The price has risen because demand for Vancouver real estate has consistently exceeded the supply over the last 14 years. The Hong Kong handover ceremony was 1997, and it came with a number of transitional provisions expiring 2000. As those provisions expired, Hong Kong funds began to flow out, and were initially spread over a number over of markets. As the investment results developed, Vancouver (and Toronto) captured a growing market share of the rising flow, and local real estate prices have risen accordingly.
Yes there is price risk, but it is minor. The Hong Kong gate will not remain open forever, but when it closes; it will be sudden, absolute, and will stay closed for a very long time. If the price of the condo collapses 70% it really does not matter – what matters is that you got the funds out, it is in a safe place, and your family has options.
Price risk declines significantly, the more you can make on the Canadian property during interim flips. Concentrate the recycled and new inflow on select markets, and you can generate a reliable bubble of rising prices. Sell into the bubble for a gain, reinvest the proceeds in other Canadian real estate, and when the door closes – you will not be one of those down 70%.
Everything to this is exceptionally rational; it is just not what most Canadians are accustomed to. It is also not that unusual, re foreign investment in London (UK), New York, Paris, Milan, etc.
SD