Mon Feb 24, 2014 12:01am PST
Welcome the state
Ottawa’s recent announcement that the existing version of its immigrant investor program would be scrapped and the regulations revised was touted in many quarters as causing havoc in Vancouver’s real estate market.
But if the foreign money that’s being sunk into Vancouver real estate has been known to skew market statistics, it hasn’t been through direct competition with average home buyers.
Certainly, the applicants with a minimum net worth of $1.6 million and $800,000 to lend the government interest-free aren’t the folks pushing up values in East Vancouver.
“They’re different sectors and tiers of the market,” said George Wong of Magnum Projects Ltd., which has handled project marketing for Aspac Developments Ltd., Holborn Group and others. “What these wealthy immigrants have been buying are the big houses, in the wealthier pockets.”
Wong – echoing the cris du coeur that sounded when Ottawa stepped in to prevent Chinese companies from investing in the resource sector – believes the latest announcement sends the wrong message about Canada’s openness to foreign investment.
“It sends a message out to the world that Canada is unfriendly, and I think that’s a shame,” he said. “The optics are not good.”
But chances are the measures won’t have much of an effect. Wong believes immigration consultants will simply find alternative means to get people – and their cash – into Canada.
The flow of cash is what Wong believes has the biggest impact on local real estate, especially as investors have become comfortable enough to begin scouting development prospects.
The attention-grabbing investments in the Cambie corridor in 2009 and 2010 are examples, as is activity by Yuanheng Holdings Ltd. and Adestra Hotel Group.
“We have seen many immigrants that have come here and they are buying development land, and they are now talking about developing,” he said.
State-owned companies from China are also preparing to secure development sites in the Lower Mainland, but Wong said he is sworn to confidence regarding the negotiations – although the prospect should be good news for the province.
“That’s going to make the Vancouver market even more vibrant,” he said. “We’ve got such a good thing going, let’s just keep it going.”
Stepping out of the provincial budget lockup last week, Urban Development Institute president and CEO Anne McMullin was unaware of plans by Chinese state-owned companies to enter the local development business, but she did have some good news of her own.
The province’s Property Transfer Tax (PTT) exemption for first-time buyers will increase to $475,000 from $425,000, effective immediately. A partial exemption is available for homes valued between $475,000 and $500,000. The measure will boost the savings available to first-time home buyers and, more importantly, allow them to consider paying more for a home – PTT-free – than they would have otherwise.
McMullin said the change could benefit 1,700 to 1,800 buyers a year, saving them upwards of $7,500 each.
According to the Real Estate Board of Greater Vancouver figures, buyers of townhomes and apartments will benefit most; the benchmark price for these properties in January stood at $457,700 and $371,500, respectively.
The real estate sector has long advocated for changes to the Property Transfer Tax, arguing that it contributes to the province’s notoriously unaffordable housing.
Same, but different
With final approvals in hand, Orca Shores LLC launched the Cottages at Seabright Farm in Point Roberts on Valentine’s weekend. While the project lies in Washington state, all roads lead to Canada for the community. This has made Metro Vancouver buyers key to its success – and buyers from Point Roberts may be key to success for the major retail projects Tsawwassen First Nation is developing with Ivanhoe Cambridge and Property Development Group on Highway 17.
“People in Point Roberts are very excited,” said Wayne Knowles, a representative of Orca Shores. “[For] major shopping, we have to drive through the tunnel, which now we won’t have to do.”
Knowles expects the proximity to a major shopping complex will attract buyers to the “quaint community” of 62 cottages Orca Shores is developing.
Originally proposed in 2006, Seabright Farm was scaled back to 62 units from 103. Parallel to what Century Group plans for its Southlands property in Tsawwassen, Orca Shores’ project will have 31 acres of green space, including a 6.2-acre farm.
“Our marketing studies have shown that people want to know where their food is coming from, and because we’ve got so much space we wanted to include a farm,” Knowles said. “It wasn’t a zoning requirement. ... We wanted it to be a quaint community.”
Three lots at the project have sold to date. •