To recap, we have gone to China as a response to demand from our clients. We determined early on that we’re likely the only brokerage in BC that’s capable of supporting an economically feasible office in China due to our multiple lines of business: Residential Brokerage, Commercial Sales, Project Marketing for Developers, Property Management and Mortgage Financing. Having one or two of these capabilities would not be enough to sustain an office in China, but having all 4 means that Macdonald Realty and its affiliated companies – Macdonald Commercial, Property Management, and Platinum Project Marketing – can make it work.
In the first month after our arrival, the unexpected changes to the Canadian Investor Immigrant Program had a lot of people scrambling, trying to figure out what the impact would be for the Vancouver housing market. I must admit that I’ve changed my mind about how big the impact would be from Large to Minimal. The reason, as explained by some of our Immigration Consulting partners here in China, is that their wealthy clients are more interested in placing their children and a portion of their wealth outside of China than they are in immigrating themselves. Canada offers a perfect solution for this through student visas for children and an accompanying 10-year multiple entry visa for adults. These immigration consultant partners are fairly confident that many of their clients will choose this route and continue to invest in Canada and British Columbian residential and commercial real estate.
Another issue that we’ve had to deal with is representative fraud. This is something that is quite common and widespread in China and only recently has it made its way over to Canada. We have now verified 3 cases of individuals who have fraudulently claimed to be the Canadian representative of a company in China, and we have several other suspicious incidences to follow up on. The cases seem to follow the same pattern: an individual claims to be the representative of a large Chinese company, he/she knows a lot about the company or a decision-maker in the company but most of the information can be found online, and the individual tells us not to contact the decision-maker back in China because they are ‘very busy’. Through the BC Trade Office here in China, I’ve been able to get a hold of the Chairmen of several of these companies and most of them (though not all) have denied having any sort of official representation in Canada. This is just another area where having ‘boots on the ground’ can help.
Moving forward, this month’s task is to determine and solve the logistical, legal, and administrative challenges of opening an office in China. This is one of the biggest hurdles for Canadian companies and is one of the main reasons why so few have set up shop in the country.
As an aside, I recently made a side-trip to Taiwan to learn about the state of the Taipei real estate market. Much to my surprise, I found that housing prices in Taipei are much higher than in Vancouver and their wages are significantly lower. This goes to the heart of the paradox that we’ve been faced with in this business for several years now: Vancouver house prices, wages, and housing affordability. The oft-cited Demographia study is often twisted in Vancouver headlines as being a study of all markets around the world, when in actuality it only covers 9 (mostly western) countries. It explains the paradox of why Canadians often think that Vancouver is so expensive while our Chinese clients continually tell us how cheap Vancouver is. I certainly can’t explain to you how the economics of Taipei’s real estate market work, I can only tell you that they do. And if Vancouver is the most Asian city outside of Asia, it certainly lends credibility to the theory that Vancouver house prices may still have some room to grow.
VP Corporate Strategy
Macdonald Real Estate Group
Dispatches from China
Dan Scarrow is Vice President of Corporate Strategy at Macdonald Realty. A second generation Chinese Canadian with fluency in Mandarin, Dan will be spending several months in Shanghai investigating the opportunity to open a Macdonald Realty rep office in China. Dan will be sending monthly dispatches with stories from his experiences in Shanghai.
Based in Vancouver, British Columbia, Macdonald Realty has 20 offices and 1,000 staff and Realtors, and offers a full range of real estate services across the province, including residential and commercial brokerage, property and strata management, and project marketing.
For more information contact Macdonald Realty at 1-877-278-3888