You Can't Go Wrong with Vancouver

One of North America's most important cities is also one of its most livable. Vancouver is blessed with scenic mountain views, a superb natural harbor, and great weather. With its diverse economy, great infrastructure, low crime rate, and strategic geographic location, Vancouver offers plenty of jobs, tourist money, and investment opportunities.

Investors from Hong Kong have long favored Vancouver as an investment destination over other cities in the Americas. In short, here's why they and others think it's so great:

- It's Canada's largest port city, a vital gateway to the Pacific, China, and Southeast Asia; it exports more than any other port in North America; and it's the western terminus of the Trans-Canada highway and railroad.
- It's one of the world's largest centers for forestry, logging, and the lumber industry as a whole. As China requires more paper products, expect a surge in Vancouver area exports.
- It has the world's largest concentration of mining companies with offices in the CBD and with operations in British Colombia and the world.
- After Toronto, it has Canada's largest banking industry. HSBC Canada is headquartered here and Royal Bank of Canada, TD Bank, Scotiabank, CIBC, and Bank of Montreal (BMO) have significant regional operations here as well.

Television and Movies

Vancouver, or "Hollywood North" as some call it, has Canada's largest television and motion picture industry, grossing over $1.2 B annually. Since the 1930's, movie makers have chosen to shoot here instead of Southern California. Today, the city is home to a host of film schools, media arts centers, studios, and production companies. After Los Angeles and New York, more films are produced here than anywhere else in North America. Vancouver's movies are not all just second-class. Some are major box office hits like I, Robot, X-Men, and Fantastic 4. Successful television programs like Smallville, Reaper, Stargate Atlantis, and The L Word are also filmed in the city. Since costs are a lot less and the process is more seamless, Vancouver has become an attractive alternative.

The Olympics

The 2010 Winter Olympic Games is less than 2 years away and development in the heart of the city is in full swing. As a result 280,000 jobs have been created (RBC report) and unemployment has been halved to 4%. Hosting the Olympics is expected to pump in a net $ 10 B into the local economy. Local, provincial, and national governments have already committed over $1 B for construction projects like the new convention center expansion, the new Hillcrest/Nat Bailey stadium, upgrades to the BC Place Stadium, the Olympic village at Whistler, the conversion of industrial areas into livable communities, widening area highways, and even the creation of the Hydrogen Highway (a stretch from Vancouver airport to Whistler with hydrogen fueling stations).

Fuel Cell Technology

The region is at the forefront of fuel cell technology. In fact, it's home to the National Research Council Institute for Fuel Cell Innovation (NRC) and the headquarters of some of the largest developers of the technology. It's estimated that Canada has a 30% market share in the $ 2.5 B fuel cell industry and that 70% of those employed in the industry work in and around Vancouver. The NRC even forecasts a ten-fold increase in the industry by 2017. So investing in Vancouver's fuel cell industry could be a profitable idea.

Vancouver's own Ballard Power Systems (BLDP) is a pioneer and leader in the fuel cell industry. It recently released a mostly positive second quarter report. It posted a 15% quarterly increase and a 51% year-to-date (YTD) increase in product shipments. YTD revenue was up 12% and operating expenses were down by about 30%. Just a few weeks ago, the company extended a service contract with Daimler to provide fuel cells to buses in Hamburg, Germany. As more cities go green, you can expect an increase in business.

Tourism

Vancouver may not have lived up its full tourism potential. It's often a port of call on Alaskan cruise itineraries and they've become extremely popular in recent years. As the cruise industry grows, expect the city to benefit. Presently over 1 million people use Vancouver as a gateway for their cruise vacation. Investors should know that cruise ships dock at Canada Place, which has a hotel, convention center, IMAX and lots of shops and restaurants.

An additional 6.5 million visitors stay overnight in the city, visit the aquarium, take harbor cruises and peruse the city's diverse neighborhoods, spending nearly $ 2 B annually. After the Olympics showcases the city, you can expect the number of visitors to increase.

Outside of the city, the region's ski slopes are amongst the best in the world. Located a mere 20 minutes' drive from downtown, Whistler Mountain offers skiers and sightseers fun in the snow and spectacular views of the city. The Whistler-Blackcomb resort, co-host to the 2010 games is one of North America's largest and most popular skiing destinations.

