VANCOUVER—On a quiet street on Vancouver’s west side sits a six-bedroom house on a corner lot. It’s a spacious but not ostentatious family house in the same style as countless others built over the past two decades.

The $5.6-million home on 28th Ave. features visible security cameras but was still the target of an as-yet-unexplained break-in over the weekend. Monday afternoon saw two private security guards stationed in the Dunbar home’s front yard, their eyes hidden by sunglasses as they pretended not to notice the media set up across the street.

This six-bedroom house could soon be a jail cell for the chief financial officer of one of China’s biggest companies.

Meng Wanzhou was arrested on Dec. 1 at Vancouver International Airport as she transferred planes on her way from Hong Kong to Mexico. The arrest came after U.S. authorities requested Canada extradite her to face charges that her company defrauded HSBC and violated American sanctions against Iran.

In bail hearings this week, Meng’s lawyers argued she is not a flight risk and would stay in Vancouver as she fights the extradition attempt. Her lawyers want house arrest at the 28th Ave. home with the guarantee of a monitoring bracelet, rather than see Meng await her extradition hearing in jail. However, ultimate discretion for the terms of any possible bail, including where Meng might stay, lies with a B.C. Supreme Court judge.

Two multimillion-dollar Vancouver homes owned by Meng’s husband, Liu Xiaozong, played a part in establishing Meng’s ties to the city. The 46-year-old executive and her children spend weeks, sometimes months, of the summer in Vancouver, her lawyers said.

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Defence lawyer David Martin told the court on Friday: “She has a home. Her husband is here ... Her daughter is in school but will be transferred to this place.”

But prosecutors countered that “vacations” are not enough to establish close ties.

Liu and Meng’s second home in Vancouver better matches the great wealth prosecutors have alluded to. The six-bedroom, six-bathroom home on Matthews Ave. in Vancouver’s exclusive Shaughnessy neighbourhood is worth $16.3 million, according to a tax assessment. The neighbourhood boasts large lots, heritage mansions valued in the tens of millions and large, bright red signs protesting the provincial government’s decision to increase tax on homes worth over $3 million.

The Matthews Ave. house is currently under construction. In 2017, records show the home was declared exempt from Vancouver’s empty homes tax, and an audit was opened. The city has not yet received an empty homes tax declaration for the home for 2018. The 28th Ave. house was declared occupied for 2018.

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Long-time observers of Vancouver’s famously overheated real-estate market have been watching the Meng case play out, and they’re struck by how closely her story follows the patterns they’ve been tracking in immigration and real estate.

“It’s really ... reflecting the forces that are shaping real estate,” said Andy Yan, an urban planner and director of the City Program at Simon Fraser University.

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Those forces include immigration policies that favoured wealthy investors and the common pattern of “satellite” families, as children attend school in Vancouver but the principal earner stays in Hong Kong or China to work.

“Housing in Vancouver is no longer about income but about wealth,” Yan said. “In this case, this wealth is predominantly generated outside of the city to be brought into Vancouver.”

When Ron Usher looked over land title and mortgage documents for the Vancouver properties owned by Liu and Meng’s husband, he found they were similar to “tens of thousands” of properties in Metro Vancouver.

“This is totally the norm for offshore purchases,” said Usher, the general counsel for B.C. Notaries, who was a member of a 2016 panel that reviewed real-estate regulation in the province.

“You’ll see a CIBC, an HSBC significant loan, the owner is a student or a housewife. This is completely normal.”

The 28th Ave. home has a $5-million mortgage, and the Matthews Ave. home has a $15-million mortgage, both from HSBC. Both mortgage documents were signed by Liu from a notary public’s office in Hong Kong. His occupation is listed as “investor” on one mortgage and “marketing developer” on another.

The mortgage documents may appear to indicate a tiny or non-existent down payment, but Usher said that would be a misinterpretation. He said the documents indicate a common type of mortgage offered not just by HSBC but by many Canadian banks.

“This is an open-ended mortgage. You may be using it to buy your car, to fix your house, to go on a vacation,” Usher explained.

“What it means is, they’ll give you money for buying your house, but it will also be like a line of credit. So what they put on the title is not what you’re actually paying; you’d have to see the loan agreement to actually understand that.”

Exactly how much offshore wealth has influenced Vancouver’s housing market has been hotly debated for years. But Yan said Meng’s story is an example of the “rarefied” wealth that has entered the market, and he said a raft of government policies that have been introduced since 2016 are important to reset the imbalance.

Those policies include a 20 per cent foreign buyer tax when properties change hands, an increased property tax on properties worth over $3 million, Vancouver’s empty homes tax (one per cent of assessed value, although the current mayor has vowed to raise it to three per cent) and a provincial speculation tax that also targets underused properties.

“That’s the really interesting part of this case,” Yan said. “It really touches upon how Vancouver has become this city of hyper-transiency that has really shaped its housing markets.”

Clarification — December 11, 2018: This article was edited from a previous version that mistakenly referred to the six-bedroom home on 28th Ave. as a two-bedroom home on the first reference.

With files from Jesse Winter

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