This week’s top stories primarily cover the residential and office sectors, each representing diverging trends. In the residential sector, velocity of home sales has slowed considerably. The Real Estate Board of Greater Vancouver believes the April slowdown is indicative of changing market conditions. Meanwhile, two new office developments in downtown Vancouver continue to feed into the sector’s higher-than-ever demand.
Here is Western Investor’s pick of the top real estate stories published this week.
Westbank Corp recently received approval for an office development in downtown Vancouver, Peter Mitham reports.
Westbank Corp. plans to announce a new strata office development in downtown Vancouver. It recently won approval from the city for a 24-storey tower at 400 West Georgia Street with 353,000 square feet of office space and is planning to redevelop the Creative Energy plant at 720 Beatty Street with a mix of residential units and 18 storeys of office space.
Westbank leasing executive Roz McQueen disclosed the strata plan as panellists at commercial real estate association NAIOP discussed the role of strata projects in raising expectations of what downtown land is worth.
“I think Bosa paid $180 a buildable [square foot] for that site at Cordova and Hastings,” opined Maury Dubuque, senior managing director with Colliers International in Vancouver.
Reflecting on current construction costs, and what buyers have been willing to pay, he wondered if $400 a buildable square foot might make sense to some people.
Dan Turner, a principal of PCI Group, said land values are anyone’s guess these days.
“It’s whatever someone pays, especially in the downtown right now. [Values] are way off base,” he said.
With construction costs rising, Turner expects values to retrench closer to $200 a buildable square foot.
Speculation was one of the hot issues raised with the nine-member panel charged with recommending ways to revitalize the province’s Agricultural Land Reserve during the public consultation that ended April 30. The more than 1,500 respondents frequently expressed concern over who is buying farmland and what they’re doing with it.
But Farm Credit Canada’s latest report on farmland values says farmers looking to expand were the single biggest driver of demand for farmland in 2017. This contributed to a 2.7% increase provincewide in farmland values in 2017 versus the previous year. This was the weakest increase since 2012.
Nevertheless, the report noted, “throughout most of the province, there continued to be demand from rural residential buyers seeking land close to urban centres.”
The phenomenon was evident in where the biggest increases in benchmark values occurred: Vancouver Island, which has been the destination for an influx of buyers pushed out of the Lower Mainland, which saw the second-greatest increase. The next-greatest increases radiated out from here, through the Okanagan and Kootenay regions and north through the Thompson-Nicola, Cariboo and Peace.
While quarter-section estates have been a concern in the Peace, land values increased a mere 0.2% to an average transaction value of $1,543 an acre. This contrasts sharply with the 23.6% gain on Vancouver Island, where the typical sale maxes out at $100,000 an acre.
The company announced April 30 it would be taking over redevelopment of the Canada Post building, expanding its Vancouver footprint by several thousand tech jobs.
The old Canada Post building at 349 West Georgia Street will be redeveloped into Amazon Canada's new Vancouver headquarters, Prime Minister Justin Trudeau announced today (April 30) alongside Amazon VP, Alexandre Gagnon. The headquarters, expected to open by 2022, will create 3,000 new corporate, high-tech jobs.
This will be Amazon's third downtown Vancouver office, joining the company's 156,000 square-foot location at TELUS Garden and a nine-storey office currently under construction at 402 Dunsmuir Street. The company expects to employ 5,000 employs across the three offices.
“Amazon is excited to create 3,000 more highly skilled jobs in Vancouver,” said Alexandre Gagnon, vice-president of Amazon Canada and Mexico. “Vancouver is home to an incredibly talented and diverse workforce, and these thousands of new employees will invent on behalf of our customers worldwide.”
The new headquarters will be housed within a 416,000-square-foot tower built above the existing Canada Post building.
QuadReal Property Group will develop the mixed-use project, aptly named The Post. The redevelopment will also include retail and restaurant space.
"This is great news for Canadian professionals looking for new challenges and new markets, or students ready to enter the job market," Prime Minister Trudeau said. "I want to highlight Amazon's commitment to recruiting top talent from our universities, giving students the opportunity to have a direct impact on their technology at an early stage in their careers."
Metro region saw lowest number of April home sales since 2001; board says “market conditions are changing” and points to diminished purchasing power.
