Canadian economists are suggesting that stock market upheaval and the further devaluing of the renminbi against the U.S. dollar will only fuel the flow of money into assets not linked to China’s currency.
“Chinese investors will likely look to the U.S. dollar as a main investment instrument, but the Canadian dollar’s persistent weakness has also made real estate in Vancouver more attractive”, stated Scotia Bank Economics VP Derek Holt in a recent Vancouver Sun interview. The depreciation of the Canadian dollar puts Vancouver assets on sale, “in the context of other Pacific-Rim cities like San Francisco or Singapore…we look pretty cheap right now.”
Keep in mind that “Beijing has some controls in place to prevent capital moving offshore which will limit the number of buyers driven to the Canadian market”, counters TD Senior Economist Leslie Preston.
Andreas Schotter, a professor of international business at the Ivey Business School of Western Ontario stated … “I think exodus is too harsh a word, but for sure, investors will try to balance their portfolios more away from the renminbi.” “For those who are able to move money out of China, Vancouver and other metropolitan real estate in Canada remains very attractive” in the context of an undervalued loonie.
London Pacific’s Thomas Trowbridge commented that “how much money is flooding from China into Vancouver property is up for debate, however, more and more experts are suggesting that Chinese cash is a dominant and growing factor”.
This week Vancouver Mayor Gregor Robertson came close to acknowledging the China money influence, saying “runaway” Metro Vancouver housing prices are “divorced” from local incomes and senior governments should start tracking foreign investment data.
You can read the full Vancouver Sun Article by Chuck Chiang HERE