By Elizabeth Dilts and Julie Gordon
VANCOUVER, Oct 14 (Reuters) - At a luxury car dealership in
Vancouver, a 19-year-old college student recently traded in his
2014 Ferrari for a 2016 Bentley that cost C$350,000 ($268,446).
MCL Motor Cars Manager Scott Warren says the teen was his
typical customer: young, Chinese and eager to swap a relatively
new car for an even newer, trendier model.
"They don't mind taking a C$75,000 hit," he said, noting
that some brand-sensitive teens change cars every few months.
"They just trade them in and dad puts the money in their
account."
While Vancouver is often called the gateway to Asia and has
been a top destination for wealthy Chinese immigrants for some
time, the boon for luxury retailers this year is particularly
noteworthy given the summer plunge in the Chinese stock market
and President Xi Jinping's campaign against corruption.
The crackdown, which has included Chinese demands that
Canada arrest and deport former Chinese officials accused of
corruption, has had no apparent impact on demand for everything
from C$350,000 Bentleys to C$3,000 bottles of wine.
But cracks could be starting to show. Detached home sales
volumes in the city of Vancouver fell 41 percent from June to
September, with listings down just 3 percent, the largest drop
in sales for that period since 2008.
Real estate agent Tom Gradecak, who sells on Vancouver's
affluent westside, says it "feels" like the market has slowed,
but prices have not dropped yet.
"It could be the Chinese stock market - probably is - but it
could just be a bit of a breather from an insane first part of
the year," he said, adding that he just sold a home for
C$300,000 over the asking price with seven competing offers.
Yet business remains so brisk at car dealerships that
sportscar-maker McLaren has a third-party financier on hand at
its Vancouver location to provide loans to young Chinese clients
who may lack a Canadian credit history.
At MCL, Warren said the dealership expects to sell 70
Bentleys this year, about the same as the Toronto store despite
Vancouver having roughly a third of the population, noting the
brand is popular for its mix of luxury and performance.
"It's amazing the amount of 16- to 24-year-old kids with 500
horsepower under the hood of their cars in this city," he added
with a laugh. The Bentley Flying Spur W12's engine clocks in at
616 horsepower, triple the power of a typical Toyota Camry.
But the ostentatious displays of wealth by Chinese
immigrants have created tension in Vancouver, a city known for
its eco-friendliness and yoga culture.
A blog called "University of Beautiful Cars," a play on the
University of British Columbia, posts photos of luxury vehicles
parked on campus with snarky comments like "struggling Vancouver
student needs new Porsche."
And there has been backlash from faculty and students who
say they cannot afford to live on the leafy campus due to high
price of condos on University land, which start at more than
C$400,000 for small units and are heavily marketed in China.
Indeed, foreign buyers are widely blamed by locals for the
stratospheric rise in housing costs in Vancouver, where the
median condo sold for C$495,866 in September and detached home
demanded C$2.02 million, up 60 percent from September 2010.
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STOCKING THE WINE CELLAR
Wealthy mainland Chinese started streaming into Vancouver
around 2005, many entering on the now defunct millionaire visa
program, which fast-tracked visas for foreigners with a net
worth of at least C$1.6 million and C$800,000 to invest.
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From 2005 to 2010, the program attracted more than 57,000
wealthy individuals to Canada, with about 30,000 arriving in
British Columbia. Research has shown that many of those who
landed elsewhere quickly moved to the west coast province,
attracted by Vancouver's top-ranked schools, pristine
environment, and long-established Asian community.
The influx helped to attract upscale department stores like
Nordstrom Inc (N:JWN) JWN.N and high-end retailer Simons, and fuel the
expansion of luxury department store Holt Renfrew.
Nancy Bendtsen, co-owner of contemporary furniture design
store Inform Interiors, said the surge in business from
Chinese-speaking clients has helped the business expand into a
second location and hire new staff, including four Mandarin
speakers.
"I've done million-dollar deals with nothing but hand
signals," said Bendtsen, laughing off the language barriers she
still occasionally encounters.
Bendtsen said her clients, frequently women whose husbands
remain in China, hire Inform to outfit entire homes in
Vancouver, China and around the world.
The desire for all things luxurious is not limited to cars,
clothes and home furnishings. At the state-owned liquor store's
2012 Bordeaux launch earlier this month, more than 200 people -
most of them speaking Mandarin - lined up to get first pick of
the most exclusive bottles of the famous French wine.
One woman, who did not identify herself, was frantically
searching the crates for numerous expensive bottles and ended up
buying nearly C$19,000 worth of wine.
Another woman, who gave her name as Vivian, came armed with
a list of requests from her husband, who spends most of his time
working abroad but maintains a wine cellar in their Vancouver
home for when he visits.
"I don't know anything about wine," she said, gesturing to
her selection of bottles. "My husband picked it up as a hobby."
Peter Wang, a Vancouver-based wine consultant who came with
a newcomer couple from mainland China, said his friends had
spent the night in line to ensure they would be able to get a
rare $2,800 Chateau Petrus and a $1,200 bottle of Chateau Lafite
Rothschild, both from the Pomerol region of France.
"It's a great year for Pomerols," he said, lugging three
cases of the C$65-a-bottle Chateau Rouget to the cash register.
"There are some real good values in this vintage."
($1 = 1.3038 Canadian dollars)