Late last month, a 153-unit condo development in New Westminster sold out in two and a half hours.
More than 400 potential buyers lined up for the sales day. For every unit sold, there was at least one back-up offer made. There was nothing overtly special about the project, which will be completed by fall 2012.
The two-phase development, called Eight West, is located at 21 8th Avenue in the heart of New Westminster, a traditional-design and mix of town homes and condos starting at $168,800 - standard mid-market housing for the Lower Mainland. But for reasons only understood by the increasing number of local realtors who have learned to target the Mainland Chinese market, it held an irresistible allure to the new Chinese buyers looking to invest their money in the Canadian housing market.
Bill Morrison, the marketer in charge of selling the project, says he realized halfway through his marketing plan that Chinese buyers were showing interest. Once he tweaked his focus to include Chinese-specific media, he had a buying frenzy on his hands, with a line-up around the block.
"I could have sold double that amount," says Mr. Morrison. "We had no idea that would be the result. There was a huge demand."
Of the 153 units sold, about 40 per cent went to Chinese buyers, and many of them would hardly be familiar with B.C.'s historic former capital city. A major marketing feature was the removal of the Harmonized Sales Tax, and while that strategy appealed to locals, it didn't matter so much to the new Chinese buyer, says Mr. Morrison. They would have regarded the tax as little more than the cost of doing business, he says. And unlike their Hong Kong predecessors who made up the buying wave of the 90s in Vancouver, Coquitlam and Richmond, the Mainland Chinese buyer is more open to all regions of Metro Vancouver.
Earlier this year, the Bosa Sovereign hotel-condo tower in Burnaby sold out in two days, largely due to the new Asian market. And last week, people began lining up in the rain on Wednesday for a shot at one of the Quintet luxury condo towers being built in Richmond City Centre. Organizers handed out blankets and WiFi cards so the 80 people in line could stay warm and watch the Canucks game while they waited for the sales office to open Saturday morning. The builder sold more than 270 suites that day, with 30 suites held back for a later release
Realtors looking to reap the rewards of this new market would do well to educate themselves on the specific needs of the new buyer, says Mr. Morrison, who's been in the business for 27 years. And to reap those rewards, the smart realtor will actively seek out these new buyers with target market strategies. It would be shortsighted to take a blanket marketing approach when it comes to the new buyers, he says.
"The difference between the Hong Kong Chinese and the Mainland Chinese market is immense," says Mr. Morrison. "We are dealing with a lot of people who have a lot of money for the first time. It's the first time some of them have been on an airplane. They buy a little slower than someone from Hong Kong, who's been here 20 years.
"There are so many levels and nuances within each market, you can miss out if you lump them together."
Landcor Data Corporation compiles B.C.'s most comprehensive real estate statistics. President Rudy Nielsen had long known that Mainland China was driving the Vancouver market, but he had yet to prove it with numbers. In Landcor's first-quarter 2011 residential sales summary, one of Landcor's senior analysts, from Anhui province in China, examined luxury sales in Richmond and Vancouver's west side, and identified the number of buyers with Chinese names. The analyst found that in 2010, more than 74 per cent of buyers were most likely from Mainland China. It's imperfect methodology, but it at least lends some statistical support to a trend that has so far been based on anecdotal information.
"Yes, the realtors are correct," Mr. Nielsen concludes in his report. "China is coming and it likes what it sees.
"They're arriving with fortunes intact, especially in the Lower Mainland, eagerly buying their own bits of the good life and helping buoy up real estate prices."
Many do not want to live in the condos or even rent them out, say the realtors interviewed for this story. They want to have a safe haven for their investment in desirable Canadian cities, in a country that is economically and politically stable.
"You could almost say it's a 'land bank,'" says Mr. Morrison.
The Chinese are attracted to Vancouver, but Toronto has its enticements too. Vancouver marketer Cam Good recently helped sell out an Etobicoke development called Westlake, which, he says, was largely snapped up by Mainland Chinese buyers. Mr. Good has taken his marketing strategy one step further. He says he's the only Canadian realtor to open offices in Beijing and Hong Kong, directly marketing projects in White Rock, Squamish, and the Toronto area to Chinese buyers who want to protect their new found wealth by tying it up in Canadian real estate.
By opening offices in Hong Kong and China, Mr. Good aims to beat his competition to the source.
"In China, it's relationship based. The North American market makes buying decisions by looking for specialists, like appraisers, inspectors, realtors, whereas a Chinese person is more likely to make buying decisions based on trust," says Mr. Good.
Simeon Garratt heads up the Hong Kong office. He usually lives in Vancouver, but was raised in China and speaks Mandarin and some Cantonese. Mr. Garratt understands not just the language, but also the culture. Canadian real estate is simply a better deal.
"If you look at the cost per square foot here, it's a bargain to buy here in Vancouver," said Mr. Garratt, prior to leaving for Hong Kong.
"I mean in Beijing, you are going to pay over $1,000 a square foot for anything nice. And that price is top end in Vancouver, for the best you can get."
Dan Scarrow, vice president of corporate strategy for Vancouver-based Macdonald Realty, believes that an office based in Asia is more useful for getting listings than selling condos.
"Having an office there is more a ploy to get listings with developers," says Mr. Scarrow, who speaks Mandarin. "You are not going to sell many units in China. The Chinese are like any other buyer. They need to see the project to buy it."
He also believes that the new Chinese buyer is fuelling the Vancouver market because they believe in the appreciation of real estate.
"A large number of Chinese people who've come over recently, their experience with capitalism is that everything goes up forever, because it has for the last 20 years in China, so they have that mentality. "
Special to The Globe and Mail