City a hot spot for Chinese buyers

Foreign buyers have become a kind of real estate industry bogeymen: widely feared, with an influence that many analysts say is more mythic than real.

According to the Canadian Mortgage and Housing Corporation, the proportion of buyers from other countries remains too small to be the main driver of price increases. The number of foreign buyers in Greater Montreal is estimated at around two per cent, by CMHC’s reckoning.

However, while the numbers are small overall, it’s disingenuous to say there is no impact. There is no bogeymen, but there is something going on.

A recent report from a popular Chinese-language website for investors in international property ( juwai.com) revealed its buyers are now more likely to ask for information on homes in Montreal than in Vancouver.

After new taxes on foreign buyers were introduced in Toronto and Vancouver in 2016, the number of inquiries on the site about properties in Montreal spiked by 85 per cent.

During the same period, interest in Toronto and Vancouver properties declined, by 25 per cent and 18 per cent, respectively.

Juwai CEO Carrie Law said while some buyers from China are put off by the thought of doing business in a Frenchspeaking province, the lower prices and lack of foreign buyer taxes are big incentives to look past the language barrier.

“Two things distinguish Montreal from other Canadian cities: its lack of foreign buyer taxes and its market growth story when other parts of Canada are slowing,” Law said.

But while Montreal is emerging as the new hot spot for Chinese buyers looking to invest in Canadian real estate, only a tiny percentage of those who are window-shopping for our real estate plan to come here to stay.

A survey of Juwai’s users found that while more than half of these potential buyers were looking to purchase property for their own use, fewer than two per cent of those considering homes in Montreal said they planned to immigrate.

One-quarter were looking for investment properties, and 15 per cent said they were planning to buy property for themselves or family members to live in while attending school in Canada.

Real estate agents and analysts alike have noticed that Chinese buyers aren’t shopping everywhere in Montreal. They tend to buy in specific parts of the city, which — coincidentally or not — are also the areas with the most significant price increases and bidding wars in recent years.

According to real estate agent Sophie Ou, who specializes in working with Chinese-speaking clients, one of the reasons buying activity is so concentrated is that many buyers coming from China rely on recommendations on internet message boards, or advice from family and friends who have already purchased Canadian real estate.

They often have as little as a week or two to shop for a home and make an offer before they have to fly back home, Ou said. Because the pool of homes for sale in preferred areas is limited, when they find a house they like, they are motivated to bid aggressively to seal the deal, she said.

“The price here compared to the price in certain cities in China is really very cheap,” Ou said. “Many of them don’t even come here, they just put down the down payment.”