Monday, June 7, 2010

Mainland Chinese buyers led luxury-home market recovery

Blog by James Wong

Mainland Chinese buyers led luxury-home market recovery

Canada seen as a safe storehouse for personal wealth

By Derrick Penner, Vancouver Sun February 6, 2010

It took a couple of months, but sales of luxury homes in 2009 caught up to the general real estate market driven largely by buyers from mainland China, one dealer in high-end homes has found.

The Real Estate Board of Greater Vancouver recorded 30 sales of homes more than $5 million through the Multiple Listing Service compared with 26 for 2008.

"But in 2009, all of those were after April," Dan Scarrow, an agent with Macdonald Realty in Vancouver said in an interview. "Nothing sold over $5 million between January and the end of April."

Scarrow said the pickup in sales lagged the recovery of sales in the general market, but once sellers at the lower end started moving up, luxury properties started to move as well.

"I think there was a delay of probably two or three months between the lowest and highest end starting to sell," Scarrow said.

Luxury properties took somewhat of a hit during the world financial crisis of 2008, a year in which high-end sales fell off their previous peak.

While 2008 saw Metro Vancouver set a record for top price for a home, at $28.2 million for 3330 Radcliffe Ave. in West Vancouver, overall MLS sales came in at 26 compared with 35 MLS sales in 2007.

At the time, agents viewed the situation as affluent buyers delaying decisions while uncertainty reigned in world financial markets.

Scarrow added that once Metro Vancouver's market thawed in the spring of 2009, "mainland Chinese buyers started getting on board as well."

Scarrow said foreign buyers are coming into Metro Vancouver from Australia, Europe and the United States, but they are being overshadowed by mainland Chinese purchasers who view Canada as a good country to provide a western education for their children and Canadian real estate as a safe storehouse for their wealth.

Scarrow added that the trend is similar to what Vancouver experienced with Taiwanese and Hong Kong immigration with the wealthiest business immigrants taking the vanguard and choosing Vancouver as a convenient location that offers them the attributes they are looking for while also being relatively close to their businesses back in Asia.

"So there was a wave of Taiwanese buyers that came in and buoyed the market," Scarrow said. "Then Hong Kong buyers came in and now mainland China buyers are coming, but there are 50 times as many of them, potentially, coming to the city."

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