Immigration Boosting Canadian Housing Sector -Analysis

A house in Greater Vancouver, Canada. A report by the National Bank of Canada says the effects of immigration on demographics will keep housing prices in Canada from falling (Tony Fox, GFLD)

A new economic analysis credits immigration for keeping Canada’s housing sector growing amid a slowdown in the developed economies.

As reported by the Globe and Mail, a National Bank of Canada (NBC) report on the Canadian housing market finds that the so-called ‘household forming cohort’, which is the segment of the population aged 20-44, is growing much faster in Canada than in most developed countries.

Without the influx of 147,000 new Canadians aged 20-44 through immigration, the demographic would have seen a decline in 2012, according to NBC senior economist and report author, Matthieu Arseneau. The average growth rate of the 20-44 demographic was negative 0.3 percent last year among the rest of the developed economies, compared to the positive 1.1 percent growth rate seen in Canada.

Arseneau cites a high rate of employment among foreign born Canadian citizens, which is lower than only New Zealand and Norway’s, as a pull attracting foreigners to immigrate to Canada.

The report projects the growth in Canada’s 20-44 cohort will decrease after 2013, but will remain positive, and will exceed that of other developed countries. This demographic trend, Arseneau argues, will provide the country’s housing market with a comparative advantage over those in other developed countries, and reduce the likelihood of a crash in Canadian housing prices as predicted by some market watchers.

Canada comes in top 5 among G20 in Entrepreneurship Ranking

Lack of regulatory barriers, availability of venture capital funding and a culture that embraces entrepreneurship placed Canada in the top quartile in the EY G20 Entrepreneurship Barometer 2013 (U.S. Department of State)

A new report by Ernst & Young places Canada’s entrepreneurial ecosystem in the top five among the G20 countries.

The G20 Entrepreneurship Barometer 2013 ranks a country’s entrepreneurial environment according to its score in five sub-categories: access to funding, entrepreneurship culture, tax and regulation, education and training, and coordinated support between government, academic institutions and the private sector.

The formulation of the ratings relies on business environment indicators, like number of new businesses started per year, data collected in a survey of more than 1,500 entrepreneurs across the G20 countries, the insights gained in interviews with entrepreneurs, academics and experts, and a qualitative analysis of government initiatives to encourage and assist entrepreneurship.

Canada came fourth in the access to funding category, thanks largely to per capita venture capital funding that is second only to the U.S. It ranked third in entrepreneurship culture, behind the U.S. and South Korea, as interviewees had a generally positive opinion of the country’s attitude toward entrepreneurship and its acceptance of failure (more accepting than other countries).

In the tax and regulation category, which scores countries by the ease of complying with regulations when starting and running a business, and the number of special tax incentives for entrepreneurs, the country came second, after Saudi Arabia, for its simple business registration process, lack of labour laws allowing for a flexible labour market, and an abundance of tax subsidies for small and medium sized enterprises.

While the G20 Entrepreneurship Barometer is one of many possible ways of determining the quality of an entrepreneurial ecosystem, and has not been shown to predict for entrepreneurial success, Canada’s strong showing will at the very least help boost its image globally as a centre of innovation and a country that’s open for business.

Montreal Tops List of Best Cities for International Students

Cultural attractions like the iconic Montreal Museum of Fine Arts helped give Montreal the top spot in the ‘social experience’ sub-index of the Sea Turtle Index

An index commissioned by the Bank of Communications (BoCom), one of the largest banks in China, places Montreal, Canada as the best city in the world for international students.

Other Canadian cities that ranked well include Toronto (4th) and Vancouver (15th).

