-introduced-in-parliament-passed-in-new-year
They’re not going to ban it anytime soon. Heck, there are even luxury vacations for foreign buyers here https://luxurybc.ca/tour/ which means it isn’t over yet.
This is old news. They’ve been bringing people over from China on the West coast for years now. Just no one seemed to care. The site is a joke. There are no listings and everything leads to a contact. If they were really peddling inventory there would be some inventory…
but I want to buy a condo in Florida when I retire ?
Canada is a manufacturing and export economy. Right now, we’re manufacturing and exporting homes, for global consumption. We’ll never fix the issue, since we’ve convinced ourselves that we’re a modern economy, and this is supporting a non-existent innovation industry.
Bang on. And once the perceived value of our “product” evaporates we won’t have anything to backstop our economy.
If all levels of government do not act swiftly to address this crisis they will be openly complicit in perpetuating it. It is no longer possible to claim that there is not enough information, allowing Canada to degrade into a money parking/laundering heaven.
Saying or acting in way that people who live here, pay taxes here and abide by Canadian laws/norms have to compete against foreign money of unknown origin for such a basic necessity as a place to live and raise their families, is beyond cynical.
I think the wheels are coming off and I suspect our government will enact some laws next year. the reason australia and new zealand had to act quicker was the size of their economies and it became very, very obvious what was happening a lot quicker. And, I hate to say this, there is A LOT of racism in Australia. Systemic like in Britain. It was easier for the ‘foreign buyers ruining house’ narrative to take hold and gain traction. I’ve said this, if the issue was in QC the Bloc would have jumped on this as a defense of french society…the rest of us are just cakers who don’t seems to give a crap until it is too late. We’re too nice.
I hope you are right and something will be done this time. It has nothing to do with xenophobia or anti-market ideology. The market is beginning to take care of it and there is much more to come but there is a reason for Transparency International giving Canada low marks on this issue. There is a risk that the coming crash will be used as an excuse to do nothing about this situation and it will happen again.
Housing market has to be local in order to be balanced. If the constraint of locality is removed, you will end up with what’s unfolding now – a few specs who got rich quickly and some serious bills for others to pay in one way or another.
And, as if it wasn’t bad enough:
https://globalnews.ca/news/3886743/quebec-immigrant-investor-program-vancouver/
We should allow foreigners to buy property here, then once the money is in our banks seize the property back.
1) Wealthy immigrants, specifically the Chinese have NEVER had trouble getting their capital out and moving it to other countries. My wife sold a $400K condo in scarbourough to the grandson of one the most powerful Generals in the People Army…5+ years ago. He paid cash. Showed up and bought a maserati within a few months. Now he is a movie producer and writing a book, that we was paid hundreds of thousand for (he is a nobody…). All shell games, nothing has changed.
2) When ‘big news’ like this comes out, when it has already been happening for years, is it really ‘new’ or is it just frothing to the top? Is this ‘new news’ that hasn’t been factored into the market?
3) China is approaching a serious apex as they attempt in an infantile way to shift from export to consumerism. their stock market is a joke. Fraud is rife. Their debt market is probably on the verge of completely crashing. Xi cannot prop up the Yuan. They cannot build anymore ‘ghost cities’. The government can’t control its people and the wheels are falling off. America first, Fink’s letter to CEOs and other ‘agendas’ look to put pressure on Chinese exports and accelerate their problems.
4)Expect more and more news stories about housing and foreign money. I personally believe we need a scape goat when prices come down and ‘cracking down on rich Chinese’ is a simple narrative that everyone can fall back on. Vancouver will always be a mess because of how pervasive foreign money is there and the weather is nicer.
I always said prices are never coming down. Littel bit fluctuations here and there. Canada is Tax haven for rich elites.
Politicians do not care what young and immigrant think or need since there solid voter base is older white population, who is obviously a seller. Immigrants take 3 to 4 years to become citizens and In a present environment when economy and voter base both are based on sellers, do not expect any price correction.
CM, thank you for your insights. I suggest you take on as much debt as possible, keep buying up housing at inflated prices and just wait out the storm for a couple of years and then sell for 20% more than you bought for. Rinse and repeat as the global elite keep pushing our real estate prices through the roof…to paraphrase my boy Denzel ‘Hong Kong ain’t got nothin on me!’
Bluetheimpala, If you notice the present political environment is all about identity, appeasement and personality politics. Do you think present Government will take chances to ignore their voter base and donor base, just to make things right for you and me (middle class)? They only remember middle class 2 weeks before the election. This is the fact, numbers may say whatever Politics case about the only reelection and play their game accordingly.
If we believe that they look at numbers and fact before making a call on the economy then we are a fool.
Look at Drug Inc. example, how they got marijuana legalized despite all odds and people are cheering without knowing the impact down the line.
Same with economy media and politicians are for sale, provided right price is offered. Do you think those China trips by our politico bosses were to sell maple syrup to China? he achieved what he aimed for GDP growth, these investors will definitely fule GDP and that’s what matters to him. Media will go crazy how GDP is booming under present boos and Mostly and biggest voter base which is retired seniors and first or second-time voter will believe and vote.
