Wednesday, September 27, 2017 / by Tesa Real Estate Group
Thanks to premier Katherine Wynne, Ontario’s new housing policies have put a brake on sizzling housing markets in Great Toronto Area. The new policies apparently leave Chinese buyers in a wait and see position.
Now, the question is, will Chinese buyers come back to GTA markets again?
Our answer is yes and we are already hearing from our overseas investors. Here is why.
Chinese inflation rate is about 6% according to the Chinese government (privately, people think the rate is much higher), that means the assets Chinese holds will lose 50% of its value in about 10 years.
Chinese are moving their money out of China both by institutions and private citizens.
Globe and Mail had a report about Chinese institutions who are buying Canadian assets including a recent one, BC’s landmark, Grouse Mountain Resorts. (Grouse Mountain acquisition just the start for Chinese investment firm, banker says, https://www.theglobeandmail.com/news/world/grouse-mountain-acquisition-just-the-start-for-chinese-investment-firm-banker-says/article35699906/)
Also, New York Time had another report on the same topic (Behind an $18 Billion Donation to a New York Charity, a Shadowy Chinese Conglomerate, https://www.nytimes.com/2017/07/26/business/hna-group-billion-donation-new-york-charity.html)
What the Globe and Mail and NYT did not disclose is that these deals will give those top executives in Chinese institutions the opportunities to send their families and family members to Canada conveniently, acquiring Canadian passports later. It is part of schemes for executives to move their money out of China.
For private citizens whose fortunes were made in the last 30 years from the economic boom in China, they are facing uncertainty about tomorrow’s Chinese markets. One of the latest pressing issues is that Chinese communist propaganda machines are promoting a new policy, pushing private capital to invest in state-run companies.
Although the details of this new policy are to be seen, it reminds everyone of how communist governments confiscated private capitals and assets in early the 50s of the 20th-century in the name of cooperation between government and capitalists and private citizens.
No doubt, the new policy will push more Chinese citizens to move their money and assets out of China.
Will GTA’s home price rebound faster than that experienced in Vancouver?
Our answer is yes. The Globe and Mail story may answer this question perfectly (https://www.theglobeandmail.com/real-estate/toronto/gta-sees-slump-in-1-million-plus-home-sales/article35650331/).
Do Chinese have investment vehicles in China?
The answer is no. For example, both the state and companies in China notoriously manipulate China’s stock markets. In the last 15 years, China’s economy has grown 6-fold, while China’s stock market indexes stay flat.
How to read China?
To understand China, all you have to do is to watch the movie, The God Father, a great film done by Hollywood. They both share the same problem in which the rule of law does not govern them. Therefore, no matter how much of a fortune they make or how glorious they look, it can be lost overnight.
There is no cure for an authoritarian state to solve the problems above. Therefore, China’s money will keep heading to the west no matter what kind of policy the Chinese government introduces.
The Role of TESA?
Being GTA's Newest Technologically advance Investor focused Real Estate Brokerage, Development Firm and soon to be Financial Institution, we focus on locating outdated and distressed properties that could gain and value and profit through strategic structuring, renovations and/or developments in which we can assist in. We also assist in any sort of mortgages, loans and construction financing to be able to create the perfect investment vehicle with a high projected return.
If you have any questions or uncertainties about the current real estate market or would like to start an investment project with us, call us directly and we will be happy to assist you.