Douglas Todd: Prof spotlighted foreign ownership in Vancouver 30 years ago. But few followed the money.
Credit to Author: Douglas Todd| Date: Thu, 20 Feb 2020 15:00:50 +0000
“I’ve always had a problem with the media not following the money.”
That’s from Simon Fraser University professor emeritus Donald Gutstein, who more than 30 years ago shone a spotlight on how foreign capital was flooding into Vancouver’s real estate market.
In the late 1980s, Gutstein began poring through Metro Vancouver’s land title office and discovered a tremendous volume of capital was flowing out of increasingly wealthy Asia into B.C. real estate.
The river of money was partly a consequence of Vancouver’s Expo 86, which featured the pavilions of 54 nations and sparked boasts about the city becoming “world class.” That seemed to inspire a host of politicians to head off on “trade missions” around the world to woo investment, which, alas, mostly went into Canadian real estate.
“The investors were just doing what they were invited to do,” says Gutstein, now 81. He emphasizes that the foreign-trade-mission-crazed politicians of recent decades came from every stripe — federal Conservative and Liberal and provincial Social Credit, NDP and Liberal.
Politicians welcomed foreign capital because it “is an easy way to boost your economic numbers,” Gutstein says. But the trouble is most of the money just pumped up the cost of real estate, especially when much of it at the time was funnelled into existing buildings.
After writing Vancouver Inc. in the 1970s to reveal the power developers have over politicians, Gutstein explained the globalization phenomenon in 1990 in The New Landlords: Asian Investment in Canadian Real Estate. It was preceded by a 1998 feature in Vancouver Magazine headlined ‘Hong Kong Money.’
Both grew out of Gutstein’s exhaustive work revealing how financiers like Stanley Ho, David Lam, Robert Lee, S.H. Sung, Geoffrey Lau and others had been buying up B.C. and Canadian towers and houses.
Gutstein discovered Social Credit cabinet minister Grace McCarthy had sold the former Expo 86 lands, which made up one sixth of downtown Vancouver, to Hong Kong billionaire Li Ka-shing for what was even then an astonishingly cheap sum, $8 per buildable square foot. Gutstein also uncovered 20 major Greater Vancouver hotels had been sold in one year, and 15 involved offshore, mainly Asian money.
A specialist in teaching documentary research methods in SFU’s communications department, Gutstein says he was never accused of being “xenophobic.”
Perhaps it was because “I was just following the money to see what happens.” A few journalists, such as The Vancouver Sun’s Elizabeth Godley and the late CBC Radio talk-show host Peter Gzowski, covered The New Landlords. Godley’s piece explained Gutstein’s conviction it would have been far better if offshore investors had instead supported Canada’s manufacturing industries, which would have provided jobs and social stability.
The Vancouver Sun’s Elizabeth Godley wrote about SFU prof Donald Gutstein’s book, The New Landlords, in 1990.
Even though Gutstein escaped personal attack for his research, he now realizes some journalists in the 1990s who tried to cover how Hong Kong, Singapore, Chinese, Japanese and Malaysian capital was pouring into Canadian real estate were accused of being “racist” by developers and their supporters. It induced reporters and editors to move onto other subjects.
Gutstein himself also shifted onto other social critiques in the mid-1990s, after noticing a lack of mainstream interest in the real-estate fallout from Expo 86. He’s since written books about corporate propaganda, Stephen Harper and how the internet undermines democracy.
He’s never, unlike many “progressive” people today, been particularly focused on identity politics, which can emphasize the interests of ethnic, sexual and gender groups over the common good. “I’ve always been more interested in politics and economics and who benefits from the decisions governments make.”
Gutstein acknowledges some disappointment his findings of three decades ago didn’t resonate more with media outlets and what people today call “influencers,” because he is convinced foreign capital was a key reason Metro Vancouver’s housing prices are now among the most unaffordable in the world.
He credits a former UBC business professor, Michael Goldberg, with explaining how a trans-Pacific family-based culture of wealth turned urban Canada into a global real estate market in the 1980s and beyond. “Whistler was already there, and so were parts of West Vancouver and the west side of Vancouver. Local people were not in that market anymore. It was being dominated by investors from all over the world, who already owned real estate,” he says.
“They would use their holdings to buy more real estate. And that put the price of real estate out of the reach of local people in Vancouver. Nowadays, the price of Vancouver real estate is not determined, by any stretch of the imagination, by people who live and work here. It’s determined by this global market, by people who might have property in France and Hong Kong and London.”
Philosophically, Gutstein worries about how capitalism and democracy can coexist. They won’t, he says, if politicians spend their energy trying to please rich people and big business while overriding the interests of the majority of citizens.
He believes the housing crises in Vancouver, Toronto and Victoria could have been forestalled by politicians if journalists and academics had consistently followed the impact of foreign capital — and not waited until a handful began doing so about six years ago, eventually prompting the B.C. NDP and others to act.
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Gutstein has no trouble with B.C.’s speculation and vacancy tax, for instance, since it’s designed in part to restrain so-called “satellite” families who invest in property with wealth earned abroad, where it isn’t subject to Canadian income tax. “The money is not really making a financial contribution to the country, so it makes sense to capture the benefit (the buyers obtain) in a tax,” he says.
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Though retired from teaching at SFU, Gutstein is still in the game. His most recent book is titled The Big Stall: How Big Oil and Think Tanks are Blocking Action on Climate Change in Canada.
To Gutstein, the climate-change issue central to The Big Stall may even be bigger than skyrocketing Canadian real-estate prices. But that doesn’t mean taking action on one front cancels out doing so on the other.
Asked three decades later if he might have been a prophet without honour in his own country in regard to The New Landlord’s warnings about the dangers of mass foreign investment in Canadian real estate, Gutstein modestly answers: “Possibly.”
dtodd@postmedia.com