Tens of billions of dollars are sitting in Canadian banks as an estimated 20 per cent of the Chinese-Canadians living in Hong Kong prepare for a gradual exodus from “Fragrant Harbour” due to the recent political developments and uncertain economic outlook in the city.
Call them the “double returnees”.
Capital flows in the past year out of Hong Kong, home to as many as half a million Canadian passport holders and prospective immigrants, reached an all-time record of nearly C$44 billion (US$34.9 billion) in electronic fund transfers, according to FINTRAC, Canada’s anti-money laundering agency that gathers financial intelligence on transfers exceeding C$10,000. Some speculate the actual amount is even higher.
Whatever the real amount of cash injection is, it has Canadian property developers and realtors – along with other segments of the economy such as financial institutions, automobile dealerships, furniture and appliance stores, luxury goods merchants, home improvement businesses and restaurants – all salivating over getting their piece of the action.
“Emigration has been a popular subject in Hong Kong,” said Jean-Francois Harvey, a Canadian lawyer based in the Hong Kong Special Administrative Region who specializes in immigration for high-net-worth individuals.
Harvey, who moved to Hong Kong from Montreal 20 years ago, said in an interview he has seen a four-fold increase in clients looking to move to Canada since the middle of 2020.
“There has been an incredible increase in demand especially for Canada in Hong Kong,” he said. “So much so that in the middle of COVID 19, I had to double the team and the size of our office in Hong Kong. This is more than a spike, this is a wave.”
Harvey said his clients in the past year have transferred at least C$1 million, and routinely as much as C$5 million or C$10 million to Canada.
In Hong Kong, HSBC, the largest bank in the city of 7.5 million people, has established a special international department to connect Hongkongers with other global markets – with Canada being at the forefront, along with Britain and Australia. London-based HSBC’s Canadian subsidiary is headquartered in downtown Vancouver.
In Canada, online lender Equitable Bank, told media that it experienced a surge in deposits from Hong Kong right after Beijing passed the controversial National Security Law on June 30, 2020.
In recent decades, Hongkongers had grown weary of constant upheavals, prompting them to flee again and again to safer overseas countries where there are established Chinese diaspora, with Canada as the favored destination.
However, each time, after things cooled down, they returned to Hong Kong for better career prospect. It must be emphasized that many Hong Kong immigrants chose to stay after gaining Canadian citizenship. A lot of those who left did so because of poor employment opportunities for them in Canada.
Back to the present, John Martin, a former Vancouver lawyer now working in Hong Kong as an immigration consultant, echoed Harvey’s views about a growing exodus. “I think that’s pretty accurate, although it will be a slow exit rather than a total retreat,” Martin said in an interview.
As for himself, Martin, like a lot of other Canadian expatriates, has no near-term plans to return to Canada, since business for him remains brisk. “If enough people leave, someone has to fill the void,” said Martin, chairman of Pan Pacific Group. “It has been busier here than it’s ever been.”
Meanwhile, developers, property consultants and realtors in Canada – particularly in Vancouver and Toronto that are already both homes to hundreds of thousands of ethnic Chinese – are drooling over the prospect of cashing in on the lion’s share of the billions currently stashed in Canadian banks from Hong Kong depositors.
Terence Tung, director of SQM Global Properties, is a Hong Kong-based licenced realtor who sells overseas properties to Hong Kong buyers. He indicated that real estate in Canada is highly coveted among Hongkongers, second only to the United Kingdom. Canada ranks ahead of other regions such as Australia, New Zealand, the United States, Singapore, Malaysia, Japan and Taiwan. “They are end-users who are shopping around for self-use, preferably new projects in the pre-sale stage or under construction,” said Tung.
He also pointed out that in the Greater Vancouver area, the most popular locations are Richmond, downtown Vancouver and the city’s westside, like Oakridge. The highly sought-after homes for end-users are two and three-bedroom condominiums or townhouses. Hong Kong buyers are also keenly interested in locations with good schools for their grandchildren.
When you approach Hong Kong families, you must provide homes with more than one bathroom, luxury appointments such as open kitchens with high-end, European-made cabinets and appliances, and large closets. During the pandemic, people are forced to stay at home, and the kitchen has become the most popular common area where families spend the most time in. This is one of the reasons why a great kitchen is a deciding factor for Hong Kong buyers when looking for new homes.
Hong Kong commentator Albert Cheng, who is founding president of the Hong Kong Chinese Canadian Association, predicted a significant surge in Hong Kong immigrants in Canada back in 2018. In his column for the South China Morning Post, he stated that at least 10 per cent of the 300,000 Canadian passport holders living in Hong Kong would move back to Canada, meaning at least 30,000 people. Cheng foresaw those particular immigrants would be mostly well-educated middle-class professionals, with the capital to buy new homes in Canada, as well as invest in the property market.
Echoing Terence Tung’s views on the latest market trends, Cheng points out: “Unlike the 1970s, Hong Kong immigrants no longer want to buy a ‘monster home,’ as before they could bring their housekeeper to Canada, but now, they have to do their own work.”
Tung emphasized that discerning Hong Kong buyers are especially attracted to units offering spacious kitchens with upscale European brand name appliances and cabinetry. “Among smart developers, all new condos are being built with very nice kitchens, as (end-users) plan to spend a lot of time in the kitchen,” Tung said. He added that in the past two years, his agents are “seeing a lot of new faces” at Hong Kong showrooms marketing Vancouver projects.
