Since 2019, protests against China in Hong Kong have been raging. The cause of these protests is the aggressive effort of China to control the semi-autonomous city. Realtors from Vancouver and Toronto who have clients from mainland China and Hong Kong have been bracing themselves for the increasing interest in pre-sale properties.
Looming Threat
When Ashley Lum, a wealth manager, was asked why she's still staying in Hong Kong even with the threat of the Chinese government taking over the city, she could only sigh.
“Look, it’s not simple to just get up and leave your home,” Ms. Lum said when asked over the phone.
Ms. Lum, 36 years of age, is a dual citizen of Hong Kong and Canada. Her family was originally from Hong Kong. However, she was born in North York, Toronto and then moved to Hong Kong with her family in 1999. Their move was different from what most people would've done. This was uncommon, especially with the wave of immigration after Britain gave the control of Hong Kong back to China.
Ms. Lum added, “My father felt that Asia was the continent to be in, that there would be more opportunities for us… I don’t think we’ll move back to Canada just yet… maybe if things get worse here? I’m not sure.”
There are more or less than 300,000 Canadians that are temporarily or permanently staying in Hong Kong.
Lum explained, “I’m from Hong Kong. I’ve been in the protests, I’m supportive of the protests, I’m angry at what’s taking place, and I’m scared, but it’s also hard to uproot myself and my whole family and move overseas.”
This was a reference to the recent protests against the implementation of Beijing-drafted national security legislation.
Still Interested In Pre-Sale Properties
Real Estate professionals in Canada are continuously receiving inquiries from people in Hong Kong. However, these inquiries don't necessarily translate to purchases.
A Realtor from Toronto, said, “My client who is Canadian and moved back to Hong Kong about 10 years ago, said she’s looking for a pre-construction condominium to purchase. They’re inquiring, but I wouldn’t say units are selling very fast.”
She added, “This client called me because she said the national security law is concerning. She wants her son to move to Canada to study next year.”
The President of MacDonald Real Estate Group in Vancouver, Dan Scarrow, said that his company is experiencing a rise of inquiries about pre-sale properties in Vancouver from clients in Hong Kong.
Scarrow said, “Developers will see success from what’s going on in Hong Kong because they are selling pre-sale units. But you are not going to see it in the data because those units aren’t going to close for another three to four years.”
May Not Be As Huge As It Seems
Scarrow believes that the idea that Hong Kong residents will suddenly rush into the country and start buying properties may not happen anytime soon.
He added, “If anyone dug into the statistics of how much money is leaving Hong Kong and coming into Canadian real estate, I think they would be surprised at how minimal it actually is.”
If you take a look at the real estate prices in Vancouver and Toronto, they all held up even with the coronavirus pandemic. This suggests that foreign buyers, such as residents of Hong Kong, may not have much impact.
A dean and professor emeritus at University of British Columbia's Sauder School of Business, Micheal Goldberg, said, "That trend suggests that foreign buyers including those from Hong Kong do not really have much of an impact on the market."
Goldberg added, “But I do know that some folks in Hong Kong who are Canadian citizens or have family in Canada are on high alert, and are preparing to come back in a moment’s notice. I suspect you’re going to see more of this trend if China continues to be oppressive, and especially if they bring troops in.”
Goldberg studied the effect of globalisation on North America and Asia's real estate market.
The professor said that there's money in the Canadian real estate that comes from Hong Kong. However, the amount is not that significant, especially since the protests began in 2016.
The professor said, “Even if you’re apolitical, you start to get concerned about the safety of your investments and the future of your kids.”
"The decision to uproot and move to Canada, even in the face of this sovereignty issue, is a risky one."
He added, “What kind of job will you get? What about schooling? There’s definitely some activity from Hong Kong with regards to Canadian real estate, but it is too early to tell if it will become a trend.”
However, the Vice-Chairman noted that none of the most prominent developers marketing Vancouver properties in the semi-autonomous city had taken action. The data from CBRE points out that only several institutional capitals for commercial real estate go to North America, while most of it goes to Europe.
“The residential side still has an interest in Canada, but I would say a lot of the high net worth money is going to commercial investments in London.”
Priscilla Lok said that plenty of upper-middle-class Hong Kongers think that the political situation isn't a massive enough threat for people to start moving abroad.
The Toronto realtor said, “Most of the calls I’m getting are dual nationals. They are professionals, they have enough money to buy a place, but they would have to sell their place in Hong Kong first, or refinance it. That takes time.”
Is Canada The Best Bet?
With the protests everywhere, not just in Hong Kong, and the coronavirus pandemic, Canada might just be the safest best. Scarrow said that one of the less noticeable trends is fewer Canadians who want to move to Hong Kong.
Scarrow explained, “In the past 10 or 20 years, there’s been a brain drain out of Canada that has really been reversed now. Many overseas students came here, did school, and then found jobs in Hong Kong, London, Shanghai etc..”
He added, “But I think you’re going to see a lot of those people now saying… it looks like Canada is my best bet. If you’re thinking of starting a new job, Hong Kong has fallen way down the list of places you would want to relocate to at this point, and you’re going to feel that impact on the real estate market.”
What do you think? Do you think this is the perfect time for Hong Kong citizens to move? Is it better for Canadians to stay in Canada?