Vancouver will never go back to being a beautiful but sleepy – and relatively inexpensive – town on the West Coast.
It has become one of the new landing sites on the continent for global capital and immigrants, say experts who specialize in what are called “emerging gateway cities.”
Vancouver was ranked fifth in the Americas in attractiveness for foreign direct investment last year by FDI Intelligence, a division of the Financial Times that deals with issues related to the movement of global capital. According to a Thomson Reuters report, the city has brought in $2-billion in foreign-investment venture capital between 1997 and 2011.
It is being highlighted as one of the new global hot spots, along with Houston and Miami, at a massive international gathering of investors, developers, planners and politicians in Vancouver this week.
The top 10 cities that FDI Intelligence identified as landing spots for foreign capital were, in order: New York, Sao Paulo, Toronto, Montreal, Vancouver, Houston, Atlanta, San Francisco, Miami and Chicago.
Like other gateway cities, Vancouver is benefiting from the energy and diversity that brings, said speakers at the Urban Land Institute’s spring meeting, where a focus of many workshops is figuring out where international money is flowing.
But this city has a unique situation that causes international money to have an outsize impact here.
Vancouver’s restricted space for growth, a function of being surrounded by mountains, sea and the American border, means foreign investors are willing to pay higher prices to get part of a limited resource.
“Vancouver is somewhat constrained, unlike Houston, which is on a giant tabletop flat plain,” said Mark Cover, a Houston-based senior managing director at Hines, an international real-estate investment firm. “So capital would look at Vancouver, and whatever piece of the pie it can get becomes more valuable.”
And that creates a downside to the investment benefits, said Vancouver’s deputy city manager.
“We’re seeing a lot of overseas investment buying up real estate – that is creating affordability problems,” Sadhu Johnston told the convention.
Mayor Gregor Robertson acknowledged that it means the city has to put extra effort into trying to funnel foreign money into other sectors besides real estate.
“We’ve got to remain vigilant in directing waves of investment to keep the city livable and to respect the character of the city,” said Mr. Robertson.
The mayor has had to deal with mounting resident opposition to offshore buyers of real estate in his two terms. But those in the condo industry, who are big supporters of his party, insisting that there aren’t that many foreign investors.
Mr. Robertson said he hopes that, as investors get more familiar with Vancouver, they will start to put their money into the city’s tech and other sectors.
“Real estate is a reflexive new-immigrant investment” that will change over time, he believes.
Being a gateway city creates other problems, as well.
For one, there’s a lot of pressure on Vancouver to become a major transfer point for fossil fuels.
“That doesn’t align well with our brand,” said Mr. Johnston.
Secondly, although the city’s huge population of relatively new immigrants is an asset to the city, not all of those new immigrants buy into the city’s brand, he said.
“The ‘greenest city’ does not translate very well to Chinese,” said Mr. Johnston. “Some people come from farms and they don’t want to start farming in their yards. It’s a struggle to translate that green city to different cultures.”
Like other gateway cities, Vancouver has a very high immigrant population, with 44 per cent of the city’s population born outside of Canada and half of that group having arrived in the city in just the past 20 years.