"This Is A Ridiculous Joke" - An Abandoned, Rotting Vancouver House Is Listed For $7.2 Million

One month ago, we wrote about the curious story of several Vancouver homes which sold in 2011 to Chinese buyers for millions and dollars, and which had since been left completely abandoned, vacant and rotting. As Postmedia News first reported that the home — in the 4100-block West 8th Avenue, bought for $4.6 million in July 2011 by Huaican Ren and his wife Xuepei Sun, was subject to a City of Vancouver "untidy premises" order.

A quick reminder for those new to the story:

The Point Grey property stopped functioning as a home and became a storage of wealth six years ago, according to property documents and a neighbour’s account.

 

It was well-cared for in 2010 when it was sold to an investor. Since then it has been flipped through a property transfer in a Beijing law office and left unoccupied.

 

Current owners of the other vacant property residing on the 4100-block 8th Avenue West home are Huaican Ren and Xue Pei Sun.  Since the purchase, the current "owners" have not been seen. Huaican Ren is founder of a number of China-based companies with interests in real estate development, as well as gemstones, retailing, tourism, and restaurants. His wife is a shareholder in companies.

 

City hall is currently trying to estimate how many Vancouver homes are vacant. And these online communities are anecdotally gathering photo evidence and coming to conclusions that offshore investment is to blame. In other words, the "Chinese."

The property, because "house" is too generous a word, in question - located on the 4100-block West 8th Avenue in Vancouver - is shown below:

 

According to the Global Real Estate Institute, Huaican Ren is chairman of Kunming North Star Enterprise Company Limited and is among “the world’s leading real estate players.”  According to other sources, he is the "founder of a number of China-based companies with interests in real estate development, as well as gemstones, retailing, tourism, and restaurants."

Whatever his profession may be (or was) one thing is certain: he is long gone. 

The Chinese businessman aka "launderer of hot money into Canadian real estate" and his wife also own a $3.57-million Arbutus Ridge home that also appeared to be vacant. The Province attended the Arbutus Ridge home last week seeking to speak to Huaican Ren for this story, and attempted to reach Huaican Ren through the listing brokerage for the Point Grey home. No one answered the door at the Arbutus Ridge home.

What is fascinating is the history of flips involving just this one home, and involving Chinese "investors: Huaican Ren, then listed as “businessman,” and his wife Xue Pei Sun, “homemaker,” bought the home from Wei Min Zhang in July 2011 for $4.6 million.  Wei Min Zhang in turn had bought the home in July 2010 for $3.35 million.

And it is about to be flipped again: according to Sam Cooper of PostMedia news, the vacant, rotting, "ownerless" $6.2-million home is on the market again. For $7.2 million!

While we don't know who the seller is - after all the official owner appears to have disappeared - we have no doubt it will be sold: recall this chart of Vancouver real estate prices, which incidentally is the best indicator of China's capital outflow problem:

We are sad to say that this "abandoned, rotting" house will sell, and almost certainly above asking. At that point we can begin counting down the days until the new owner (Chinese, of course) will likewise disappear. We explained this odd dynamic a month ago:

What is happening is quite simple:

  • Chinese investors smuggled out millions in embezzled cash, hot money or perfectly legal funds, bypassing the $50,000/year limit in legal capital outflows.
  • They make "all cash" purchases, usually sight unseen, using third parties intermediaries to preserve their anonymity, or directly in perso, in cities like Vancouver, New York, London or San Francisco.
  • The house becomes a new "Swiss bank account", providing the promise of an anonymous store of value and retaining the cash equivalent value of the original capital outflow.
  • Then the owners disappear, never to be heard from or seen again.

We also said that "as more Chinese scramble to engage and repeat if only the first three steps, the price of local housing, which is merely a store of value to price indiscriminate foreign buyers, soars while it makes home purchases for the domestic population prohibitively expensive and virtually impossible."

For its part, the local government has no incentive to stop this recycling of real estate: after all the higher the price, and the more the "flips", the greater the taxes collected.

We do, however, express our condolences to the local population which not only can not afford to chase these ridiculous bids ever higher, but is left out in the cold... literally.

It remains to be seen how much longer such Chinese house flipping will continue, because the natives are getting restless, and also angry. 

As we reported earlier this week, when we brought readers the story of another Vancouver shack selling for hundreds of thousands of dollars above asking, everyone involved in these kinds of transactions can not believe what is going on, starting with the real estate agent, who was incredulous. "For it to go over $4 million is remarkable. I had five offers,” he said. “These were local buyers just looking to make a shift who wanted to move into this area."

Thomas Davidoff with UBC’s Sauder School of Business told Vancity Buzz: "These prices are getting pretty freaking nuts in my opinion." 

As a proposition for someone who’s going to live in that house and what you’re getting for four million plus – that is a ridiculous joke and that is not something that’s going to work for people who just make a living in Vancouver," Davidoff says.

We can't wait to learn the reaction of the people who "make a living " in Vancouver when they learn that this "rotting, abandoned" sheck is about to sell above its $7.2 million asking price.

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