When you cross over the Granville Street Bridge that winds into downtown Vancouver, you’d be forgiven for thinking you’re in Hong Kong. The skyline has the same ribbon of gleaming apartment towers hugging the waterfront, and similar mountains in the distance.
There is also an unabashed display of wealth, readily apparent in the city’s Kitsilano neighborhood. Within a few short blocks, you can find dealerships for some of the world’s most expensive cars: Lamborghini, Ferrari, Rolls-Royce and Aston Martin, among others.
At the front of the McLaren showroom are four sleek, high-performance sports cars, known as supercars. Wilson Ng, an account manager with McLaren Automotive, gently runs his hand over one of the 570GT models. “They’re starting around $200,000 to up to $250,000 to $300,000,” he says, up to about $222,000 in U.S. dollars.
That’s for one of the cheaper models in this showroom. The most expensive runs about CA$1 million ($740,587) — the Vancouver showroom sold six last year. Ng says there’s a big market in Vancouver. Most customers are foreign.
“There is a large amount of Asian [supercar buyers], including mainland China, Taiwan, Hong Kong, East India, Singapore … so a lot of foreign money,” he says.
Ng says the supercar market in Vancouver started to really take off around 2010, when China’s economy was red-hot. Wealthy Asian immigrants and investors also started buying up businesses and property in the city. The result has been a real estate market now out of reach for many residents, something that is straining the city’s reputation for welcoming newcomers.
A magnet for immigrants
Marianne Wu first came from China to Vancouver as a student seven years ago and now works in marketing and translating. The 27-year-old says she loves the city, just received her permanent residency card and bought a two-bedroom condo downtown.
“You know, people really want to own something because that’s where their security comes from,” she says. Owning property is deeply rooted in Chinese culture, she says, but the government in Beijing doesn’t allow people to own the land their homes are built on.
Wu says her family back in China helped her buy a home in Vancouver. “They push me to buy a property here,” she says. “They want me to have a stable life, which everybody wants.”
Vancouver has long been a magnet for immigrants from all over the world. It is one of Canada’s most diverse cities and prides itself on its multiculturalism. Immigrants began arriving from China in the late 1800s, when laborers came to help build the trans-Canada railway. Shortly after its completion, Canada began cracking down on Chinese immigrants, and banned most of them in the early 1920s.
Half a century later, those policies changed and Canada began encouraging Chinese professionals and entrepreneurs to come. About 20% of Vancouver’s population now identifies as ethnic Chinese.
The Chinese community has made a positive contribution to Vancouver, says Henry Yu, a historian at the University of British Columbia.
“You’ll see hospital wings, you’ll see at UBC, the Chan Centre for [the] Performing Arts. There are Chinese names on all of the institutions of arts and culture,” he says.
Yu says there was a surge of Chinese immigrants and investment in the Vancouver region in the 1990s, when there was concern over what would happen in 1997, the year Britain handed sovereignty of Hong Kong back to China.
“A lot of Hong Kong Chinese began to look into possibilities for getting Canadian citizenship,” he says. “Canada actually embraced that and said we’re gonna encourage these people to come because we want these energetic, ambitious and sharp people to come.”
Over the past decade, money from mainland China has been flooding into Vancouver, says Andy Yan, an urban studies adjunct professor at Simon Fraser University in Vancouver. Wealthy people in mainland China are worried about the future, he says, and Vancouver is seen as a good place to park money, often anonymously.
“It’s actually the desire for safe haven … where you are looking for a hedge against political, economic, social insecurity, and I think, increasingly, climate change,” he says. “And I think you’re coming to a place like Vancouver because it’s safer.”
The presence of organized crime
But in 2017, Canadian authorities uncovered a massive money laundering operation that has raised concerns about that flow of money from China.
The epicenter of the illegal operation was the River Rock Casino in the Vancouver suburb of Richmond, where more than half the population is Chinese. River Rock Casino is an enormous resort with restaurants, a hotel and big-name entertainment.
