The real estate bubble in Canada’s leading cities affects the average Canadian in obvious ways – if you own property, selling is favorable. But if you’re already rich, is selling the right choice? The answer is discussed in one of this week’s top stories, as well as how the change in strata laws affects everyone and how liquor in Canadian supermarkets is expanding in Saskatchewan. In Vancouver, a land swap with murky terms continues the trend of sizable land deals purchased by condo developers for astronomical prices with little available details.
Here are Western Investor’s pick of the top stories on commercial real estate this week.
Real estate bubble? The wealthy see it differently – The Globe and Mail
How do the wealthy navigate Canada’s hot real estate market? Well, they certainly have more choices that the average homeowner. The can choose whether to buy, sell or hold with considerably more ease, The Globe and Mail reports.
One key advantage that wealthier real estate investors have over those with more modest means is patience, observes Ludovic Siouffi, a portfolio manager with Canaccord Genuity Wealth Management in Vancouver.
“The wealthy and/or the more sophisticated investor understands that there are ups and downs to any market, whether that is real estate or stock portfolios, and they are somewhat immune to these massive spikes. They aren’t dramatic and emotional about wanting to ‘sell, sell, sell.’”
For many years, Vancouver was unquestionably the country’s hottest real estate market, buoyed in part by an influx of foreign investment. Regulations aimed at limiting real estate purchases have cooled the market somewhat, but Mr. Siouffi does not see that changing the strategy for most wealthy investors.
“Guys who are heavy in real estate and who have been heavy in real estate are always adding, regardless of the market conditions,” he says. “It is expensive now, it was expensive five years ago and it was expensive five years before that.”
That does not mean wealthy investors are not willing to take some profits off the table. Mr. Siouffi notes he recently had a conversation with one of his clients who has a portfolio of 10 properties and was looking to sell one of them and put the proceeds into the equity market.
“That is a conversation that I am having with some of my investors,” he says.
New condo-sale rule brings relief to many, grief to some – Business in Vancouver
Up until now, most coverage on B.C.’s new law changes allowing for strata councils to dissolve and sell old complexes for a profit have been considered overwhelmingly positive for strata owners – but as Business in Vancouver reports, it isn’t always in some owner’s best interest.
The government’s Bill 40 lowered the bar so that if 80% of the owners in a strata corporation vote to dissolve that entity and sell the site to a developer, they can petition BC Supreme Court for final approval.
The court then takes into consideration whether owners who oppose the sale will suffer a significant hardship. Court approval is not a rubber-stamp process, but proposals are now a lot more likely to find success in court than they would have before Bill 40 became law.
Previously, courts usually required unanimity among the owners, although judges could make exceptions for cases in which a development was badly rundown.
The downside of B.C.’s new legislation, however, is that condominium owners who like where they live and have no desire to sell are in a more precarious situation when neighbours start looking to divest.
The new law raises the possibility that seniors and other owners and tenants on fixed incomes could be forced out of their homes – a prospect that is particularly daunting in the Lower Mainland given the huge run-up in the region’s real estate prices.
Sobeys scores retail liquor license – Western Investor
One of Western Investor’s most-red stories this week covered Saskatchewan’s latest foray into the liquor business, taking full advantage of law changes that allow grocery stores to apply to carry liquor in store.
The grocery giant has been awarded a licence to open nine additional liquor stores throughout the province, bringing its total up to 11.
It’s all part of a large-scale privatizing of Saskatchewan’s liquor industry, which includes plans for new ownership of 50 liquor outlets. Other operators will include co-ops and private owners.
Keri Scobie, Sobeys’ Calgary-based director of communications, said details are still being finalized for specific locations within nine communities, the size of the stand-alone stores and when they’ll open. She said two would cut the ribbon within the next 18 months.
The company already operates one liquor store in Saskatoon and another in Regina. Both locations are about 10,000 square feet in size.
“It’s been a very positive experience for us. We’ve brought a modern liquor retailing experience to both of our stores,” she said.
With the stores located in close proximity to their Sobeys outlets, Scobie said the company hopes to gain a larger share of wallets by offering near one-stop shopping.
“We look at it as a convenience factor for our customers and being there for all of their needs,” she said.
Both Regina and Saskatoon will get another liquor store while Sobeys will open one in each of Battleford, Emerald Park, Kindersley, Melville, Moose Jaw, Tisdale and Yorkton.
“This is a great opportunity for us to expand the footprint we have in the province. If there are opportunities in other markets, we’ll be open to that, too,” she said.
New questions about controversial Downtown Vancouver land swap deal – Global
BC Housing has been providing funding to a local condo developer, spurring questions on the disclosure terms of the deal and whether BC Housing should be providing funding to a luxury developer.
The patch of land at 508 Helmcken Street is a muddy hole in the ground but it will soon be home to a luxury condo tower.
And for nearly seven months BC Housing financed the developer while condo presales were underway.
“I didn’t think this could possibly be happening,” said South Vancouver Park Society’s Glen Chernen, who discovered the mortgage documents.
“I don’t think that BC Housing should be financing condos.”
Here’s how it unfolded.
Brenhill, a developer, built the New Jubilee House, a social housing project that was supposed to cost $30.6 million.
BC Housing financed its construction with a mortgage worth $36.2 million.
When construction was completed, the loan was replaced with a $39-million mortgage for the Helmcken Street property where Brenhill would build market condos on land it received from the city in a sole-source deal.
No other developers were offered the chance to make a proposal.
BC Housing issued a statement saying that, “contrary to allegations made earlier today in Question Period, BC Housing has never had any involvement in this development,” referring to the market condos to be built on Helmcken Street.
However, the mortgage was registered to 508 Helmcken Street and a provision stated that Brenhill must provide details of “pre-sale achievements for the contemplated market housing project.”
The loan was repaid. But Chernen nevertheless wants the auditor general to investigate.
“I would like to see open disclosure of any such deals,” hesaid.