Tung said pre-construction sales are highly coveted by returning Canadians since they don’t have to take occupancy right away and can wait until the projects are completed in one to three years. “So there’s no rush to move in,” he said. “It’s tailor-made for them.”
Terence Tung
Director of SQM Global Properties
Jacky Chan, a leading Vancouver realtor, said that in post-pandemic times, British Columbia’s housing market will boom again similar to the late 1980s and early 1990s, driven by Canadians returning home from Hong Kong and elsewhere. “A lot of people are coming back from all over the world. We’re seeing that each single day,” said Chan, president of Vancouver-based BakerWest Real Estate Inc, which works closely with developers, such as Concord Pacific and Aspac Developments. “Demand is naturally increasing because of natural population growth and migration, and with recent Canadian immigration policy changes.”
Other industry sources noted the Canadian government plans to admit more than 1.2 million new immigrants within the next three years – further driving housing demand.
Chan’s firm is a division of Toronto’s Baker Real Estate, the country’s largest condo pre-sales and marketing agency. Himself an emigrant from Hong Kong in 1994, Chan said Vancouver is the preferred destination for Canadians to escape the political uncertainty and high cost living in Hong Kong. Vancouver is favored over Toronto because of BC’s milder climate and the city’s “Gateway to the Pacific” location.
Keelan Chapman, founder of the Canadian Real Estate Investment Centre in Hong Kong, said he has seen a noticeable uptick in purchasers interested in properties in good public school areas, with Vancouver’s westside being most popular. “The buyers we’re seeing now intend to eventually become end-users rather than just investors,” Chapman said. While many of his clients are Hong Kong residents with Canadian passports, “We’re also seeing a lot of non-Canadian Hongkongers looking into Canada.”
Chapman also said Hong Kong buyers enjoy the flexibility offered by new pre-sale since they can wait for three or four years while the projects are being built. This gives them time to decide whether to take occupancy or to rent out their homes temporarily until they reach their ultimate decision to relocate to Canadian shores.
Chapman said some of his clients with Canadian passports have quickened their timelines for returning to about five years on average, from approximately eight years previously.
Keelan Chapman
Founder of Canadian Real Estate Investment Centre (HK)
Meanwhile, local realtors expect to experience a post-pandemic boom in the Greater Vancouver property market. “Migration levels are expected to accelerate through 2021 onwards to account for the dip during the pandemic,” said Dan Scarrow, president of Vancouver-based Macdonald Realty. “This includes immigration levels, which will surpass 400,000 per year, along with a return of international students.
“As it pertains to Hong Kong, we expect more money and people to flow to Vancouver after the recent mainland Chinese crackdowns,” added Scarrow, whose firm has Asian operations in Hong Kong and Shanghai. “It won’t be like 1997 though. It will be much more subtle. There’s already a critical mass of Chinese people in Vancouver and most wealthy Hongkongers already have a beachhead in Canada, so the movement of money and people won’t be noticeable as in the 1990s.”
Dan Scarrow
President of MacDonald Realty
Realtor David Yang, broker-owner of Pacific Evergreen Realty, said besides Vancouver’s west side, areas in BC’s Lower Mainland that are now also attractive to Hong Kong buyers include Burnaby, Coquitlam, Surrey and Langley, as well as the good old standby, Richmond.
“The (Greater Vancouver) market has been the most active since 2016,” Yang said. “After COVID 19, it will be more incredible, with sales jumping 20 to 30 per cent.”
Kitchen Infinity (HK) is the major distributor of European cabinetry in Hong Kong, being the sole distributor of high-end German-made Poggenpohl and Gaggenau products for over 30 years.
Company CEO Sandra Wong noted that as 75 percent of the city’s luxury residential developments now feature European appliances and cabinets, “that’s why Hong Kong home buyers who have moved to Canada are very familiar with European brands such as Poggenpohl and Gaggenau.”
David Yang
Broker-owner of Pacific Evergreen Realty
Kitchen Infinity Vancouver is the major distributor of high-end German and Italian products in Canada. In 2019, it opened in Gastown the largest kitchen cabinets showroom in the country.
Company Marketing Director Carl Müller said that Hong Kong home buyers are usually attracted by high-end European branded kitchen cabinets and appliances. They highly covet enjoyment and home investment value — similar to their obsession for other European designs such as cars, yachts and fashion.
Property price appreciation in Vancouver has enriched home owners and sellers, boosting their discretionary budgets for kitchen renovations and enhancements. Recently, there have been increasing inquiries from local developers, contractors and home owners on European kitchen cabinets. They are interested in the European brands that are most popular among Hongkongers. They always choose European-made custom cabinets over European-style cabinets manufactured in other countries.
Kitchen is one of the most important rooms in the house. There, we spend the most time in the company of our loved ones. It is a room where family and friends cook and dine together. The best memories are often created in the kitchen. Where there is a demand, there is a supply. Catering to the needs of modern families, newly designed homes feature a large and integrated space of living, dining and cooking areas all blended in together. The open-plan design is highly sought-after in the property market.
Bloomberg Business News reported that according to real estate firm Royal LePage, good kitchen designs can raise the value of a property by more than 12.5 per cent and are more attractive to buyers.
Kitchen Infinity Hong Kong Showroom
Kitchen Infinity Vancouver Flagship Store