Metro Vancouver real estate developers need to lean-in on understanding the needs of the rising immigrant investor class - a key to attracting capital for future development.
Stats Canada recently released "A Profile of Residential Real Estate Investors in 2020," which objectively stated several facts regarding active investors in the Canadian real estate market.
This article serves as a follow-up to another report released in February 2023, highlighting the share of properties used as investments across five provinces in Canada. The study was undertaken in response to a growing concern about the role of residential real estate investors in Canada.
The word "investor," in most cases, has been associated with a negative connotation when used in the context of local real estate. It has been described as a group of individuals who seize housing opportunities from first-time homebuyers and end-users who are unable to enter the market.
However, there is the other side of the equation that can argue that these investors are a solution to the lack of available supply in the market, which ultimately drives up prices. These investors are a key source of capital that contributes to the private development of much-needed housing that has not been delivered in any other way.
Focusing on Metro Vancouver, the majority of new housing is supplied through the construction of new condominiums. In order for these new developments to break ground, the developer is reliant on investors and other purchasers to commit a sizeable deposit in order to meet their capital requirements from their lenders. These investors play a very important role in the creation of new housing, which is rarely talked about. Without these parties, the cranes you see today that will ultimately add to the rental pool would never be brought to market.
The article released by Statistics Canada went on to describe how established immigrants—those who landed before 2010—comprised a higher share of investors than their share of the provincial populations.
As an example, the launch of a new condo development in Surrey or Burnaby can objectively attest to the aforementioned statement. Whether they are South Asian, Chinese, Filipino, etc. purchasers, these established immigrants are closer to the source of the next wave of immigrants that will fuel demand for years to come.
What needs to be understood by locals is the value that land and property holds for these immigrants. Speaking on behalf of South Asians, owning real estate brings families a sense of security and comfort required for them to live a fulfilling life. These are also groups that may not be as in tune with other favorable North American investment vehicles, such as stocks, bonds or GICs. Real estate is their investment of choice. These people are willing to invest their hard-earned money into the local markets, using the knowledge they have on hand to support their investment thesis. This knowledge comes from conversations they're having with family and friends back home who are planning to migrate to Canada. We should consider ourselves fortunate that these groups have chosen Canada as their destination of choice.
Moving forward, developers and marketers should further focus on the knowledge of this investor subgroup, as they can offer valuable insights into the next wave of development that future Metro Vancouver residents will seek. Whether it be lock-off suites in condos for the elders, or amenities that provide creative spaces for their children to study, understanding the needs of these subgroups is crucial.
The optimistic nature of these established immigrants is an amazing addition to our local communities. These are people who seek better opportunities for their children, emphasizing the importance of education and the pursuit of the Canadian dream.
- Immigrants now represent nearly 1 in 4 people in Canada, and based on Statistics Canada's recent population projections, immigrants could represent from 29.1% to 34.0% of the population of Canada by 2041.
- "For the first time, India took the top spot as the primary place of birth of new immigrants to Canada (18.6% of recent immigrants from 2016 to 2021), followed by the Philippines (11.4%) and China (8.9%). The last time that such a high proportion of immigrants came from a single place of birth was during the 1971 Census, when 20.9% of all recent immigrants came from the United Kingdom."
- Vancouver had the second-largest proportion of immigrants, at 41.8%. Within the large urban centre of Vancouver, immigrants accounted for three-fifths (60.3%) of the population of Richmond and half (50.4%) of Burnaby's population.