Peter German, a former deputy commissioner of the Royal Canadian Mounted Police, was commissioned by British Columbia’s attorney general to look into money laundering at Red Rock and other casinos.
Casinos have “produced a lot of revenue for the provincial government,” German tells NPR. “But over a number of years, it had also become a very comfortable place for organized crime to launder its money.”
German found an underground banking system was used to help wealthy Chinese individuals funnel money from China to Vancouver. It would transit through the casinos.
“We have video and many instances of people walking into casinos with bags, duffel bags, of cash, $20 bills,” he says. In some cases, people were carrying up to half-a-million Canadian dollars at a time. Those bills would be turned into gambling chips that could be cashed out afterward.
“People from China were able to get their money in Vancouver, pick it up and then do what they want with it,” he says.
German found that more than CA$7 billion ($5.18 billion) was laundered in British Columbia in 2018. Some of the laundered money flowed into the illegal drug trade, some into luxury cars. More than CA$5 billion ($3.7 billion) was laundered through the real estate market and led to a 5% increase in housing costs.
A real estate spending spree
Yan says for more than a decade, wealthy Chinese buyers have been on a spending spree, scooping up houses, condos and apartment blocks throughout the greater Vancouver area. This has driven up prices and added to a run on the city’s housing stock.
Chinese buyers accounted for one-third of the CA$38 billion ($28.1 billion) of residential home sales in Vancouver in 2015, according to the National Bank of Canada.
Vancouver’s real estate prices are the third-highest throughout the U.S. and Canada, Yan says, after the San Francisco/Oakland/Hayward metropolitan area and Silicon Valley’s San Jose/Sunnyvale/Santa Clara area. He says those two areas claim the top spots in terms of income, but Vancouver falls well behind — it’s No. 50.
Canadian media has reported that Chinese college students own multimillion- dollar homes, and about 10% of those who own real estate in Vancouver don’t live in Canada — an issue spotlighted over the winter, when Canadian authorities arrested Meng Wanzhou, the chief financial officer of Chinese tech giant Huawei. Meng was arrested for other reasons, but owns two homes in Vancouver worth more than CA$22 million ($16.3 million), and visits them irregularly.
Such reports have led to a growing resentment among Vancouver residents like Brittany Davis, who feel priced out of the market. Davis and her husband recently moved back to Vancouver after living in the U.S. They are struggling with the high housing prices, she explained while walking her collie, Bella, on the city’s popular Vancouver Island. They can barely afford to rent their apartment.
Davis says it’s frustrating when foreign investors buy up homes but don’t even live in them.
“Even where we live, I’ve seen apartments that are just, you know, nobody’s there — vacant,” she says. “You can walk around and see just empty houses.”
Canada’s federal and provincial governments recently tried to stabilize the Vancouver area’s real estate market by adding new taxes, including a vacancy tax, for foreign buyers.
That smacks of racism to Kevin Huang, founder of the Hua Foundation, a nonprofit community development organization.
He says undoubtedly some wealthy ethnic Chinese people see Vancouver as only an investment. “However,” he says, “there are a lot of folks [from China] that are wanting to integrate, wanting to find jobs and wanting to contribute.”
British Columbia Attorney General David Eby tells NPR it’s difficult to discuss raising taxes for foreigners because it can “quickly transition into talk of discrimination, talk of racism.” But he says Canada’s tax system just wasn’t keeping up with reality.
“Really,” he says, “this is a recognition this [is] a modern society, there’s a bunch of people moving in and out. They can earn money anywhere in the world and buy property here. And we need to take steps to make sure that people who are working and living here are at least on a level playing field with people who are earning money somewhere else and bring it in.”
That strategy may be having an effect. Chinese investment in commercial property in Vancouver dropped by about a third in 2018 over the previous two years, according to the commercial real estate firm CBRE Ltd.