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Which GTA homes Chinese investors are buying

By Tony Wong – Toronto Star MoneyVille

Richard Ling knows all too well that some Asian lux­ury mar­ket buy­ers have par­tic­u­lar tastes.

It has to be over the top,” says the exu­ber­ant Ling, an upscale home spe­cial­ist with Har­vey Kalles Real Estate.

Recently, he sug­gested that one of his clients see a man­sion in the Bayview Avenue and York Mills Road area of Toronto that was listed at $18 million.

It had that under­stated WASPy ele­gance. But I think they wanted some­thing a lit­tle more showy,” says Ling. “Like the White House.”

Showy would be the home on Doul­ton Drive the real­tor sold for a Mis­sis­sauga record price of $7.25 mil­lion to a main­land Chi­nese buyer.

The 14,000-square-foot con­tem­po­rary home screamed opulence.

It was like walk­ing into a Bol­ly­wood set. There was mar­ble every­where. It was so shiny you needed sun­glasses,” says Ling.

The yel­low Fer­rari parked in the foyer helped seal the deal. The buyer, who is in the steel busi­ness, also had an impres­sive Fer­rari collection.

Hello Toronto. The Chi­nese are com­ing — and cit­i­zens from the world’s sec­ond largest econ­omy are look­ing for some prime real estate.

Chi­nese investors have been the largest buy­ers of pricey Cen­tral Lon­don real estate so far this year. In Syd­ney, they are cred­ited with buy­ing up to 60% of all prop­er­ties in new projects. And in Van­cou­ver, they have been blamed for jack­ing aver­age prices up by 25% year over year.

Bank of Canada gov­er­nor Mark Car­ney has already said Asian wealth is caus­ing prices to move to “extreme” lev­els in the Van­cou­ver mar­ket, where the price of a stan­dard bun­ga­low is more than a mil­lion dollars.

But while Van­cou­ver has been get­ting the lion’s share of atten­tion, Toronto has not escaped notice.

As Bei­jing reins in wildly over­heated domes­tic res­i­den­tial mar­kets, the mid­dle class moves its grow­ing wealth off­shore into havens such as Canada, Aus­tralia and more specif­i­cally into Metro Van­cou­ver and Toronto,” said a recent report by Vancouver-based con­sul­tancy Land­cor. “In China, real estate has long been regarded as a secure bet.”

In 2007, China had about 22,000 mil­lion­aire house­holds and that num­ber is expected to increase to 409,000 by 2017, accord­ing to Bar­clays Wealth.

Toronto prices are cheap in com­par­i­son to cities such as Hong Kong, where a main­land Chi­nese buyer pur­chased a 6,000-square-foot pent­house last year for $57 mil­lion, or $9,000 per square foot, a world-record price.

Asian buy­ers have already been cred­ited with buy­ing the pent­house at the Ritz Carl­ton for north of $10 mil­lion and an Asian buyer had pur­chased the pent­house at 1 Bloor for a reported $25 mil­lion before the devel­oper scrapped the project dur­ing the downturn.

While records are gen­er­ally not kept on the coun­try of ori­gin for investors, real estate insid­ers say Asian for­eign invest­ment remains high in the Toronto market.

The city is on the map for Chi­nese investors, par­tic­u­larly after China Invest­ment Corp., one of the world’s top five largest sov­er­eign wealth funds, decided to open its first non-Asian office in the city last year, bypass­ing other finan­cial cen­tres such as New York and Lon­don. With $332 bil­lion in assets, the fund is flush with cash and a major player in the invest­ment world.

The recent global eco­nomic tur­moil on stock mar­kets will also likely not have much of an impact since real estate is seen as a safe haven for for­eign investors, say analysts.

We are a big­ger, more diverse mar­ket than say Van­cou­ver, but there is def­i­nitely a huge Asian buyer influ­ence,” said John­son Cheng, sales man­ager at Peter Street con­do­mini­ums in the city’s enter­tain­ment district.

At the spring launch, Cheng tar­geted the Asian mar­ket by tak­ing out adver­tis­ing in Chi­nese news­pa­pers such as Sing Tao and Ming Pao. After most of the units had been sold, he adver­tised in main­stream media.

He esti­mates that an astound­ing 55% to 60% of the buy­ers in that project were Asian investors. Most of the sales went to main­land Chi­nese buy­ers, some of whom were bused in on real-estate “tours” to view properties.

You get to see Nia­gara Falls, and in between you can go shop­ping for a condo,” said Cheng.

Asians typ­i­cally buy real estate because they feel it’s a safe place to park their money, said Cheng. Canada is also accept­ing of diver­sity and the GTA has the largest eth­nic Chi­nese pop­u­la­tion in North America.