Created by the Economist Intelligence Unit (EIU) with design input from BoCom management, the Sea Turtle Index (a name referring to Chinese students who study abroad only to return, like sea turtles, to their country of origin) ranks foreign student destinations according to five sub-indices:

  • Educational returns: the international value of the education provided in the city relative to its cost
  • Financial returns: the openness of the investment environment to foreign nationals and the amount of volatility risk that could effect investment returns
  • Real estate returns: the return on investment in the local real estate market
  • Work experience: the local job market for foreign students and graduates in terms of availability of jobs, wages and low-taxes
  • Social experience: the city’s level of culture, worldliness and multi-culturalism

Of the 80 cities included in the index, Montreal came in 6th place in the ‘educational returns’ sub-index, behind only Cambridge (1st), Oxford (2nd), London (3rd), Seoul (4th), and Beijing (5th).

Montreal benefited from having comparatively affordable universities and cost of living while providing high quality tertiary education. Vancouver and Toronto also had their score helped by their low cost of living, although not as much as Montreal which was found to be a more affordable place to live.

None of the American cities included in the study made the top 10 in the educational returns category, despite several being home to some of the best educational institutions in the world. The poor showing was largely due to the high cost of tuition for their undergraduate programs.

Some cities, including Singapore, Hong Kong and New York, saw their educational returns ranking pushed down due to a high cost of living.

The EIU included a ‘financial returns’ sub-index owing to the fact that the parents of international students and often international students themselves like to make investments in the city where the students live.

None of the North American cities included in the study made the top 30 in this sub-index, due in Canada to relatively high taxes and in the United States to excessive “money laundering regulations and terrorism legislation” stifling financial freedom.

Hong Kong placed first in this ranking, followed by Auckland, New Zealand (2nd) and Santiago, Chile (3rd), which benefited from having comparatively few regulations on finance and banking that restrict international capital flows.

Three Canadian cities made the top 30 in the ‘real-estate returns’ sub-index: Toronto (4th), Montreal (12th), and Vancouver (13th), while Hong Kong took the top spot thanks to its hot real estate market.

Canadian cities did well due to a combination of well-performing real-estate markets and avoidance of the boom-busts that affected many other world cities in the period leading up to and following the global mortgage crisis.

Canada’s openness to foreign investment also helped push its cities above those in countries with real-estate markets that have seen substantial gains in recent years but which have more restrictions on foreign property ownership, like Shanghai, Bangkok, Mumbai and Seoul.

Immigration rules benefit Canada

Canadian cities took the top five spots in the work experience sub-index due to immigration laws that allow foreign students, upon completion of their study programs, to obtain post-graduate work permits that are valid for durations equaling the length of their study in Canada.

This contrasts with the U.S. where international students have few options to stay and work in the United States upon completing their studies.

Edmonton’s combination of a hot labour market and low provincial taxes gave it an edge over its Canadian counterparts and earned it the top spot in the ranking, followed by Hamilton (2nd), Toronto (3rd), Vancouver (4th) and Montreal (5th).

Montreal managed to also share the top spot in the ‘social experience’ sub-index with London, England, thanks to its low rates of violent crime, high cultural diversity and its world renowned cultural attractions.

Canada’s high levels of multiculturalism and low crime rates helped three other Canadian cities: Toronto, Vancouver and Edmonton, make the top 30 in this ranking.

As incomes in China rapidly grow, parents in the country’s large and education-minded population are increasingly able to afford a foreign university education for their children.

Therefore the good showing of Canadian cities in the Sea Turtle Index, which caters mostly to Chinese students seeking to study abroad, portends well for Canadian efforts to make the country a top destination for international students.

With the federal government having committed itself to making it easier for international students to stay and work in Canada and become permanent residents through programs like the Canadian Experience Class, Canada’s appeal to international students could increase even more in coming years.

Diane Francis Says Canada Needs a Silicon Valley

Diane Francis says Canada needs to do more create its own version of Silicon Valley in order to obtain the economic benefits that tech entrepreneurs can provide

A recent article in the blog of Diane Francis, an editor-at-large for the National Post, argues that Canada needs to create its own version of the American Silicon Valley, and commends Citizenship and Immigration Canada (CIC) for taking a step in this direction with the creation of the Start-Up Visa.

