[URBAN NOTE] "Canada's real-estate boom: a Chinese perspective"

[rfmcdonald]

The Toronto Star's Maria Jimenez has a great article exploring the motivations for Chinese to invest in Canadian real estate. From a Chinese perspective, contending with even higher real estate prices than in Canada and with greater potential for instability, there are few reasons not to go ahead and buy something here.

While Canadians complain about inflated real estate prices, try buying a home in Shanghai.

A two-bedroom unit in “Wonderful Place,” a complex of highrise towers in the city’s northeast, has no closets, a galley kitchen, a minuscule balcony crammed with clothing racks and an extra fridge in the living room. While the grounds boast trimmed lawns and burbling fountains — the area is marketed as a “21st-century eco-friendly knowledge-oriented garden district” — the home is run-of-the-mill. But the cost is not. It is listed for $2 million (Canadian).

A shabbier 400-square-foot apartment in a building nearby goes for $1.6-million. Parking is $60,000 extra.

“We don’t have a lot of vacancies,” a real estate agent for this area, New Jiangwan City, tells a Star reporter.

The real estate bubble in one of China’s richest cities is so frenzied the average price for new homes rose by 30 per cent in the first three quarters of 2016. In Beijing and Shenzhen, the housing markets have increased by a similar amount, making them among the most expensive cities in the world to buy a home.

The Shanghai government has tried to cool the housing market, making it more difficult for existing property owners to buy another home, and increasing down payment requirements.

“Real estate in China is just crazy,” says Bo Chen, a 39-year-old economist at Huazhong University of Science and Technology in Shanghai. “People have money and they want to put it somewhere.”

For many, somewhere means Canada.