Quality of Life

As you may know, Vancouver is one of Canada's warmest cities with a temperate marine climate ensuring mild temperatures year round, averaging between 40 and 75 F (6-23 C). It's not as rainy as most people think, with just 47 inches of precipitation annually (about the same as New York City )and an average of over 285 days of sunshine each year (about the same as San Francisco).

Consistently ranked as one of the best cities in the world in which to live, Vancouver lives up to its reputation. In Mercer's 2008 Quality of Living survey, Vancouver ranked 4th after Zurich, Geneva, and Vienna. Determinants for the survey are culture, personal freedom, economy, available public services, stable climate, education and recreation, and of course, safety. In fact violent crime rates here are far lower than most US cities with comparable population.

Vancouver has become one of Canada's most diverse cities and the only one with a majority-minority population. Over 50% of the city and over 40% of the metro area as a whole has a first language other than English. Vancouver is also home to some of North America's largest Chinese and East Indian communities.

Strong Real Estate Market

The real estate market in Vancouver is expected to do well through 2010. Although there is presently a correction unfolding in the Canadian housingmarket, supply and demand for homes are expected to even out. Unlike in US cities that recently witnessed an oversupply of new homes and risky lending practices, the situation is a lot better in Canada. Vancouver is a little different. City and provincial leadership has made it clear that they favor high density development over urban sprawl. Thus, you can expect property values to increase as developers run out of space.

The city's most popular neighborhoods are north and west of the city's historic center. These are also amongst the densest, developed, and affluent sections, such as Yaletown, West End, Financial District, and Kitsilano to name a few. We've included a few up and coming neighborhoods around town, where you'll find more affordable housing, more development underway, and better investment property opportunities:

Mount Pleasant is at the crossroads of Main Street and Broadway where you'll find Vancouver City Hall. Once largely known as a blue-collar community, it has changed in recent years because of its central location and the construction of a new light rail line (opening in 2009). The area is also known as Brewery Creek or South Main.

Downtown Eastside is the oldest part of town and one of the most diverse. There's a mix of pre-20th century architecture but a growing amount of development and gentrification. This area encompasses portions of Gastown and is adjacent to Chinatown and old Japantown.

Strathcona is one of the city's oldest primarily residential neighborhoods and has largely been working class. Given its central location and lower density, it has been attracting a slew of newcomers. Adjacent to Chinatown, it's become a predominantly Chinese-speaking but is still quite diverse.

Kensington-Cedar Cottage is in the east central portion of town and is one of the city's most diverse areas, as over two-thirds of residents aren't native English speakers. This area has some of the best views of the city's skyline and the mountains to the East. Furthermore it's an increasingly popular neighborhood for young professionals seeking more affordable housing.

It's quite obvious that Vancouver is well on its way to becoming a true world-class city. With so many positive attributes, it's easy to see why it's our favorite Canadian investment destination.

Macau Still Poised for Growth

Over the past decade tiny Macau has managed to grow at an unfathomable pace, but it's not over yet. A recent economic and real estate market correction has brought new opportunities to investors who missed out.

Americans know little about Macau, a subtropical former Portuguese colony and now special administrative region off the southeastern coast of China. With land area less than the size of Manhattan and with about a half million people, Macau is one of the densest places in the world. Like Hong Kong, the powerful business hub to the north, Macau too has a business-friendly environment and attracts a great deal of foreign direct investment.

If Hong Kong were China's New York, then Macau would certainly be its Las Vegas. Actually, gamblers spent more money here than in Vegas--a cool $ 8 Billion. Taxes from casino gaming made up about 75% of government revenue. Unlike Las Vegas, Macau offers beaches, genuine colonial architecture, narrow streets reminiscent of European cities, and close proximity to over 1 billion people.

Macau's casino industry and colonial attractions have propelled it to one of China's top tourist destinations. Its tourism industry has more than doubled since 2003 as it welcomed over 27 million visitors last year. Although roughly 75% of tourists are from both mainland China and Hong Kong, the news is spreading fast. Officials expect more international arrivals from Europe, the States, and Australia, and Macau could soon become one of the world's top tourist destinations.

Tourists will notice that Macau is much cheaper than Hong Kong and nearly as safe. Macau's local currency, the pataca is worth about 12 cents to every US$ 1 and cheap Chinese labor keeps expenses low. Tourists can walk about Macau without worry as violent crime rates here on a whole are far lower than in US cities.