Francis says that skilled entrepreneurs can provide the type of economic boost that a country cannot ignore:

Canada has been America’s farm team for centuries, providing brawn, brainpower and talent to feed its mighty industries. But the contest for talent has never been greater, notably for those technology entrepreneurs who are capable of invention, innovation and single-handedly replicating the GNP of small states.

She applauds Citizenship and Immigration Minister Jason Kenney’s May visit to the U.S. to recruit technology workers facing H-1B problems, and argues that the Canadian government needs to do more campaigns like this.

With the CEOs of American technology giants lobbying for greater government action to attract foreign tech talent to the U.S., Congress won’t stand still Francis says, and will try to match Canada’s Start-Up Visa program.

The federal government should be looking to add to its efforts now, to match the inevitable response by the U.S. government.

Not only should Canada be recruiting foreign tech workers living in the U.S., it should also be encouraging immigration by Americans themselves, who could find Canada’s tech clusters, a midst world class urban centres enticing, she argues.

Francis notes that the Government of Canada has a $500 million Venture Capital Action Plan in the works, which will subsidize Canadian venture capital firms that invest in Canadian start-ups.

Government subsidies like these, Francis says, are alone not enough to create a “technology venture capitalist marketplace” however, and the federal government should also be scaling up the Start-Up Visa program and increasing tax breaks for entrepreneurs.

A focus on economic impact of immigration

Francis’ call to action on attracting foreign entrepreneurs is one of several in a series by influential Canadian individuals and prominent Canadian institutions urging the country to make a more concerted effort to extract economic benefits from immigration.

Other than pushing for more entrepreneur friendly immigration programs, the other area of immigration policy that pundits have repeatedly pressed the country to give more attention to has been building on Canada’s strengths as a destination for international students and increasing the foreign student population.

This has included calls to make it easier for international students already in Canada to become permanent residents.

The provincial governments have also called on the federal government to increase the role of the provinces in selecting new Canadians. They say that the Provincial Nominee Programs (PNPs) allow them to select immigrants that meet their unique economic needs.

Canada Top Country for Immigrant Businesses – Financial Post

Canada tops the list of countries to start a business according to a new article in the Financial Post (Martin Cajzer)

An article featured in last Friday’s Financial Post makes the case for Canada being one of the best countries in the world for immigrants to start a business.

Among the factors that make Canada such a welcoming place for immigrant entrepreneurs are its business friendly environment and immigration program, says author Chris Riddell:

The World Bank labelled Canada the best place in the G-7 to start a business, and thanks to an open immigration policy, a comparatively easy one to enter. Add a strong banking system, growing job market, and high standard of living, and it’s no wonder it tops immigrant entrepreneurs’ list.

For many, the government’s Start-Up Visa launched in April is making Canada an even more appealing place.

For business people considering Canada as a destination for immigration, there are three points to consider:

  • The per capita income of new immigrants is well below the Canadian average, with the gap growing since the early 1970s despite the average level of education of recent immigrants increasing in the intervening time. The longer an immigrant is in Canada, the closer their income tends to be to the Canadian average.

  • Immigrants and first-generation Canadians make up a sizeable percentage of Canada’s millionaires, at 48 percent.

  • The average income of immigrants who are admitted into Canada through the business class immigration programs is slightly below that of immigrants admitted through the Federal Skilled Worker Program (FSWP), despite the former group having had to meet stringent capital and business experience requirements.

Taken together, it suggests that:

1) immigrants who arrive through economic class non-business immigration programs, like the FSWP, are likely not at a significant disadvantage compared to their business class counterparts in their chance of creating a successful business, that

2) immigrants are likely more entrepreneurial than the general population, and that

3) many immigrant business people fail for the few that succeed.

Matt Man, a successful immigrant businessman profiled for Riddell’s article, advises immigrants who are starting their business to try to get as much face-time as possible to improve their chance of success:

“Face to face can always make up for some of what I lost due to my accent or the way I’m communicating.”

