Ashley Lum sighs impatiently when asked why, despite the looming threat of greater Chinese control over Hong Kong, she’s choosing to remain in the city-state for the foreseeable future.
“Look, it’s not simple to just get up and leave your home,” the 36-year-old wealth manager told the Financial Post over the phone recently.
“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,” she quipped, referring to the recent wave of demonstrations against the imposition of a Beijing-drafted national security legislation, which came into effect on July 1.
The decision to uproot and move to Canada, even in the face of this sovereignty issue, is a risky one
Lum is dual citizen of Canada and Hong Kong. She was born in North York, a borough of Toronto, but relocated to Hong Kong along with her family (who are all originally from there) back in 1999 — going against the wave of immigration that was flowing in the opposite direction, after Britain handed back control of Hong Kong to China in 1997.
“My father felt that Asia was the continent to be, that there would be more opportunities for us,” Lum said. “I don’t think we’ll move back to Canada just yet… maybe if things get worse here? I’m not sure.”
There are approximately 300,000 Canadian citizens or permanent residents in Hong Kong.
As protests have raged on since last year against China’s increasingly aggressive attempts to exert control over the semi-autonomous city, realtors across Toronto and Vancouver with clients primarily from Hong Kong and mainland China, have braced for a wave of inquiries about Canadian real estate.
They received inquiries, but it did not necessarily translate into purchases.
“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,” said Priscilla Lok, a realtor in Toronto who focuses on servicing Hong Kong based residents and investors interested in the Canadian real estate market. “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.”
Dan Scarrow, president of Macdonald Real Estate Group in Vancouver, says that his company has definitely seen an increase in inquiries from Hong Kong focused on pre-construction units in Vancouver. “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.”
Scarrow believes that the notion that Hong Kongers are about to rush into Canada and sweep up its property market is almost entirely false. “If anyone dug into the statistics of how much money is leaving Hong Kong and coming into Canadian real estate, I think they will be surprised at how minimal it actually is.”
Real estate prices in Toronto and Vancouver have largely held up throughout the pandemic. That trend suggests that foreign buyers including those from Hong Kong do not really have much of an impact on the market, said Michael Goldberg, professor and dean emeritus at University of British Columbia’s Sauder School of Business.
“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,” said Goldberg, who has studied the impact of globalization on real estate markets in both Asia and North America for decades.
Goldberg said that there has been a trickle of money from Hong Kong into Canadian real estate, though not in huge sums, since demonstrations started in 2016. “Even if you’re apolitical, you start to get concerned about the safety of your investments and the future of your kids.”
That might be what is motivating the few purchases from Hong Kong that some realtors have started to see over the past few weeks, according to Tony Quattrin, vice chairman of capital markets in Vancouver for global real estate company CBRE Group Inc.
“One developer told me that they sold 19 units last weekend, and of those 19, 16 were Hong Kong-based people with the intent of coming to live in Vancouver. So it’s not the rent-it, flip-it kind of thing. These were two bedroom and three bedroom units,” Quattrin said.
He added that another developer told him that although there are many inquiries locally in Hong Kong, they hadn’t yet translated into actual purchases. “The decision to uproot and move to Canada, even in the face of this sovereignty issue, is a risky one. 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.”
Some of the biggest developers marketing Vancouver property in Hong Kong are Westbank Corp., Enrich Developments, and Shape Properties Group — did not respond to the Financial Post’s request for information on property interest out of Hong Kong.
But Quattrin noted on the flip side, none of the big Hong Kong players have “pulled the trigger in Vancouver” in the last little while, after the 15 per cent foreign investor tax was imposed two years ago. CBRE data points towards large institutional capital for commercial real estate going into Europe, more than North America. “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.”
Lok, the Toronto realtor who hails from Hong Kong, said that for many upper middle class and even middle class Hong Kongers, the political situation isn’t yet a big enough threat to warrant a mass exodus abroad. “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.”
Scarrow believes that one of the less considered trends that’s taking place because of the pandemic and China’s looming grip on Hong Kong is fewer Canadians migrating to Hong Kong.
“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 said.
“But I think you’re going to see a lot of those people now saying… 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.”
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