Hi, I’m Blue..if you couldn’t tell I am Canadian. Your reference to ‘Drugs Inc’ is either misplaced or just ignorant as it is a US documentary…in 5 years every bit of green will have a sprinkle of Canada as we are poised to gobble every developed market (just waiting for the US to open up but LHS/APH is ready and waiting along with ACB and WEED). With a retarded elf like Sessions running the show, the maple leaf has stepped in and is crushing it. Trust me, weeed know what we’re doing (see what I did there..did ya see!) Buuut your comment was about housing and I’m ranting like a mental patient.
Sure, keep on thinking the government is corrupt and just selling ourselves to a foreign entity. Same comment made in 1993 about NAFTA, that we’re selling Canada out. There is no conspiracy to gut the domestic housing market by our politicians. While we need a healthy construction industry, as a resource based economy, we know the follies of putting all of the donuts in one basket. We’ve gone and done it again!
And your last arguement is a little silly; the ones who are getting completely fubared by the housing issue are the older cohorts, 50+ who have borrowed against the value of their house to renovate, buy other properties, have fun, or help out their offspring.
Blue, Political class don’t have to conspire to screw us. They just have to be silent and Politicians are chosen to govern to ask questions to discuss policies and social issues. If they are not asking questions which you and I without any resources understand or can see, it means they are ignoring the real issues which affect us every day.
Silence on real estate by mainstream media and the political class is an indication that there is something fishy.
There are elections in Ontario within next 6 months, Do you see any side of political class raising the issue or making even real estate and affordable housing their prime pitch? Dead silence, they will do everything to distract the attention from real issues and avoid discussing what matter most in parliament.
No.
These people created the problem deserve go to jail but first investigate how many property they bought during their Political mandate PERIOD.
What people Sal? Created what problem? No one created this environment it was a combination of forces which BD has written about quite competently.
Oh, you’re making a partisan comment attacking the government in power in an attempt to over simplify a complex issue with a ‘sound bite’. give it a rest buddy.
It is myopic thinking and commentary, like this, that muddies the water and confuses the issues. If your first reaction to this looming crisis ‘Fuck the liberals, Justin is an idiot’ that’s great but you’re one of the less than educated people who need sites like this or risk looking a fool in social situations.
BD4L
1) I’m talking about the old government.
2) You are presumptuous and ignorant because you think it’s the fault of globalization e
and you are offensive as well (I treat you the same way as you treated me and all the
other readers who think differently from you !!) Politics is in the hands of finance and
you confuse this with the globalization and I bet that you do not know how a
mortgage is issued from the bank I mean how the fractional banking system works.
3) Read and try to be a little more humble !!
https://www.thestar.com/news/gta/2018/01/29/canadas-financial-system-is-less-transparent-than-russias-report-says.html
https://www.zerohedge.com/news/2016-03-10/how-vancouver-being-sold-chinese-illegal-dark-side-behind-real-estate-bubble
this will fuel the prices further and will lead to a greater free fall down the line..as you know today’s mil’s are tomorrows voters…
We live in a globalized world and real estate is not immune from it. In fact, it’s just a symptom.
https://thetyee.ca/Opinion/2018/01/18/Housing-Crisis-Really-About-Globalization/
I’m confused- so many pieces in this blog imply that prices are going to go down. Then we see that Asian investors are coming in the droves, likely driving up prices? Could you please clarify?
Prices are coming down, and Canadians are over leaveraged. The price of real estate has exploded far beyond local economics. Juwai is offering up blocks of real estate to wealthy foreigners to fund projects that no one local can afford. Just google the disaster that is called Fortress Real Developments and their syndicated mortgage nightmare. These foreigners are being fed the same BS we are about the value of Canadian real estate, and just like stupid locals, they believe it. ALL levels of government are acting to avoid a disaster, and save morons from themselves, but the morons keep on buying. Just this week the Niagara region was voted second in the country for economic growth (largely based in real estate), but last month was bestowed with the honour of having one of the highest unemployment rates. Chew on that for a little while, and ask yourself what the final outcome will be. When the unemployed are lined up for “investors” 1750.00 rentals, who do you suppose is going to pay the bills. They won’t, they will struggle for a few months, fall behind on the water and hydro, start paying the rent later and later, and eventually the weary “investor” will sell. And pop goes the weasel, or the real estate bubble….
[…] Juwai Partners To Sell US And Canadian Real Estate To Ultra Rich Asian Investors (Better Dwelling) […]
[…] Institutions and wealthy investors were looking for the same thing – yield. Researchers noted these groups of investors began chasing yields, looking for better returns in the low interest rate environment. They specifically callout markets such as Amsterdam, Melbourne, Sydney, Toronto, and Vancouver. This isn’t something new to regular readers, but always nice to see academia get up to speed. In a few years, they’ll probably even learn there’s a whole platform dedicated to selling whole condo blocks, reserved just for ultra-wealthy Asian families. […]