48% of Canadian Millionaires From Immigrant Families

A new survey on Canadian millionaires finds that 48 percent are new Canadians and 68 percent are self-made (Government of Canada)

A new survey by BMO Harris Private Banking finds that nearly half of Canadian millionaires are either immigrants or have at least one parents born outside of the country.

The findings suggest a high degree of entrepreneurialism among the Canadian immigrant population, and contrasts with the theme of a recent special contribution to the Vancouver Sun that argues immigrants cost the Canadian $20 billion annually.

The survey further found that 68 percent of immigrant and first-generation millionaires report being self-made – about equal to the 67 percent rate among all Canadian millionaires surveyed.

The province of British Columbia has the highest proportion of millionaires belonging to immigrant families, at 68 percent, while the rate in every other province is below 50 percent.

The BMO Harris Private Banking survey was conducted online by Pollara between March 28th and April 11th, 2013, using a sample of 305 Canadian adults with a net worth of over 1 million dollars.

Canadian Construction Industry Recovering

A house under construction in Vancouver, British Columbia. Vancouver saw the biggest increase in the value of building permits issued in April among large Canadian cities

New data shows the value of building permits issued in Canada increasing for a fourth consecutive month, signalling a recovery in the country’s construction sector after a decline in late 2012.

A Statistics Canada report released this week shows that permits worth $7.0 billion were issued in April, 10.5 percent more than in March.

Much of the increase came from an increase in the value of multi-family dwelling residential permits issued, which at $2.1 billion in April, was a staggering 51.9 percent more than in March.

The development is welcome news to the Canadian construction sector, particularly condo builders, which saw a sharp decline in issued permit values, from a peak of $7.5 billion in October 2012 to a low of $5.7 billion in December 2012.

Among the provinces, British Columbia saw the biggest increase in the value of permits issued, reaching $978.3 million in April, 40.4 percent more than in March.

Immigration Minister to Visit Silicon Valley to Promote ‘Start Up Visa’

Waterloo, Ontario, sometimes called Silicon North, is one of Canada’s major tech centres. Citizenship and Immigration Canada hopes the new Start Up Visa encourages foreign technology entrepreneurs to start companies in the country

Canadian Citizenship and Immigration Minister Jason Kenney will be visiting California’s Silicon Valley on Friday for a four day trip intended to promote Canada as a place to live for the region’s entrepreneurs.

According to an article in San Jose’s Mercury News, a billboard is currently appearing near Silicon Valley advertising Canada to foreign tech workers struggling with H-1B visa restrictions:

On Tuesday, just days before Kenney was set to tour San Francisco and the South Bay to promote his new visa for startup entrepreneurs, a giant red maple leaf emerged on a billboard off Highway 101 on the route from San Francisco to the heart of Silicon Valley, part of a Canadian advertisement encouraging tech workers here temporarily to migrate north permanently.

Modeled on an idea first introduced but never passed in the U.S. Congress, Canada’s new “startup visa” grants permanent residency to entrepreneurs who can raise enough venture capital and start a Canadian business.

“H-1B problems?” asks the South San Francisco billboard, referencing America’s temporary visa for skilled foreign workers. “Pivot to Canada.”

Citizenship and Immigration Canada (CIC) hopes to capitalize on the frustration tech companies in the U.S. are feeling over immigration restrictions on foreign technology workers and encourage them to relocate to and invest in Canada.

The eventual goal is to help foster the development of a Canadian equivalent to Silicon Valley.

One challenge that CIC faces in this mission is the country’s top marginal income tax rate, which is significantly higher than that of the U.S. A Canadian entrepreneur can look forward to paying about 50 percent of their income to the government if they succeed in joining the top bracket of income earners.

Compensating for this disadvantage, the federal government is offering a perk that no other advanced economy offers foreign entrepreneurs: permanent residency status.

For foreign tech workers in the U.S. anxiously awaiting the six year limits on their H-1B visas, immigration to Canada offers a chance of stability that only permanent residency can provide.

