Capsizing the Boat? The Tidal Wave of Chinese Real Estate Purchases on Prince Edward Island

I have a deep attachment to this place, and without apology or explanation, I wear the Island’s cultural heritage almost like a religious shroud.

But in a world that extolls the virtues of open borders, a global community, and the free movement of people and capital from one country to another, wanting to protect the integrity of a small traditional community is looked upon with great suspicion.

The few who dare to challenge Prince Edward Island’s present immigration policy are regarded as xenophobic nativists.

But how can it ever be wrong to identify strongly with a community and want to maintain and protect its character and values, or its economic wellbeing.

That is a question I have been asking myself as the current tidal wave of foreign investment washes over our tiny province, in the form of commercial and residential real estate acquisitions by Chinese immigrants.

Chinese are buying property abroad “like there is no tomorrow”, to quote the international real estate agency Juwai, and investments totalled $80 Billion last year alone, primarily in the United States, Canada, and Australia. Here in Canada, the hottest markets have been the major cities of Vancouver, Toronto, and Montreal.

But smaller markets like Prince Edward Island are also being exploited.

The infamous Provincial Nominee Program (PNP) opened the door for Chinese immigration to Prince Edward Island in the mid 1990s, and that immigration, with its cash investments, has escalated over the past few years.

A friend and neighbor in the tourism industry told me recently that a majority of businesses in the Cavendish area, including cottages, campgrounds, and restaurants, have been purchased by Chinese investors, and yet neither the industry nor government have reported this. Obviously, they believe that such a dramatic shift in commercial ownership is inconsequential, except for the immediate financial benefits that accrue to the sellers, their agents and lawyers.

I do find it more than a little strange and unsettling that the traditional heartland of our Island tourism industry, marketed for decades as the land of Anne, is now controlled by newly-arrived Chinese businessmen, many of whom are not committed to the province as permanent residents, and are here only to fulfill the conditions of Canadian citizenship.

Prince Edward Island is small in geography and population. Premier MacLauchlan likes to call us the “mighty Island”, and it is true that throughout history we have often punched above our weight as a jurisdiction.

And yet, the Island possesses finite natural resources and a small economy. Like a dory without much of a keel, our equilibrium is precarious and our tipping point easily reached. That equilibrium was threatened in the 1970s when big corporations and non-residents began to acquire large acreages of agricultural land in the province.

In 1975, two citizens of the United States, unhappy with the decision of government to deny them land, challenged provisions of our Real Property Act. However, the Supreme Court of Canada upheld the right of the province to regulate and control the ownership of land, and in 1982 the Conservative government of Premier J. Angus MacLean, brought in the historic Lands Protection Act.

That cornerstone legislation placed strict limits on non-resident and corporate land ownership, with the purpose of ensuring that our land remained primarily in the hands of Islanders, and under their control.

As a young public servant in 1980, I remember the feeling of urgency surrounding the Lands Protection Act, and many years later I would have the responsibility for its administration as Vice Chair of the Island Regulatory and Appeals Commission.

While the Lands Protection Act recognizes the vulnerability of our land resources, I believe it is now time to consider similar restrictions on the purchase of commercial and residential real estate in the province by immigrant investors who are here as temporary residents.

As real estate analyst Ben Myers wrote in the Huffington Post, short term investors, especially “highly-leveraged ones keen on flipping a property” after a short period of time, add volatility to the market.

The Ontario government recently imposed a 15 percent Non-Resident Speculation Tax on residential purchases by individuals “who are not citizens or permanent residents of Canada or by foreign corporations,” though refugees and nominees under the province’s Immigrant Nominee Program are exempt.

At the federal level, government through Investment Canada (formerly the Foreign Investment Review Agency or FIRA), reviews foreign acquisitions of Canadian corporations to ensure the interests of the people of Canada are being protected.

It is not unreasonable then for Prince Edward Island to carry out a similar review of residential and commercial real estate purchases by foreign nationals, and to begin regulating and controlling those purchases.

Prince Edward Island has always looked outward. We have welcomed newcomers for two centuries. We should continue to embrace new immigrants and refugees, especially individuals and families who are committed to living here permanently, and to making this place their home. We want their investment in energy, talent, and diversity.

But Islanders deserve an immigration policy that is focused on people and not on their bank accounts.

Without controls, I believe we could be approaching another tipping point, and though we are moored to the mainland by a concrete bridge, it will not keep us from capsizing.

We don’t need to be exploited as a temporary dumping station for money in flight from other countries. It causes both social and economic instability, drives up the price of property, and produces no long-term benefits for a small Island province.

 

One thought on “Capsizing the Boat? The Tidal Wave of Chinese Real Estate Purchases on Prince Edward Island

  1. Thanks for this article Allan. Some Canadian provinces require Business owners to be residents of Canada, or a certain number of the “directors” of an incorporated business to be residents – PEI doesn’t, so Chines businessmen can get Permanent residency to Canada through PNP just by buying a business, but actually have it be an active business on paper only and remain in China….and many are apparently doing that, fearing a crackdown by the Chinese government and wanting an “escape plan” for their families and their wealth. That should change. And I’d also like to see the provincial government set up a website which posts each and every new business and/or new business owner so we can see what’s happening in real time. Currently, there is no way of searching the Island Business Registry without first knowing the name of the business, the incorporation number, etc. and each query requires a separate step to type out a “captcha,” so you can’t find out how many businesses a given person owns, how many boards they are directors on, etc. Islanders should have full access to this information.

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