Event Report “Chinese-Canadian Connections: Investment in Real Estate”

On March 5, 2018, Synergy: Journal of Contemporary Asian Studies hosted a panel discussion featuring visiting Professor James McKellar and Professor Lynette Ong titled “Chinese-Canadian Connections: Investment in Real Estate” at the Asian Institute, Munk School of Global Affairs at the University of Toronto. Professor McKellar is the Director of the Brookfield Centre in Real Estate and Infrastructure at the York University Schulich School of Business. Professor Ong is an Associate Professor of Political Science at the University of Toronto and Director of Munk China Initiatives. Her research focuses on authoritarian politics and the political economy of development. The discussion was moderated by Gloria Liu, Editor-in-Chief of Synergy Journal. The main sponsor of this event was the Asian Institute.

Professor McKellar opened the discussion with detailed comments on the economics behind housing in Canada. He focused his discussion on a macroeconomic approach and looked at three main components: the difference between investment or income-producing property and private property, the context around investing as a whole, and Chinese real estate investment today and into the future. Professor McKellar prefaced his comments with the disclaimer that most of the evidence supporting his conclusions is anecdotal because hard data is accumulating but not available yet. He suggested as well that this lack of data makes many conclusions speculative and not authoritative. For context, Professor McKellar provided an outline of the historical record of overseas investment in Canada going back to European Union investments. Looking forward, there is a new regulatory machine taking effect on March 1, 2018 that will make Chinese investment more uncertain and cause Chinese and offshore real-estate investors to follow the well-worn path of retreat. This is likely to affect commercial real estate—investments of the past—more than housing.

Professor Ong adopted more of a policy approach and described internal Chinese policies and how they affect the housing market. The Chinese want to place their money elsewhere, and Canada is an ideal market for that. The Chinese Government is presently freezing assets in China as part of anti-corruption campaigns, and nimble Chinese investors are moving their assets in anticipation. Professor Ong described the housing crisis as a lack of supply, rather than a crisis of demand, meaning the city—aside from high-rises—is not expanding or building more housing. She commented that there are houses owned by Chinese investors that are not being lived in, and she echoed Professor McKellar’s comment that more information is required to underpin concrete claims and predict the effects of this type of investment moving forward. Real estate investment and ownership has several purposes and it is important in public policy debates to separate economics from nationalist or anti-foreign sentiment.

At the conclusion of the event, the panel discussed questions posed by the audience. One interesting question was about multicultural families where one parent is in China and one in Canada, and what effect this dynamic might have on the housing crisis. Another was a question regarding how Millennials are going to deal with this crisis. Professor McKellar raised the issue of intergenerational loans and suggested that we need to know more about them because they may be driving housing in Toronto. He also addressed home equity, specifically how much value typically sits in one’s home. Finally, Professor Ong discussed the sentimental and cultural aspects of housing and in particular, existing housing choices for Chinese investors.

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