Metro Vancouver home sales saw the coolest April for 17 years, with the Real Estate Board of Greater Vancouver (REBGV) stating that “market conditions are changing.”
There were 2,579 home sales on the Multiple Listing Service® in April, according to REBGV statistics released May 2. This is a 27.4 per cent drop from the 3,553 sales in April last year, and the lowest since 2001.
However, April’s transactions are a slight improvement over the previous month, rising 2.5 per cent over March 2018 when 2,517 homes exchanged hands.
“Market conditions are changing. Home sales declined in our region last month to a 17-year April low and home sellers have become more active than we’ve seen in the past three years,” said Phil Moore, REBGV president. “The mortgage requirements that the federal government implemented this year have, among other factors, diminished home buyers’ purchasing power and they’re being felt on the buyer side today.”
There was also a flurry of new listings, with sellers moving on the spring market and perhaps motivated by uncertainty over the market’s future. Some 5,820 homes were newly listing on the MLS, an 18.6 per cent increase compared with new listings in April 2017 and a whopping 30.8 per cent increase over March 2018, when 4,450 homes were listed.
That takes total number of properties currently listed on the MLS® system in Metro Vancouver to 9,822 as of the end of April, up 25.7 per cent increase over April 2017 and a 17.2 per cent increase since March 2018.
“Home buyers have more breathing room this spring. They have more selection to choose from and less demand to compete against,” added Moore.
However, those expecting the increased supply and slowing sales will result in lower prices must think again. The composite benchmark price for all residential properties in Metro Vancouver is currently $1,092,000, which is a 14.3 per cent increase over April 2017 and a 0.7 per cent increase over March 2018.
Part of the reason is that even though inventory is increasing and sales are slowing, the supply has not yet risen enough to match demand. The sales-to-active listings ratio for April 2018 is 26.3 per cent, which indicates a continued sellers’ market overall. However, this looks very different when broken into different property types.
By property type, the ratio is 14.1 per cent for detached homes (a balanced market, which is deemed in the range of 12 to 20 per cent), 36.1 per cent for townhomes and 46.7 per cent for condominiums (both strong seller’s markets).
The majority of us support a strong, united national economy and respect that we all share a responsibility to protect and expand it, Western Investor Frank O’Brien believes.
Other Canadians should take heart. Despite what is being portrayed, British Columbians are not all protectionist zealots, stage-managed protesters or political hypocrites. The majority of us living west of the Rockies support a strong, united national economy, and respect that we share a responsibility in protecting and expanding it.
The majority of us also know that three pillars form the foundation of the B.C. economy: international investment, resource extraction and real estate.
We are not all hypocrites, unlike provincial leaders who are eager to stop a vital pipeline project in the vote-heavy Lower Mainland but back another in the north, where there are not enough constituents to threaten their shaky hold on power.
We don’t all drive our fossil fueled trucks to protest an oil pipeline that will generate billions of dollars for the government and then whine that we want more low-cost taxpayer funded housing, more spending on Aboriginal issues, more government-funded drug injection sites, free daycare and higher health and education spending.
We don’t all support mouthing platitudes about protecting the middle-class and hard-working families and then tax the same people out of their businesses and homes.
We don’t all support jetting political insiders on expensive foreign trade missions who then react with horror and punishing tax barriers when foreigners actually invest in B.C.
If a wealthy foreign citizen purchases a $4 million house in B.C. the total taxes would now be more than $800,000. If he or she could not live in the home year round, the tax rises by another $120,000 annually next year.
By any measure, such a punitive tax is enough to drive away nearly any international investor. We guess this is B.C.’s alternative to a Trump-style border wall.
Or consider a Canadian citizen from, say, Manitoba or Ontario who owns a family ski condo or a lakefront cottage in B.C., which they naturally use during the appropriate season and help support the local economy. In B.C., such Canadians are now treated as alien parasites and face a prohibitive annual speculation tax on their recreational property in many parts of the province.
Then there is a new annual tax on the many longtime B.C. residents whose homes have appreciated to $3 million in value: that will now cost them $15,000 extra every year.
The majority of British Columbians realize that it takes years of hard work and sacrifice for the average family to afford quality real estate here, and do not believe such owners should be punished.