Real Estate values are driven by supply & demand. The most potent drivers of real estate demand are population growth & economic growth. Vancouver & the Lower Mainland, with its limited, even fixed, supply of land, responds to these forces directly & quickly.
In 21st century Canada, population growth & economic growth are inextricably linked to immigration trends & legislation, particularly in B.C. & the Lower Mainland. At a recent REBGV seminar, Richard & Heather Bell of Bell Alliance Lawyers, a Vancouver firm specializing in Real Estate, Business & Immigration Law, presented a detailed & encouraging outline of the latest Immigration legislation, & how that might affect Real Estate in Vancouver.
Canada’s immigration profile has changed a great deal over a generation. In 1970, the top 5 Immigration Source countries were: #1 United Kingdom, #2 USA, #3 West Indies, #4 Italy & #5 Portugal. In 2012, the top 5 Immigration Source countries were #1 China, #2 Philippines, #3 India, #4 Pakistan, & #5 USA. The Philippines & Pakistan were not in 1970’s top 10, & China & India rose from #9 & #8 respectively. Of these, a larger % of immigrants are going West to B.C. & Alberta, & the immigration demographic is now 60% Economic Class & 25% Family Class vs. 35% Economic Class & 45% Family Class 30 years ago. Over 250,000 immigrants become permanent residents & over 150,000 foreign workers come to Canada every year. Currently, over 20% of Canada’s population is foreign born, & that is to increase to 28% by 2031.
Canada’s immigration policies & programs have changed more in the past 5 years than in the previous 20 years. The intent of these changes is aimed at ensuring that new immigrants will enhance the economy & future of the country by meeting specified business & labour/skills requirements, & require that they are also able to function & integrate into Canada’s socio-economic fabric upon arrival.
The new Bill C-24 Citizenship Act has become law, & this Act strengthens Canadian citizenship by making it more difficult to acquire. The new law lengthens the residency requirement (requiring physical residency 4 out 6 years), & asks for a statement of intent from would-be Canadians to make sure they actually plan to live in this country. Adult applicants must file Canadian income tax to be eligible, & applicants 14-64 years must complete language & knowledge tests.
Many of the prior economic & general immigration policies have been changed, or closed, & new programs have been announced or implemented. The “Old” Investor & Entrepreneur program has been terminated. Speculation that this would dampen property markets has subsided, as it appears that a new Immigrant Investor Pilot Program is imminent. The new program may stipulate investment amounts in the $2-$5 million range, & require that the investments be “active” & at risk. The focus of this program encourages venture capital enterprises, & may resemble programs in the US & Australia.
A new “Express Entry” Program is coming in 2015, making the Economic Class Application into a 2 step process: 1. Applications go into a pool with other candidates, & 2. The Federal Government invites highest ranked applicants - those judged to have best chance of success, & those with valid job offers - to apply for permanent residency. Those eligible under Canadian Experience Class, Federal Skilled Workers or Federal Skilled Trades will qualify for this program, as will those nominated under the BC Provincial Nominee Program. This program promises shorter processing times, approximately 6 months & favours applicants who are young, educated, experienced & who have language proficiency.
For Business candidates, the Express Entry and BC Provincial Nominee Programs take approximately 2 years for approvals, so these applicants may be better served under the new Investor Pilot Program. OR, they can take advantage of the Intra-Company Transferee Startup Program which allows foreign businesses starting a branch subsidiary in Canada to transfer its key employees (executives, senior management, specialized knowledge workers) to set up the Canadian business. Once in Canada, these companies are expected to open offices, establish the working business, & create jobs. This program offers faster processing times, & the approved individuals are provided a work permit for 1 year (with possible extension) & options for permanent residency once in Canada & operating the business.
In spite of current emphasis on attracting & admitting high functioning & economically qualified immigrants, Canada’s immigration policy is not all business, & there are over 60 different ways that people can apply to come to Canada. This is a good thing, as Government figures show that net growth in Canada is only coming from immigration.
The impact of these policies are very significant to BC. Over the next 10 years, the Province will have one million job openings, with 1/3 of these openings expected to be filled by immigrants. Some of this will come from an increase of Business immigrants providing active investment in BC’s economy, & some will come from the addition of immigrants with technical and trade skills, international graduates, and young workers - all who will arrive job ready, with English language proficiency. For Real Estate, the impact will be pronounced, as the immigrant demographic has a strong tendency to purchase homes and properties - often within a very short time after arriving in the country. This combination of population increase with employment & investment growth will have a profound multiplier effect on local markets, as it leverages & expands residential & commercial/industrial development. This in turn will raise the level of economic activity across all sectors of local economies, & be truly an engine of prosperity. Lower Mainland & Vancouver real estate owners & investors will continue to benefit & profit from the resulting demand, growth, & innovation.
If you are looking to sell or buy real estate or wish to discuss further any topic on Real Estate, please call Bob Bracken at 604-220-2035 or 604-263-2823.