The week’s top stories focus primarily on the residential, retail and hotel markets in the Lower Mainland and to some degree, Alberta. In Metro Vancouver, home sales, especially in single family luxury home market, has slowed considerable and continues to show signs of further decrease. Meanwhile, a major retail centre fetches an impressive sale price and a string of hotels across B.C. and Alberta is undergoing a potential stake sale.
Here is Western Investor’s pick of the most buzzworthy real estate stories published this week.
All of those sold below asking price, averaging 16 per cent off list, as the region’s high-end homes fail to sell.
The Metro Vancouver real estate market is clearly cooling down, and nowhere is this happening faster than in the high-end detached home sector, an analysis of MLS data reveals.
Since May 1, 2018, only 43 detached homes in the Metro Vancouver region – stretching from Mission and Delta to the Sunshine Coast and Whistler – have sold above $7 million.
All 43 of those houses sold for below asking, averaging a discount of 16 per cent off the list price.
This compares with 94 Metro Vancouver home sales above $7 million during the previous 12-month period of May 1, 2017 to April 30 2018 – 89 of which sold under asking. In the 12 months before that – May 1, 2016 to April 30, 2017 – there were 97 sales above $7 million, 86 of which went for lower than their list price.
The highest-priced detached sale over the past 12 months was a grand, six-bedroom mansion (pictured above) in Vancouver’s priciest enclave of Shaughnessy, which sold for $26 million in May 2018 after six months on the market. That price may seem like a lot, but the house was listed in 2017 at $35 million, then reduced to $29,980,000.
After it was built, this home was listed by a different agent in April 2016 at an even higher price — $38.9 million — but did not sell at that time. Records also reveal that the property, which originally had a Tudor-style home, sold back in 2000 for $1.8 million.
However, the biggest price drop seen in the region’s $7 million-plus sector over the past year was the sale of this stunning West Vancouver house (see our listing photo gallery article here), which sold for $10.8 million, more than $6 million below the $16.88 million asking price.
Listing price reductions
With high-end detached homes failing to sell, owners are turning to price reductions to shift their properties. Of the 209 detached houses currently listed above $7 million on Metro Vancouver’s MLS (as of May 3, 2019), a relatively few 28 have reduced their price since the home was listed.
Just 20 per cent of the 865 homes released last month have sold, says MLA Canada’s research arm.
Reflecting what’s happening in the Lower Mainland’s slowing resale housing market, the presale sector doesn’t seem to be doing much better, according to the results of a new report.
MLA Advisory, the research arm of real estate marketing company MLA Canada, reported May 3 that there have been 3,817 presale units released for sale so far this year across Greater Vancouver and the Fraser Valley. That number is 23 per cent lower than the same period in 2018.
There were 10 project launches in the region in April – five of which were wood-frame condo developments in West Coquitlam, New Westminster and Langley – totalling 865 homes. Of those, just 20 per cent have sold so far, said MLA Advsory. That compares with an absorption rate of 43 per cent in April 2018, of the 879 presales released that month.
This low an absorption rate can put new home developments’ financing at risk, as institutional lenders financing a project require a certain level of uptake. MLA’s report said, “We would prefer to see this [absorption rate] closer to 25-30 per cent within the month, to make the remainder of sales needed to hit financing requirements more manageable.”
The supply of new homes coming on stream is also much lower than in recent years, said the research group.
Suzana Goncalves, chief advisory officer and partner at MLA Canada, said, “MLA Advisory estimates that nearly 5,000 concrete units within 17 projects have postponed their sales launches [to wait] for more favourable market conditions.”
The group is warning that the reduction in new home supply, caused by the slowing housing market, will have significant effects in the long term. Goncalves added, “These concrete pre-sale project delays, along with decreases in housing starts by up to 20 per cent province-wide, will have drastic long-term implications on our housing supply, affordability and home ownership.”
The Fairmont hotels are located in Whistler, Banff, Lake Louise and Jasper and are said to have an estimated transaction value of over $1 billion.
Oxford Properties Group is planning to sell a 50 per cent stake in several prominent Fairmont resort hotels across B.C. and Alberta.
The four properties are located in Whistler, B.C. and Lake Louise, Banff and Jasper, Alberta. A source with knowledge of the plans places the potential transaction value at upwards of $1 billion, according to Bloomberg News. The portfolio has a combined total of 2,200 units, welcoming more than a million guests a year.
Jones Lang LeSalle Inc. has been contracted to help sell the stake, according to the source who wishes to remain anonymous. Oxford Properties confirmed it is planning to sell the stake, but declined to comment on how much the eventual sale could be worth.
“This decision is in line with our overall strategy to grow our global partner program, which now manages over $18 billion in third party capital,” said Eric Plesman, head of Oxford Properties Canada, in a statement.
Toronto-based Oxford Properties - a real estate managment branch of OMERS, one of Canada's largest pension plans - will go onto manage the Fairmont and Fairmont Château-branded hotels. The group acquired the four hotels as part of a larger portfolio in 2006 that included Fairmont Vancouver Airport and two Quebec properties. The YVR hotel and Quebec properties have since been sold.
The remaining properties are located at 4599 Chateau Blvd., Whistler; 111 Lake Louise Dr., Lake Louise; 405 Spray Ave, Banff; 1 Old Lodge Rd, Jasper.
The mall is located across from Vancouver City Hall and sold for more than double its latest assessed value of $102 million.
The shopping centre across the street from Vancouver City Hall has sold for $225 million.
The nearly 250,000-square-foot City Square Mall was purchased by Richmond-based Sun Commercial Real Estate Group (SUNCOM), according to a new retail market report by real estate firm CBRE.
The blockbuster deal sold for more than double its assessed value of $102 million. The site’s impressive price tag is likely due to its redevelopment potential. The 3.3-acre property is located within the Broadway Corridor Plan, just a block from the Canada Line Broadway-City Hall Station and the future Millennium Line Broadway Extension.
The mixed-use commercial mall was designed with a European village feel, utilizing both heritage buildings and modern structures. The property includes 50 retail units and two six-storey office buildings.
The mall currently has a high vacancy rate. The mall lost its anchor tenant, Safeway, last year. The space has remained vacant since.
SUNCOM’s holdings include the Best Western Sands Hotel on Davie Street; Westwood Plateau Golf & Country Club in Coquitlam, Mylora Sidaway Golf Club in Richmond. They did not respond to a request for comment on their acquisition.
The property is located at the northwest corner of Cambie Street and West 12th Avenue at 555 West 12th Ave.