A potential injection of foreign money

Should investors prepare for more competition from overseas?

Stock market volatility in China may encourage some nationals to park their money in Canadian real estate.

“When you are a saver in China and you see that your government is trying to make exports more competitive and creating more balance in the economy, it’s natural for you to say, ‘Oh my God, I need to get my savings out and protect my family,’” Derek Holt, vice president with Scotiabank Economics told the Vancouver Sun.. “And I think it’s that rush-for-the-exits, the large pickups in capital flows out of China, that’s indicative of what’s happening.”

Beijing further devalued its currency by 0.51% on Thursday. That could entice its wealthier citizens to look to healthier markets to place their money. And Canadian real estate – especially in Vancouver and Toronto – is one of those places.

“Canadian real estate ... because our own currency has depreciated so much ... that has put Canadian assets on sale from the vantage point of, say, Asian investors,” Holt said. “If we judge Vancouver and Toronto in that context, it’s not cheap for us here in Canada … but in the context of other Pacific-Rim cities like San Francisco or Singapore, and given our currency depreciation and what you can buy cashing in on foreign currencies, we look pretty cheap right now.”

The Canadian government is unsure just how much influence foreign investment has on real estate markets, but many industry players argue prices in Canada’s two major markets are being inflated by foreign money, especially Chinese money.

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