MONTREAL - The mayor of Montreal expects Air Canada's decision to introduce direct year-round service to Japan will increase foreign real estate purchases but he's not worried it will lead to price spikes seen in Toronto and Vancouver.

"We don't have the same situation," Denis Coderre said Wednesday at a news conference announcing flights set to begin next June.

"There is room to have more (foreign) ownership but at the same time the vast majority are from our own people who have been buying more and more."

Montreal is arguably one of Canada's hottest market these days. Prices for a single-family homes were up eight per cent last month as sales increased 16 per cent compared to a year ago.

Purchases by Chinese nationals have surged since direct flights between Montreal and Beijing started in 2015, with Shanghai added last February.

The number of homes purchased by foreigners in Montreal increased by 62 per cent during the first nine months of 2016, but they still only account for about 1.5 per cent of all transactions, according to the Canada Mortgage Housing Corp.

Housing sales have cooled in Toronto and Vancouver since they introduced a 15 per cent tax on foreign buyers in an attempt to rein in price hikes.

Coderre says the direct service to Tokyo will generate economic returns beyond tourism.

"Each time that we announce a direct flight, it has a direct impact on our economy because it increases our wealth and our capability to play a role even more important," he said.

The country's largest airline will operate year-round service to Narita airport.

Airline CEO Calin Rovinescu said it expects to fill the Boeing 787 Dreamliner with local and Eastern Canadian passengers and Americans travelling through one of its three key Canadian hubs.

Air Canada (TSX:AC) currently operates up to 46 weekly non-stop flights between Canada and Japan from Toronto, Vancouver and Calgary. It says the Montreal direct flight represents a $200 million investment mainly for the use of the airplane that will create 150 direct jobs.

Montreal Board of Trade president Michel Leblanc said the flights will provide business opportunities for Quebec companies in artificial intelligence, gaming, clean technology and food.

"It's very strategic," he said, adding he expects it will lead to research collaborations and innovation.

Japan is Quebec's sixth largest market that purchased $1.3 billion worth of goods last year, said Deputy Premier Lise Theriault.

With more than 600 provincial companies having business links with Japan, the Asian market represents a big potential to expand their global footprint, she said at a news conference.

While she has no forecast on the size of the potential economic boost, Theriault said the province has several economic missions in the works to help exports, particularly in food, which accounted for 40 per cent of Quebec's exports to Japan.

Meanwhile, the operators of Trudeau International Airport said the addition of 18 direct flights by Air Canada since 2016 has caused traffic to grow more than seven per cent in each of the last two years, putting pressure on it to add a new terminal.

"We will obviously have to do some form of expansion in Montreal, that's for sure, in the foreseeable future and it will be a lot sooner than we had anticipated," said Aeroports de Montreal CEO Philippe Rainville.

News from © The Canadian Press, 2017