It isn’t unusual for some investors to buy two or three con­do­mini­ums at a time when vis­it­ing the city, said Cheng.

The typ­i­cal over­seas buyer is try­ing to pre­serve wealth. Many of them are chil­dren of entre­pre­neurs who were born in the ’80s and they’ve never really tasted the same kind of hard­ship their par­ents have,” said Cheng, who is also a vice-president at con­do­minium spe­cial­ist Mil­borne Real Estate Inc.

Kitty Zhu, 24, bought two lux­ury down­town Toronto con­do­mini­ums in the same build­ing with her father ear­lier this year. She is liv­ing in a third prop­erty she bought last year.

We think Toronto is a good invest­ment and the lifestyle is very good, much calmer com­pared to China,” said Zhu, who is study­ing Eng­lish in Canada.

Orig­i­nally from Shangahi, Zhu said learn­ing Eng­lish and a for­eign cul­ture will help her father’s man­u­fac­tur­ing busi­ness when she returns to China.

The prices in Toronto are get­ting higher, but they are still okay when you com­pare it to China or Hong Kong,” said Zhu.

Asian investors are becom­ing increas­ingly sophis­ti­cated, some­times land-banking prop­erty by buy­ing acres in the Ontario green­belt and sit­ting on it for future devel­op­ment, said Cheng.

One big rea­son for the wave of invest­ment is that Canada received “approved des­ti­na­tion sta­tus” from the Chi­nese gov­ern­ment in 2009, which has made get­ting tourist visas eas­ier for Chi­nese citizens.

Tourism real estate has since become big busi­ness, as tourists drop in to project sites to view prop­erty before mov­ing on to the out­let malls.

Another incen­tive is that Bei­jing has cracked down on prop­erty spec­u­la­tion this year by intro­duc­ing tough mea­sures such as a 5.5% tax on homes sold within five years to curb flipping.

In Bei­jing, prop­erty prices rose by 28% last year, while in Shang­hai prices rose an astound­ing 26%.

This has caused investors to seek a return elsewhere.

Still, it’s hard to pin­point the exact amount of invest­ment because Chi­nese buy­ers tend to remain secre­tive about their wealth. And with­out hard Cana­dian sta­tis­tics, sep­a­rat­ing myth from fact about Chi­nese investors remains an issue, accord­ing to a recent Col­liers report.

A num­ber of recent launches reported large num­bers of Asian buy­ers. Yet a sig­nif­i­cant por­tion of these buy­ers are actu­ally local res­i­dents, not for­eign­ers,” said the report.

That could also be the case in Toronto, where Chinese-Canadian investors may be active in the buy­ing pool.

A sig­nif­i­cant por­tion of what is per­ceived to be buy­ing by off­shore investors is, in fact, dri­ven by Chi­nese immi­grants who are inte­grated into the com­mu­nity but still main­tain strong links to main­land China, with many resid­ing and work­ing in China while their fam­ily estab­lishes roots,” said CIBC econ­o­mist Ben­jamin Tal in a report on the hous­ing market.

Mimi Ng, a vice-president at devel­oper Menkes, says the Toronto mar­ket is larger than Van­cou­ver and attracts a much more diverse crowd.

There is cer­tainly a lot of Chi­nese invest­ment here. But that is also hand in hand with South Asians, Mid­dle East­ern, Russ­ian and Korean invest­ment,” said Ng.

So far there hasn’t been a back­lash in Toronto sim­i­lar to Van­cou­ver. In 1988, the iconic Expo site in the city’s down­town was pur­chased by investors includ­ing Hong Kong bil­lion­aire Li Ka Shing.

The group built con­dos and sold them in Asia first, pro­vok­ing anger among some Van­cou­ver residents.

Toronto’s last wave of Asian invest­ment occurred in the ’80s, when Hong Kong immi­grants, wor­ried about the han­dover back to Chi­nese rule, snapped up prop­er­ties in the GTA caus­ing a mini-boom, and a neg­a­tive reac­tion by some local res­i­dents who felt they had been priced out of the mar­ket. But that wave ended in a few years after many immi­grants real­ized busi­ness oppor­tu­ni­ties in China out­weighed liv­ing in Canada.

How­ever, real­tor Ling expects the new Chi­nese wave will be longer lasting.

This isn’t just one tiny British colony. They are pump­ing out bil­lion­aires on a huge scale and it will con­tinue to have a huge impact on the Toronto mar­ket,” said Ling. “I think this will turn out to be massive.”

Con­tact Lau­rin Jef­frey for more infor­ma­tion – 416−388−1960

Lau­rin Jef­frey is a Toronto Real­tor with Cen­tury 21 Regal Realty. He did not
write these arti­cles, he just repro­duces them here for peo­ple who are
inter­ested in Toronto real estate. He does not work for any builders.


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