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When the provincial government announced in July a new 15-percent tax for foreign investors buying real estate in Metro Vancouver, it was met with nearly universal public approval. But while likely a political win for the BC Liberals ahead of next year’s election, was it a good move for business? Stewart Beck, the president and CEO of the Asia Pacific Foundation, thinks so. Beck has previously held roles as the Canadian high commissioner to the Republic of India, consul general in Shanghai, and director general of the North Asia Bureau in Ottawa, along with other government positions in China. His opinion? He thinks the Chinese will be understanding and that, importantly, the tax could cool off Canadian negativity around Chinese investment. We dropped by Beck’s office to talk about the story that, well, everyone’s talking about.First off, why do you think a tax of all things will actually be good for investment?Our concern at the foundation is, if you take a look at our polling on Asia—we do a national opinion poll every year—the general attitude around engagement with China was quite negative. There wasn’t a lot of support. Two years ago, it was probably driven around investment in the oil sands. There was a lot of media discussion around that. With all this conversation around foreign investment in the residential real estate sector, really the question was around Chinese investment. My thinking is if you do something like this, what the government has done, it removes that conversation because if you are a foreign investor coming from China into the residential real estate market, and you’re paying a premium for doing something like that, there will be less of a negative attitude toward Chinese investment.And you don’t think Chinese investors will be too upset about it?I think the Chinese probably expected something like this because it happens in China. Their government is involved in cooling the market down. I was in Shanghai in the early 2000s when speculation was rampant in the Shanghai real estate market, and the government had to bring mechanisms in to cool that off. If you allow speculation to happen, and Chinese think there’s an opportunity to make money in the market, they’ll do that. If you do something like this, then they’ll understand it’s a way to bring a measure of sanity to what’s happening. Will it actually achieve it? That remains to be seen. It’s early days.Have you observed this speculation firsthand?In the two years that we lived in our last neighbourhood, four houses were sold, three were knocked down, and new houses were built that no one lived in. One house that wasn’t knocked down across the street from us, we met the people, they’re from Beijing, nice couple. They never lived in the house, then the house went on the market a year later. So you have to ask, what’s the motivation behind that, where you buy the house and then turn around and put it up a year later? I think there was a lot of speculation going on in the market place, and I’m not against people speculating, but it’s gotta be a level playing field.Cities like Sydney, Hong Kong and you mentioned Shanghai—they’ve implemented similar measures. Is a tax like this just something that popular global cities inevitably have to do, assuming they don’t want to become the next Monaco?People tend to forget that when you have a billion people, and when you even talk about the top 1 percent, that’s huge number of people with a lot of wealth, and it’s relatively easy for them to be mobile. We also forget that we now have 10-year multiple-entry visas with China, so a Chinese person can get a 10-year multiple-entry visa and go back and forth. When I was in China, that wasn’t the case. Now you get the visa for 10 years, so you can understand why somebody would buy property and then go back and forth, without having to apply for a visa every time. It’s easier to do that. That plus this enormous growth in wealth in China.So, why Vancouver—and to a lesser extent, Toronto? Why has an American city not seen similar real estate growth over the last year?You’ve got an almost 30 percent differential in the price of the dollar versus the U.S. dollar. So if you’re buying a $2-million condo in San Francisco versus a $2-million condo in Vancouver, you can pay the 15% tax in Vancouver and still pay $250,000 less with the exchange. Plus, I think people are concerned about what’s happening in the United States and where things are going, and you look at Canada, which is a tolerant society, in a city like Vancouver, which is a beautiful city with good universities, yeah, it makes sense that people would look here—plus it’s 30 percent cheaper than the states. It’s not quite a perfect storm, but these things have come together to make Vancouver and Toronto very appealing destinations to own a piece of property.Then why not other Canadian cities, like Calgary or Victoria?Having lived in Taiwan and the mainland, I won’t say the default, when people think of Canada, is to think Vancouver, but people think of Vancouver as representing the Asia-Pacific gateway in Canada. So between Vancouver being a nice place to live and being on the Pacific Ocean, and Toronto which is seen as the financial centre of Canada, those are the two brand-name cities in both Taiwan and the mainland when I was there. When you mention a place like Halifax on the East Coast, it doesn’t really resonate. It’s about familiarity.And finally, back to the tax, the money raised from it is said to be going into affordable housing. Your thoughts on that?I would assume there’s a bit of a competition in Vancouver between industrial and residential. I know, having talked to Robin Silvester, there are some challenges around port infrastructure and land availability for development. That’s a bit of a concern for us as a foundation because knowing and understanding the growth that’s in Asia—by 2020, 44 percent of global GDP will be in Asia; by 2030, 66 percent of the global middle class will be in Asia—they’re going to be wanting to buy products, a lot of it food. The port is one of our major economic engines of growth here, so there are going to be some challenges around use of industrial land versus residential land. It’s good to have a fund to build affordable housing. The challenge will be around the planning.