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CMHC Helps Build Another Vancouver…In Beijing. Ironically, It’s Also Half Empty

CMHC Helps Build Another Vancouver...In Beijing. Ironically, It’s Also Half Empty
9 Comments

Turns out China does have a bit of a thing for Vancouver’s single family detached homes. In fact, one developer in Beijing thought Chinese buyers like them so much, they decided to build their own replica of Vancouver in China. It was such a good idea, that the Canada Mortgage and Housing Corporation (CMHC) even pitched in a little assistance. The ironic part? Much like the Canadian Vancouver, empty homes are becoming a problem, and owners have even begun selling properties for a loss.

Vancouver Forest, Beijing

The luxury development was built and marketed as a complex resembling Vancouver, Canada. It consists of 900 luxury detached single-family homes, sprawling across 55 hectares – all in the Arts and Craft, and Tudor styles you’d expect to find in Shaughnessy, Vancouver. It’s extremely green for Beijing, and built on a plot of old growth forest to make it look more like Vancouver. As crazy as it sounds, the homes 30 minutes north of the airport are really popular. According to the urban planner, properties sold out “overnight” with an average price of CA$3 million.

The Houses That CMHC Helped Build

One of the strangest things about this place is that the CMHC was involved with the construction. Yeah, the same CMHC that’s a Crown corporation designed to assist banks in lending Canadians money. Turns out they had a little known program designed to promote the export of Canadian home builders to the rest of the world.

If that sounds like the kind of business that doesn’t make sense for them, it seems like the Harper government agreed. The program was started in 1999, but it will be eliminated this year as “a part of the deficit reduction program.” It turns out it wasn’t just a terrible idea, it might have actually cost Canadians money to create jobs in China. Solid plan there.

It’s Empty…

Now here’s the strangest part. You know how everyone has been complaining that Vancouver homes are being purchased and left empty? It turns out this is happening in Vancouver, Beijing too. According to Paul Rosenau, the Canadian urban planner hired to help construct the development, “a lot of our projects sit 50 percent empty.”

Rosenau explained to the Globe and Mail’s Kerry Gold, “What’s interesting about the Chinese market is – and this is very different than here, very different than our culture – is people don’t really believe in putting their money into the bank. Anyone who has money, as soon as they have enough saved up, they buy a piece of real estate. These are middle- to upper-middle-class people.”

He further went on, “A lot of my friends in China, professional designers, someone like me, the boss of a [boutique] company like this one, they all own 15 or 20 apartments or houses. I have a friend who’s the equivalent of me in China, and he has about 20 pieces of real estate. I asked him, ‘Why do you keep buying property?’ He says, ‘how else would I invest my money?’.” Cool story bro.

The Listings

A quick peek at listings, and it looks like he’s right – a lot of these places were never occupied. We found 408 listings for homes in the development, which is kind of a lot considering the final release was less than 4 months ago. Despite being new, properties are already being sold as “urgent,” or listings claim the sellers are “losing money.” Not a hard to believe scenario since focus.cn, the real estate portal of the Chinese behemoth Sohu claims that the price per square foot has dropped almost 8% in the past 9 months. Not exactly how I “invest,” but I’m old fashioned that way.

Here are a couple of my favorite listings so far:

The “King Family” – ¥12,000,000 (CAD $2,309,502)

This massive five-bedroom, 5,000 sq ft. Tudor-style home is asking roughly CA$2,309,502. The listing photos appear to show that most rooms are unfinished, so the owners likely purchased this as an investment property. Unfortunately for them, they didn’t make a whole lot of money on it. According to the listing, “the owners lose money” on this sale.

Listing photos of the “King Family” home in Beijing China.

The “McMansion” – ¥11,500,000 (CA$2,225,120)

This four bedroom, four bathroom, is half the size at 2,443 sq. ft. – but still around the same price. The listing bills it as a luxury “McMansion,” with a price so low it’s “not to deceive you,” but to “attract you!” The honesty is refreshing. From the listing photos, it looks like the property hasn’t been lived in yet, since it’s a little raw looking.

Listing photos for the “McMansion” in Vancouver Forest, Beijing. 

So, what do you think? Is Beijing doing Vancouver better than Canada, or are the concrete replicas a sign of the excess speculation that’s currently consuming Vancouver, Canada. Leave your thoughts below.


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9 Comments

  • Reply
    Mike 2 weeks ago

    Are you sure that overgrown lawn isn’t from Vancouver, Canada? Seems all too familiar.

  • Reply
    Katy Nelson 2 weeks ago

    They’re really nice houses if they were finished. I’m surprised the builder hands them over in that state though, pretty unlikely to do that in Canada.

