Canadian cities draw foreign investors By Wesley Mark, PwC upfront.pwc.com

upfront.pwc.com
www.pwc.com/ca/china
Canadian cities draw
foreign investors
By Wesley Mark, PwC
Wesley Mark
National Deals
Leader, Real
Estate, China
Business Network
PwC’s China Business Network
offers a variety of deals,
consulting, tax, and assurance
solutions in Canada, China
and around the world. Our
globally connected team of
trusted business advisors
works closely and seamlessly
with over 14,000 PwC partners
and staff in Greater China to
help you address the important
issues facing your business.
For more information, contact:
+1 416 814 5877
[email protected]
The real estate market in major Canadian cities
such as Toronto and Vancouver continues
to flourish thanks to growing interest from
developers, investors and buyers, both domestic
and international.
for condominium units in both cities continues to
grow, which is evident in the steady launch of new
developments and the number of construction
cranes that regularly dot the Vancouver and
Toronto skylines.
Despite ongoing (and so far unrealized)
concerns that Canada’s real estate market may be
overheated, sales activity and prices remain robust
in many of the urban centres due in large part
to increasing urbanization, rising immigration,
foreign investment and development as well as
low interest rates. This abundance of real estate
activity on both the development and investment
front has been at an all-time high in all asset classes
including industrial properties, hotels, apartments
and offices.
For an increasing number of buyers, downtown
condominiums offer more affordability than a
traditional detached suburban home and can often
provide more convenience, from pedestrian access
to urban amenities to reduced commute times to
and from work. As more young workers opt for the
city lifestyle, more developers respond; building
new condos to meet an increasing demand for
rental units.
In the residential housing market, prices in major
centres such as Toronto and Vancouver have
been rising rapidly over the years, but are still
considered a bargain to foreign buyers when
compared to other international markets such as
New York, London and Hong Kong, especially due
to the softening of the Canadian dollar. Demand
These residential projects are being built not only by
domestic developers, but also by foreign companies.
Since the recent liberalization of China’s offshore
investment policies and a softening of local market
conditions, Chinese institutional and individual
investors are among those looking for real estate
opportunities outside their own borders. For many,
Canada has become one of the preferred markets
due to a stable political and economic environment.
“
Henry Cao, President, Greenland Group (Canada)
In downtown Toronto, China’s Greenland
Holding Group, recently broke ground on
its first Canadian project – a twin tower
residential complex with a hotel and
museum. The project, known as King Blue
by Greenland, includes a 122-key luxury
boutique hotel, 44 and 48-storey residential
towers, and the highest heritage facade ever
revitalized in Canada.
King Blue is Greenland’s first Canadian
project in an international expansion strategy
which includes other key cities in the United
States, United Kingdom and Australia.
“We think Canada is a country that is
consistently attracting foreign investment
and foreign interest around its real estate
market – and will attract all types of
investment,” Henry Cao, President of
Greenland’s Canadian unit said in a recent
interview with PwC.
We think Canada is a
country that is consistently
attracting foreign investment
and foreign interest around
its real estate market—
and will attract all types of
investment
“We are actually looking very closely at the
Calgary market,” said Cao. “We think there
may be opportunities to invest.”
Cao said Greenland invests in various types of
real estate including commercial, residential,
hotel and infrastructure. However, the
company’s overseas strategy will primarily
focus on residential developments, at least
for the next couple of years.
“After that, we may have more flexibility with
other types of investments,” Cao said.
Cao explains that Greenland has three
main sources of capital for its investments:
the company’s own equity, a capital raising
platform for Asian capital market and local
financial institutions in Canada.
“I think the third source is a very important
one,” said Cao, adding that some Canadian
banks are “very interested” in their project.
Cao describes Toronto’s condo market as,
“one of the top markets in the world,” and
one of Greenland’s top three priorities for
future investment.
“We probably will close one or two more
deals in the next one-year period,” Cao said.
Greenland is also keeping its eye on markets
across Canada. Calgary is of particular
interest right now because of the cooling
effect lower oil prices are having on that
city’s housing market. After years of
appreciation, house prices and sales have
slipped in cities across Alberta in recent
months, which for some investors present
agood buying opportunity.
© 2016 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. PwC refers to the Canadian member firm, and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 4578-26 0516
”
The combination of foreign capital
inflows working in partnership with major
Canadian banks is a strong economic
fundamental which inevitably leads to
diversification as parties become more
comfortable with the relationship.
Cao believes foreign investment should
be welcomed.
“For an international city like Toronto, we
think that foreign investment will always be
an important growth engine for the city’s
economy,” Cao said.
To foreign investors, Canada is considered
a strong and stable country in which to do
business. Cao expects investment demand
from foreign companies to continue for many
years to come.