A “staggering” amount of Chinese wealth that has poured into Vancouver homes since 2011 is increasingly flowing into commercial real estate deals, realtors say.
Colliers’ Spark Report says the global outflow of Chinese capital hit a record of $18 billion in 2014, and the amount flowing to Canada and specifically Vancouver is rising.
The report notes several “landmark deals” made by Chinese investment funds in the past year including a 232-acre Port Moody development site on which Chinese investors want to build an “urban village.”
Kirk Kuester, executive managing director of Colliers International Vancouver, said the pool of money from Mainland China seeking investments in Metro Vancouver is so vast right now that he has to turn away potential clients.
“The money is staggering, quite honestly,” Kuester said.
“It is essentially from Mainland China. They were looking at private houses in residential developments in Vancouver, and it really seemed to accelerate in mid-2013. It’s a security play, and a diversification play.
“But now we are seeing them look for cash flow from commercial sites. The biggest challenge we face is scale and process.”
Kuester said a range of Chinese investors — from state-backed funds to smaller players with just tens of millions — expect to quickly ink deals for land by offering sky-high bids. But they are sometimes frustrated by the politicized nature of development deals in Vancouver, and multi-bid processes.
Kuester said, for example, that on Wednesday he had two or three potential clients with “half-a-billion” in private funds ready to put to work, but there are simply not big enough deals to satisfy them.
“Some of these groups want to buy the biggest sites in the city and do developments that are comparable to projects in China, but would be on the upper end of anything ever done here,” Kuester said.
Dan Scarrow of Macdonald Realty Ltd. also said massive interest from China buyers in high-end Vancouver area neighbourhoods is “shifting more now towards commercial real estate.”