    • Reply
      Scott 2 weeks ago

      It’s very common in china to buy unfinished homes or apartments.. as they believe living in them devalues the property.

  • Reply
    Scott 2 weeks ago

    This Chinese real-estate fetish will end with a lot of tears around the world.

  • Reply
    André Asselin 2 weeks ago

    Thanks for writing this article. I used to be involved at CMHC with a few others in this program. As you said, the purpose of this program was to assist homebuilders to sell their products to the world. You could have also said that the program aimed to assist with the sale of building materials and homebuilding services of all kinds (architectural, engineering etc…) Your article is incorrect in suggesting that, through this program, Canadians “..might have actually cost Canadians money to create jobs in China.” In fact, when the program ended a few years ago, some $250 million of sales per year of products made or designed by Canadians were sold as a direct result of this program. The end purpose was to help create jobs in Canada by selling things made or designed in Canada and also build lasting business relationship benefiting private Canadian companies doing business in the U.S., China, Japan, South Korea, U.K., France, Germany and Russia…all with the goals of helping Canada’s housing product manufacturers, and building experts deepen and diversify their export around the world and create private sector jobs in Canada. The article is correct in stating that the program was terminated, in spite of the private business that it helped create in Canada.

    • Reply
      Dave 2 weeks ago

      In the article they linked to in the Globe and Mail, the urban planner hired says they built a Beijing office. Sounds like in this case they created more jobs in Beijing than in Canada.

      This government subsidy situation is crap. My business requires I make sustainable marketing decisions to grow, and take on new investors when I need to expand beyond what my working capital allows. All taxpayers shouldn’t have to line the pockets of a few choice people, that just happen to be the industry that makes the most donations to the political parties running.

      • Reply
        André Asselin 2 weeks ago

        Hey Dave; I would be very happy to tell you more about what we used to do to support companies entering new market areas. You like to characterize this work as “subsidies” to individual companies when often other companies were benefiting from the trail-blazing of those first to venture in new markets. I am sure that the Canadian architects that benefited from the work of this urban planner, for instance, are thankful for the business opportunities and the experience they gained. I can’t tell from your comments if your business is involved in exporting outside Canada. Entering new market is not an easy thing. Often times, there are networking as well as regulatory and other non-tarif barriers standing in the way…..that was CMHC’s main focus when it used to work with exporters…NOT to subsidize the cost of the housing built, and the program was always open to any new serious company considering exporting…And, yes, when a private company works in another country, it usually ends-up hiring local people as well as the cost of doing business…this doesn’t take away the fact that Chinese buyers ended-up paying for Canadian content…which, in the end, created jobs in Canada. Finally, the suggestion that somehow the private companies involved were involved in political donations is gratuitous and unfair. Anyway, no point arguing back and forth…if you wish to discuss this further, if you want to find out more about this, please let me know, I would then gladly send you my private email. Best. André

  • Reply
    Justin Thyme 2 weeks ago

    China has not yet fully realized a ‘rule of law’ constitution-based legal system. The State can still act arbitrarily, and without recourse to law. ‘Laws’ can just ‘disappear’ overnight. So, keeping your money in a bank account is not the best option. A bank book is not tangible. What was there in the account yesterday may not be there tomorrow. And the Chinese stock market is in its infancy. The Chinese are still waffling over the concept. How do you console ‘Marxism’ with ‘free market price fluctuations’? It is unfathomable in Marxist doctrine that the price of a stock can depend only on how much someone is willing to pay for it, not on its intrinsic worth.

    But land? It is very tangible. And so far, relatively immune from being confiscated. It is not the price rising or falling that matters, but that it IS. It EXISTS, in tangible form. Weather a house is worth $3 million or $4 million, someone can live in it just the same. The value of the house is NOT in how much someone is willing to pay for it, but in its utility.

    That’s why the Chinese are buying land in Canada, and leaving it vacant. Not because it might increase or decrease in price, but that it will always BE. It is something tangible, that also provides utility.

    It’s an OWNERSHIP thing, not an INVESTMENT thing.

    Even the value of jewelry is not inherent in its utility, but on the price someone is willing to pay for it. If no one wants to buy it, there is no inherent value. it can’t really be used. Same for stock.

    As long as you continue to try to understand them based on an American ‘supply-demand’ system where the value of something to the MARKET is determined by what someone is willing to pay, instead of the Marxist concept that the value of something to the INDIVIDUAL is based on its utility to that individual.

    Looked at another way, MY time only has value to ME, it has NO value to anyone else.

    • Reply
      Glynis Van Steen 3 days ago

      Thank you for your comments JT…I really appreciate your perspective on this issue. Just proves that everyone really needs to attempt to understand cultural differences. It might even help make a positive difference on investment strategies!

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