Macau's recent economic growth makes Hong Kong look like Michigan by comparison. Since 2001, the economy has grown by 13% annually, GDP growth has been at an astounding 30% since 2006, and unemployment is just 3%. Pricewaterhouse Coopers expects casino revenues to continue to grow by an average of 16% annually until 2010. Couple that with big construction projects such as the proposed 18-mile long bridge-tunnel connecting Macau to Hong Kong, where most of Macau's investors reside and a huge $4 B theme park. So, Macau is still attracting a steady flow of capital and of course, its future looks bright.

Offshore Corporations in Macau

Macau has long been an offshore destination and tax haven, but things have changed. As too many people from Hong Kong took advantage of the system, Hong Kong officials pressed Macau for change. Now, the local government applies a 15% flat corporate/individual tax rate on profits exceeding about $ 38,000 and just 2 to 14% on profits less than that amount. Income taxes never exceed 15%. Nevertheless, $125,000 gets an offshore corporation and exemptions from income and industrial taxes, provided that it is in one of the following sectors: archive filing, data processing and warehousing, information consulting and programming, research and development, ship and aircraft operations, and technology testing and analysis. Furthermore, foreign employees of offshore entities get income tax exemptions for up to 3 years. The best part is that offshore entities get anonymity, privacy protection, minimal requirements, and flexibility. For more information, please click here.

Investment Opportunities

Las Vegas Sands (LVS) recently opened the Macau Venetian Casino and Resort, similar to the original in Las Vegas. As the company's president William Weidner put it: "Macao is on the verge of becoming the world's top revenue-producing gaming market. With more than three billion people within a five hour flight, Macao is poised to become the gaming and leisure destination of choice for a significant part of the world's population." The company's stock price more than doubled between 2006 and 2007 and it recently corrected from a high of $140. Now, shares are very attractive to investors at just $40 to $50.

Wynn Resorts (WYNN) is betting on Macau for future company growth. The new Wynn Macau Resort has a casino, 5-star amenities, and a great waterfront location. Like LVS, WYNN's stock price has more than doubled between 2006 and 2007 and recently corrected from a high of $160. Investing in the company seems more attractive with a $ 3.80 earnings per share (EPS), a relatively low price-to-earnings (P/E) ratio, and a much lower share price.

MGM Mirage (MGM) opened the MGM Grand resort/casino in Macau last year. Its stock price more than tripled between 2006 and 2007 and has recently corrected down to about $30, giving investors another great buying opportunity.

Industrial and Commercial Bank of China (ICBC, listed in the U.S. as ICBAF.PK and IDCBF.PK) is already one of China's largest banks, but recently acquired a majority stake in Macau's Seng Heng Bank in order to gain access to all that gaming money. In light of the recent banking crisis, shares have plummeted and seem to be settling at current prices.

Speymill Macau Property (SPYUF.PK) acquires, develops, and sells property in Macau. The stock faced a significant correction bringing it's price just above its 52-week low.

Macau Real Estate Market

As previously mentioned, Macau is very, very tiny. Land for development is extremely scarce; however, like any other tourist mecca, Macau is attracting more and more newcomers every year. For instance, it's seen a 30% increase in non-resident workers last year alone. Thus expect Macau to one day rival London, New York, and Hong Kong when it comes to pricey properties.

Many investors have been cautious since the recent pullback in the real estate market. Yes, overdevelopment is an intermediate issue, but the outlook remains promising. Keep in mind that Macau's economy is expanding at phenomenal annual rates and, again it's extremely tiny. Your property investment must appreciate in the long run in one of the 4 principal areas of Macau:

Macau peninsula, the old town and colonial Portuguese city. It borders mainland China and is where all the pre-twentieth century architecture remains.

Cotai Strip is on an island separated from the Macau peninsula. If you've ever been to Vegas, you'll notice similarities as this is where the largest concentration of casinos can be found. At less than 3 square miles, it's where you'll find most development and investment activity. Property values here average between $ 20 and $ 30 million per acre!

Taipa is the mostly residential area in between Cotai and old Macau and has most of the area's mid-priced real estate.

Coloane is the southernmost section of the region and is where you'll find beaches, parks, resorts, and golf courses. It's Macau's own green retreat. The few available properties here are amongst the city's priciest.

Macau is more than a place--it's a story of contrasts between the Orient and the West, history and modern pleasures, and urbanism and respite. Macau must continue to grow economically, because the Chinese are just beginning their rise to wealth and Macau is their playground.

Photos courtesy of the Macau Tourist Office.