Also working in Canada’s favor is the perception of being a safer country than the U.S., with significantly lower violent crime rates, particularly homicide rates. A better fiscal situation, with a much lower deficit to GDP ratio than the U.S., also gives foreign nationals more confidence in the country’s economic future.

Regardless of how successful CIC’s headhunting campaign in Silicon Valley ends up being, the federal government has a lot of ground to make up for, with total venture capital funding in all of Canada in 2012 coming to $1.5 billion -less than 15 percent of the $10.9 billion worth of deals that happened in Silicon Valley last year.

Immigration Canada Announces April 1 Launch of Start-Up Visa Program

Foreign entrepreneurs who receive venture capital funding from a designated venture capital fund or angel investor group will qualify for the new Start-Up Visa Program (CICS News)

Citizenship and Immigration Canada (CIC) announced on Thursday that foreign entrepreneurs would be able to start applying for the newly created Start-Up Visa Program on April 1st of this year.

“Canada is open for business to the world’s start-up entrepreneurs,” said Citizenship and Immigration Minister Jason Kenney in announcing the launch date.

“Innovation and entrepreneurship are essential drivers of the Canadian economy. That is why we are actively recruiting foreign entrepreneurs – those who can build companies here in Canada that will create new jobs, spur economic growth and compete on a global scale – with our new start-up visa.”

To qualify for a Start-Up Visa, a potential immigrant must receive venture capital funding from a fund and angel investor group designated as a recognized venture capital investor by CIC, in partnership with Canada’s Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Organization (NACO).

A full list of designated venture capital funds and angel investor groups can be seen on the CIC website.

International competition

The Canadian Start-Up Visa Program is the first permanent residency program of its kind in the world but will still have to contend with competition for global start-ups from other countries which offer temporary residency and other perks to attract foreign entrepreneurs.

Singapore for example offers the EntrePass (Entrepreneur Pass), which provides business visas to qualifying individuals seeking to start a business in the country, and a competitive business environment, with no capital gains tax, a low income tax, and no fiscal deficit.

While inviting foreign business people and entrepreneurs to Canada undoubtedly contributes to the Canadian economy, an analysis on the income trends of Canada’s economic class immigrants, conducted by CICS News in January, suggests that the full potential of the capital and talent invited to Canada might remain unrealized unless the country’s business environment becomes globally competitive in terms of expected after-tax returns on investment made in the country.

Canada’s Immigration Backlog Reduced by 40 Percent

Citizenship and Immigration Minister Jason Kenney announced on Tuesday that his department had reduced the backlog of permanent resident applications by forty percent since 2008 (Citizenship and Immigration Canada)

Citizenship and Immigration Canada’s (CIC) backlog of permanent resident applications has declined by forty percent since 2008, according to a CIC announcement on Tuesday.

A freeze in the acceptance of new Federal Skilled Worker and Federal Immigrant Investor applications, in place since July 2012, and an indefinite suspension of the parent and grandparent sponsorship stream of the Family Class immigration program, have reduced the rate at which CIC is receiving new permanent resident applications and allowed it to work through the backlog.

Citizenship and Immigration Minister Jason Kenney applauded the development in a press conference, saying a reduced backlog would allow for a faster and better immigration system:

“Backlogs and delays prevent Canada from attracting the best and brightest from around the world and ensuring that our immigration system is contributing to economic growth and long-term prosperity. For too long, we accepted far more applications than we could process each year. That led to backlogs increasing every year and processing times of eight to ten years in some cases, which discouraged talented, dynamic people from coming to Canada.”

CIC’s goal is to reduce processing times of applications for permanent residence to less than one year, from the sometimes over five years that it has taken in recent years.

The eventual goal is to put in place an Expression of Interest (EOI) model by the end of 2014, which will solicit simplified applications from foreign nationals interested in immigrating to Canada and invite the most promising applicants to submit a full application.