Weekly Buzz: Resource land and luxury home markets

Western Canada's top commercial real estate stories, featuring coverage on oil and gas land sales and multi-million dollar home owners claiming low income tax status

Western Investor
January 12, 2018

 Alberta landowners


This week’s top stories cover the popularity of oil and gas land in B.C. and Alberta, despite the latter’s drop in resource ranking. Meanwhile, CRA is looking into affluent neighbourhoods with multi-million dollar homes whose inhabitants report to be low income despite the cost of living in these areas. Lastly, a New York-based firm shows its appetite for Canadian investment by acquiring a Vancouver-based real estate trust.


B.C., Alberta lead 2017 land sale resurgence – Pipeline News North

Oil and gas land sale spending in B.C. and Alberta hit $793.93 million last year, more than four times the year prior’s value.

Interest in the Montney and Duvernay plays in B.C. and Alberta powered a near $800-million resurgence in oil and gas land sales in 2017.

Spending in B.C. and Alberta hit $793.93 million last year, the Daily Oil Bulletin reports, up fourfold with producers locking up 1.77 million hectares of land for exploration and development.

That's up from a paltry $217.51 million in spending in 2016, and $375.78 million in 2015, according to the Bulletin.

Spending was largely concentrated in Alberta, which ended the year with $556.39 million in bids, much of that spent on land in the East Shale Basin Duvernay, according to the Bulletin.

In B.C., spending was up to $173.25 million in 2017 after plunging to a record low of just $15.1 million in 2016.

Two sales were largely responsible for the large jump in the province, which started the year with a bang when its first land sale of 2017 produced $39.62 million in bonus bids. That sale was driven by a $35.13-million licence in Northeast B.C. prospective for the Montney east of Dawson Creek.

Meanwhile, a large $77-million parcel highlighted the province's July sale.

That high-priced drilling licence at Inga east of the Montney production at Altares, was picked up by Scott Land & Lease Ltd., which paid an average price of $13,893.90 per hectare for the 5,542-hectare parcel.

Meanwhile, spending in Saskatchewan totalled $62.83 million in 2017. That's up from $53.4 million in 2016. In Manitoba, spending hit $1.4 million last year, up from $262,000 in 2016.

Scott Land & Lease Ltd. was the top buyer in 2017, according to the Bulletin, acquiring 600,797 hectares for $357.39 million.

[Pipeline News North]


Alberta drops in resource ranking – Western Investor

Alberta now ranks as the second least-attractive Canadian jurisdiction for oil and gas investment – unfortunate news for a Prairie province continuing on an oil price comeback.

Alberta now ranks as the second least attractive Canadian jurisdiction for oil and gas investment – ahead of B.C. but far behind Saskatchewan, according to an annual global survey of petroleum-sector executives by the Fraser Institute, an independent, non-partisan, Canadian public policy think tank.

Alberta’s score improved slightly this year, but its No. 33 ranking remains far behind 2014 levels when it placed No. 14 globally out of 156 jurisdictions, the survey noted.

More than 50 per cent of survey respondents said Alberta’s high taxes deterred investment in the province’s oil and gas sector.

“The competitive headwinds Canadian jurisdictions already face in the energy sector will likely get stiffer as regulatory and tax burdens continue to lighten in the U.S.,” said Kenneth Green, senior director of the Fraser Institute’s Centre for Natural Resource.

Elsewhere in Canada, Newfoundland and Labrador was the top-ranked province having moved up from No. 25 last year to the fourth most attractive worldwide this year. Saskatchewan – No. 4 globally last year – ranks No.7 this year.

[Western Investor]


CRA targeting one Lower Mainland neighbourhood, comparing high home values to tax filings – North Shore News

Families with homes in affluent North Shore neighbourhoods are possibly being investigated by the CRA for claiming low-income status despite owning multi-million dollar homes.

The CRA’s Postal Code Project is targeting five wealthy neighbourhoods across the country – including one in the Lower Mainland – to start taking a closer look at residents’ tax filings.

So far the tax agency isn’t saying which neighbourhoods are under the microscope. “We’ve looking at neighbourhoods where there’s a very high median home value,” said Ted Gallivan, the assistant commissioner for international, large business and investigations branch of the CRA.

Gallivan said the project is targeting more than 1,100 homes in areas where average home values are about $4 million.

“Most Canadians can guess” where those are, he added.

Gallivan said the first step the taxman is taking is determining the ownership of the homes. “A lot of these homes are owned by corporations or trusts or people who are non-residents,” he said.

Depending on what the ownership reveals, the agency may ask further questions, said Gallivan.

“Right at the outset what we’re seeing in some cases is the income they’re reporting is not enough to pay the property tax,” he said.

“That could be legitimate because they have other sources of wealth or they have assets that they’re liquidating but it does cause us to ask more questions.”

Recent census results put West Vancouver, where average home prices hover at $3 million, as having one of the highest rates of people with “low income” in Metro Vancouver, as measured by income reported to the government.

In certain neighbourhoods – like Chartwell and Ambleside – the percentage of “low income” families was between 25 and 33 per cent of all households.

Gallivan said the CRA also has access to other sources of data, including notices of any electronic funds transfers of $10,000 or more going back to 2015.

Analysts look to see if there is a financial flow that warrants a closer examination, said Gallivan: “Is the person sending a lot of money offshore? Or bringing money into Canada?” And most important, is that consistent with what’s been officially reported?

If the answers don’t match up, the Canada Revenue Agency may begin an audit, which can include exchanging information with tax authorities in other countries, said Gallivan.

[North Shore News]


New York firm purchases Vancouver investment trust for $3.8B – Business in Vancouver

Blackstone Property Partners has acquired Pure Industrial Real Estate Trust, established in 2007

Vancouver-based Pure Industrial Real Estate Trust (PIRET) announced January 9 it has been bought by Blackstone Property Partners, a New York-based real estate investment company whose holdings include Hilton Worldwide, Logicor and Invitation Homes.

The all-cash transaction is valued at $3.8 billion, including debt, with a transaction price of $8.10 per unit – a 21 per cent premium over the closing price on January 8 ($6.72).

The transaction, which still requires approval of two-thirds of shareholders, is expected to be completed in 2018’s second quarter.

PIRET was first established in August 2007. The company has holdings in Canada and the United States.

[Business in Vancouver]

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