A broker more than doubling his Chinese foreign clients in the last year is challenging the belief that language is an insurmountable barrier to accessing those buyers, now reshaping the West Vancouver and Richmond markets. Still, some of them, he concedes, prefer to deal with brokers of the same background.
“I would say maybe because my face and my name are Chinese that may help – I’m sure that there are cases where buyer prefer to deal with someone of the same ethnicity ,” Wayne Mah, a broker with The Mortgage Centre - City Wide and 17-year veteran of the Vancouver market, told MortgageBrokerNews.ca. “I am aware of that perception out there among brokers, but I don’t believe that the broker who wants to enter this market should be discouraged by not being able to speak Mandarin. Language is not the impediment to this market that many think it is. I don’t speak Mandarin and the foreign investor class usually speak English.”
The encouragement comes as foreign investment, most often from Mainland China, reshapes the real estate market in some of the Lower Mainland’s toniest communities – central and West Vancouver and Richmond. Local real estate boards aren’t keeping stats on their influence, Gregory Klump, an economist for the Canadian Real Estate Association, told MortgageBrokerNews.ca. Still, both mortgage and real estate professionals are pegging purchases by Chinese foreign buyers at as high as 80 per cent to 87 per cent of deals in key neighbourhoods. They’re also driving up values to historic levels, the average price for a home in Vancouver now at $831,555 -- up 25.7 per cent from even a year ago. That may be conservative. Klump is pegging the average home price in Vancouver proper at about $1.2 million, a figure significantly skewed by the number of purchases at the high end of the scale.
Mortgage brokers servicing domestic clientele in those affected neighbourhoods are reporting a dramatic slowdown in originations this spring, deals, presumably going to foreign buyers. It’s a market many mortgage professionals view as virtually closed to brokers outside Vancouver’s Chinese community. Mah disagrees.
“Brokers have to re-market themselves to this particular segment of the market,” he said, “and have to understand the specific needs and cultural preferences of the Chinese investors – they’re looking for open-term mortgages, minimal down payments and a broker has to really understand the ins and outs of the few products on the market that meet those needs.”
Despite China’s move to a free-market economy, citizens face a tight currency exchange regime in trying to take money out of the country, most eligible to transfer as little as $50,000 at a time. While they find ways around those rules – often setting up offshore companies that own equity in their domestic business – many will need to access financing in Canada.
“But if the time is right, they want the option to pay off a million-dollar mortgage tomorrow – not a prepayment, but the whole thing.,” said Mah, whose high-value deals with foreign clients accounted for 25 per cent to 30 per cent of business in May – up from the 10 per cent to 15 per cent a year ago. “A broker has to understand that. They also have to understand the higher expectations clients will have for social interaction before, during and after the deal.” It's also a myth that all Chinese property investors are paying cash up front, he said.
Mah’s knowledge of their particular needs is now paying off. “It’s organic growth that I’d like to think I’ve attracted based on my 17 years in the business and being welcoming of immigrant buyers and knowledgeable about their challenges.”
It’s an investment real estate and mortgage professionals in and outside Vancouver’s Chinese community are now making.
“The fact is that many of the deals come to me through real estate agents, some of who don’t speak Mandarin and aren’t Chinese,” Mah told MortgageBrokerNews.ca. “So, they’re not just going directly to the bank. These clients will come to a broker once they’ve learned what one can do for them and based on their reputation and expertise.”