VANCOUVER (Reuters) - At a luxury car dealership in Vancouver, a 19-year-old college student recently traded in his 2014 Ferrari for a 2016 Bentley that cost C$350,000 ($268,446).
MCL Motor Cars Manager Scott Warren says the teen was his typical customer: young, Chinese and eager to swap a relatively new car for an even newer, trendier model.
“They don’t mind taking a C$75,000 hit,” he said, noting that some brand-sensitive teens change cars every few months. “They just trade them in and dad puts the money in their account.”
While Vancouver is often called the gateway to Asia and has been a top destination for wealthy Chinese immigrants for some time, the boon for luxury retailers this year is particularly noteworthy given the summer plunge in the Chinese stock market and President Xi Jinping’s campaign against corruption.
The crackdown, which has included Chinese demands that Canada arrest and deport former Chinese officials accused of corruption, has had no apparent impact on demand for everything from C$350,000 Bentleys to C$3,000 bottles of wine.
But cracks could be starting to show. Detached home sales volumes in the city of Vancouver fell 41 percent from June to September, with listings down just 3 percent, the largest drop in sales for that period since 2008.
Real estate agent Tom Gradecak, who sells on Vancouver’s affluent westside, says it “feels” like the market has slowed, but prices have not dropped yet.
“It could be the Chinese stock market - probably is - but it could just be a bit of a breather from an insane first part of the year,” he said, adding that he just sold a home for C$300,000 over the asking price with seven competing offers.
Yet business remains so brisk at car dealerships that sportscar-maker McLaren has a third-party financier on hand at its Vancouver location to provide loans to young Chinese clients who may lack a Canadian credit history.
At MCL, Warren said the dealership expects to sell 70 Bentleys this year, about the same as the Toronto store despite Vancouver having roughly a third of the population, noting the brand is popular for its mix of luxury and performance.
“It’s amazing the amount of 16- to 24-year-old kids with 500 horsepower under the hood of their cars in this city,” he added with a laugh. The Bentley Flying Spur W12’s engine clocks in at 616 horsepower, triple the power of a typical Toyota Camry.
But the ostentatious displays of wealth by Chinese immigrants have created tension in Vancouver, a city known for its eco-friendliness and yoga culture.
A blog called “University of Beautiful Cars,” a play on the University of British Columbia, posts photos of luxury vehicles parked on campus with snarky comments like “struggling Vancouver student needs new Porsche.”
And there has been backlash from faculty and students who say they cannot afford to live on the leafy campus due to high price of condos on University land, which start at more than C$400,000 for small units and are heavily marketed in China.
Indeed, foreign buyers are widely blamed by locals for the stratospheric rise in housing costs in Vancouver, where the median condo sold for C$495,866 in September and detached home demanded C$2.02 million, up 60 percent from September 2010.
Wealthy mainland Chinese started streaming into Vancouver around 2005, many entering on the now defunct millionaire visa program, which fast-tracked visas for foreigners with a net worth of at least C$1.6 million and C$800,000 to invest.
From 2005 to 2010, the program attracted more than 57,000 wealthy individuals to Canada, with about 30,000 arriving in British Columbia. Research has shown that many of those who landed elsewhere quickly moved to the west coast province, attracted by Vancouver’s top-ranked schools, pristine environment, and long-established Asian community.
The influx helped to attract upscale department stores like Nordstrom Inc (JWN.N) and high-end retailer Simons, and fuel the expansion of luxury department store Holt Renfrew.
Nancy Bendtsen, co-owner of contemporary furniture design store Inform Interiors, said the surge in business from Chinese-speaking clients has helped the business expand into a second location and hire new staff, including four Mandarin speakers.
“I’ve done million-dollar deals with nothing but hand signals,” said Bendtsen, laughing off the language barriers she still occasionally encounters.
Bendtsen said her clients, frequently women whose husbands remain in China, hire Inform to outfit entire homes in Vancouver, China and around the world.
The desire for all things luxurious is not limited to cars, clothes and home furnishings. At the state-owned liquor store’s 2012 Bordeaux launch earlier this month, more than 200 people - most of them speaking Mandarin - lined up to get first pick of the most exclusive bottles of the famous French wine.
One woman, who did not identify herself, was frantically searching the crates for numerous expensive bottles and ended up buying nearly C$19,000 worth of wine.
Another woman, who gave her name as Vivian, came armed with a list of requests from her husband, who spends most of his time working abroad but maintains a wine cellar in their Vancouver home for when he visits.
“I don’t know anything about wine,” she said, gesturing to her selection of bottles. “My husband picked it up as a hobby.”
Peter Wang, a Vancouver-based wine consultant who came with a newcomer couple from mainland China, said his friends had spent the night in line to ensure they would be able to get a rare $2,800 Chateau Petrus and a $1,200 bottle of Chateau Lafite Rothschild, both from the Pomerol region of France.
“It’s a great year for Pomerols,” he said, lugging three cases of the C$65-a-bottle Chateau Rouget to the cash register. “There are some real good values in this vintage.”
Reporting by Elizabeth Dilts and Julie Gordon; Editing by Lisa Shumaker