(Liberal Chinese rules & new Investment Immigration program boost hopes)

2015 is expected to be a path breaking year for outbound Chinese investments to different parts of the world. A wide range of assets like hotels, golf courses, resorts, and even small businesses are on the radar of foreign investors from China.

Reports by international law experts indicates that non-financial sector offshore investments from China exceeded US$90 billion in 2013 and crossed $20 billion in just the first three months of 2014. The pace of Chinese investments into attractive investment destinations is set to increase after China liberalized its offshore-investment regulations in 2014.

Under the new rules, deals valued under $300 million will not require the previously-mandatory approval from Chinese regulators. The change, introduced in April 2014, has made it easier for Chinese citizens to purchase assets in other countries.

Along with popular investment destinations like London in the UK and New York and Los Angeles in the USA, Vancouver in Canada is expected to witness a significant rise in investments from China. Experts anticipate a huge rise in demand for commercial real estate in Vancouver and other parts of British Columbia in 2015.

In March 2014, a immigrant from China purchased the Sechelt Golf & Country Club with the intention of investing an additional $20 million to add improvements including a new hotel at the site. A marine resort at a 43-acre island off the coast of Pender Harbor was lapped up by Chinese investors who also purchased a movie theatre. Further, Chinese investors have shown interest in a multifamily development site in Gibsons in British Columbia.

Off-shore investments from China included the sale of an Okanagan lakeside resort and an equestrian centre in Langley. Investors from China are also supporting a $50 million Nanaimo hotel project.

In Vancouver, the 120-room Best Western Sands Hotel was sold to a company with Asian investment backing for a sum in excess of $30 million. This purchase is in addition to purchase of full stake in the Days Inn and a partial stake in hotel-condos in the Westin Grand hotel. All properties are situated in Vancouver.

An immigrant who was born in China with homes in Hong Kong and Vancouver invested in a 234-acre land parcel near Port Moody and Anmore in the southeastern part of Vancouver through a Vancouver-based company. This deal, amongst all other deals, indicates how offshore buyers from China are increasingly investing in real estate in and around Vancouver. Unlike the past, investors are pumping in more capital and are not afraid of participating in complex large-scale projects.

Real estate brokerages in Vancouver are seeing a significant rise in deals finalized by offshore buyers from Canada. Experts point out that the recent fall in the value of the Canadian dollar is likely to give additional fillip to inflow of offshore investments.

Along with good return on capital invested, the lifestyle offered by British Columbia is an added attraction for foreign investors. The buyer of the Sechelt Golf and Country Club pointed out that his investment decision was not motivated solely by the desire to make profit. He said that the quality of life offered by the province, the natural beauty of the place, and the benefits of leading a retired life in such a destination contributed to his investment decision.

An additional factor other than the liberalization of norms in China that has boosted investment in B.C is the new Provincial Nominee Program introduced by B.C’s administration. This is serving as a local trigger for the investment surge in the province. The PNP offers faster clearance of permanent residency permits for immigrants purchasing a business in the province.

The minimum investment requirements are $400,000 for entrepreneurs and $200,000 for regional entrepreneurs. The latter involves making investments outside in regions other than the Metro Vancouver and Abbotsford.

According to service providers assisting such investors, there is steady and sustained demand for the PNP, which is leading to increase in transactions involving purchase of local businesses. Such service providers work with business brokers in the province to identify attractive investment destinations for foreign investors from all over the world, especially from China.

According to such service providers, investors are keen on buying manufacturing companies with special preference towards industries in plastic, clothing, food and hospitality, and automobile sectors. Even retail stores and small hotels and motels are in demand, with the final choice depending on the personal work experience of the investor. Investors tend to avoid businesses with a big real estate component as this often involves a big down payment.

The PNP is also attractive foreign investment in areas beyond Vancouver and Abbotsford. Such transactions involve purchase of businesses from retiring owners. This has led to transactions for purchase of movie theatres and small service businesses in the interior parts of B.C.

Attorney Colin Singer Commentary:

The influx of business immigrants from China exceeds annual levels for such programs and places ongoing limitations to Provincial Nominee Programs across Canada.  Currently, only Quebec places specific quotas on a territorial basis to manage inventory.  Provinces offering investment based immigration programs need to consider the use of caps and quotas to manage inventory and preserve program integrity.