St. Paul's Hospital real estate deal announced as Canada and B.C. governments cope with record deficits

Maybe it's time for a serious discussion about attracting capital from Hong Kong

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      Like many other countries, Canada has a monumental financial headache. That's because COVID-19 has blown a huge hole in public treasuries.

      The federal government anticipates a $343.2-billion deficit. The Canadian economy is expected to contract by 6.8 percent this year. And the federal debt-to-GDP ratio is forecast to go from 31 percent last year up to 49 percent in the current fiscal year.

      Meanwhile, the B.C. government expects a record $12.5-billion deficit in the 2020-21 fiscal year.

      This isn't just a Canadian problem.

      Two U.S. economists, Carmen Reinhart and Vincent Reinhart, pointed out in Foreign Affairs that the World Bank has forecast a 5.2 percent decline in global economic output in 2020. That's why they're calling the current situation a "Pandemic Depression".

      This is the backdrop to Providence Health Care's recent sale of the St. Paul's Hospital site at 1081 Burrard Street to Concord Pacific for nearly $1 billion.

      That works out to more than $3,400 per square foot of land. That figure is based on the 292,235 square feet listed in the most recent assessment for the site.

      Concord Pacific plans to work with MST Development Corporation, which is owned by the Musqueam, Squamish, and Tsleil-Waututh people.

      St. Paul's Hospital will continue operating for several years until a new hospital is completed at 1002 Station Street in the Downtown Eastside.

      Hong Kong residents could help Canada

      There's an opportunity for Canada to address its financial stresses.

      And that would be to encourage many Hong Kong residents—including the 300,000 Canadians living there—to move to Canada if they're fed up with living under the jackboot of the People's Republic of China.

      Some could even be induced to move to the St. Paul's site in the future.

      Hong Kong's gross domestic product is significantly larger than British Columbia's.

      There's been a great deal of media attention—and very legitimately so—on the trampling of human rights and basic freedoms in Hong Kong.

      But there's been much less said about the potential for capital flows out of the former British colony.

      Hong Kong's gross domestic product was US$366 billion in 2019, according to Trading Economics.

      In comparison, B.C.'s gross domestic product was $256.9 billion in 2017—in Canadian dollars.

      If Canada could somehow get its mitts on some of that economic activity in Hong Kong, it could help address the country's fiscal challenges.

      Meanwhile, Burrard Street in the vicinity of St. Paul's Hospital has already turned into a richie-rich real estate zone with the notable exception of the Electra building at the corner of Nelson Street.

      While some will inevitably squawk if the St. Paul's site is marketed to multimillionaires living in Hong Kong, this could offer economic salvation to a province going deeply in the red.

      Hold on to that thought.

      The Squamish Nation plans on developing thousands of rental units on its land near the south end of the Burrard Bridge.

      The third wave may be coming

      Then consider that the Squamish Nation is building 6,000 housing units in 11 towers on its reserve land on the south end of the Burrard Bridge.

      Between 70 to 90 percent will be rental dwellings. And Mayor Kennedy Stewart is promoting rental developments in many other areas of the city.

      This suggests that Vancouver can figure out ways to house the middle class while also making an economically sensible choice to attract foreign capital fleeing Hong Kong. Perhaps the St. Paul's Hospital site could be a means of doing that, while paying for a new acute-care facility.

      Vancouver has already benefited from two major waves of Hong Kong immigration and investment. The first occurred in 1966-67 as Hong Kong's business class feared the local impact of China's Cultural Revolution.

      The second wave came in the late 1980s after Hong Kong billionaire Li Ka-shing bought the former Expo site in downtown Vancouver. At that time, Hong Kong residents feared the looming handover of their city to China in 1997.

      That wave of immigration and investment helped desegregate Vancouver and cushion the province from a devastating national recession in the early 1990s.

      Now, we could be on the verge of a third wave. When opportunity knocks, it's a good idea to answer the door.