Exclusive: Chinese buyer interest in Metro Vancouver real estate soars again

After a slump in inquiries, third quarter sees leap in Metro Vancouver searches on Chinese real estate portal Juwai.com

Following a steep drop-off in Metro Vancouver homes searches by potential buyers in China, interest spiked again in 2018’s third quarter, according to data mined for Glacier Media by China's biggest international real estate website Juwai.com.

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The number of inquiries on Metro Vancouver real estate between July and September exceeded even the height reached in 2017’s first quarter, the international property portal reported in response to an inquiry by Glacier Media (see graph above).

This follows a significant lull over the previous four quarters, where Chinese interest dropped dramatically and focused on other Canadian cities, especially Montréal. Metro Vancouver has this year slipped to being the fifth most searched-for city for Chinese buyers, after Greater Toronto, Montréal, Calgary and Ottawa – whereas in 2016 it was second only to Toronto, reported the website.

Carrie Law, CEO and director of Juwai.com, said: “Our inquiry data shows that Chinese demand plummeted during the first half of the year. This matches the official data showing that foreign buying in Greater Vancouver was down to just one per cent of activity in the first half of 2017. In the second quarter, Chinese buyer demand actually hit its lowest level since early 2015. It’s like a sinkhole opened up and swallowed all the buyers. That was the result of several quarters of plunging demand.”

A dramatic increase in inquiries turned this around in the third quarter, with searches up 130.8 per cent from the trough seen in Q2, and up 30.4 per cent over the third quarter of 2017.

Law said, “This is an upswelling of demand that we frankly didn’t expect. What we can’t tell you yet is how many of these buyers will go all the way and acquire a home, despite the foreign buyer tax. Given the time it takes to research and complete a transaction, those who do purchase should begin to show up in the official statistics only from the first quarter of 2019.”

Metro Vancouver still good value for Chinese buyers

So what could be prompting this renewed interest in Metro Vancouver real estate by Chinese buyers?

“While more expensive than alternatives like Montreal, Vancouver is still offers Chinese the prospect of homes or apartments at a relatively low price compared to similar property in China. The price per square metre for an apartment in downtown Vancouver is 37 per cent lower than in Shanghai, according to Numbeo,” Law wrote in a statement to Glacier Media.

“In China right now there’s a great deal of insecurity about the real estate and economic outlook. Most middle-class and upper-middle-class Chinese owe much of their financial security to their homes and investment properties in China, which have appreciated massively over the past two decades. But determined government policy seems to be bringing an end to price appreciation and could even cause prices to fall for the first time. In addition, political changes, the trade war, and the falling currency combine to make Chinese very nervous about their personal finances.”

Low average inquiry price

Common public perception is that Chinese buyers seek out high-priced properties to invest huge sums of cash, but this is not borne out by Juwai.com’s data. The website reported that the average inquiry price for Chinese buyers in Metro Vancouver area in 2018 so far is $831,000.

Juwai.com also said that Canada is the fourth most popular country in the world for Chinese buyers.

Copyright © 2018 Western Investor  , Joannah Connolly Glacier Media Real Estate
October 23, 2018
  

CMHC releases Sept. housing starts data

The annual pace of Canadian housing starts fell to their lowest level in nearly two years in September.

Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate came in at 188,683 units last month, down from 198,843 in August.

Thomson Reuters Eikon says economists had expected an annual rate of 210,000 for September.

September marks the third straight monthly decline.

The slowdown in the pace of housing starts comes amid rising interest rates from the Bank of Canada, and more restrictive mortgage rules.

``The September housing starts report fits with the relative calm and return to normality in sales, market balance and price growth that we are seeing across most of the country this year, in particular Toronto, following speculative excesses in Southern Ontario earlier last year and a moderate correction in response to policy measures earlier this year,'' wrote Sal Guatieri, a senior economist with BMO Capital Markets, in a note.

``Demand continues to be supported by the fastest population growth in 27 years and new millennial-led households. A calmer housing market is just what the doctor ordered, and won't discourage the Bank of Canada from raising rates on Oct. 24.''

CMHC says the pace of urban starts fell by 5.9 per cent to 175,653 units. The slowdown was dragged down by an 8.9 per cent drop to 122,656 units in urban multiple-unit projects such as condos, apartments and townhouses. Single-detached urban starts increased by two per cent to 52,997.

Rural starts were estimated at a seasonally adjusted annual rate of 13,030 units, while the six-month moving average of the monthly seasonally adjusted annual rates was 207,768 for September, down from 213,966 in August.

British Columbia led the declines with a drop of 43.3 per cent due to stiffer mortgage rules and growing lack of affordability, particularly in the Greater Vancouver area. Alberta also saw a drop of 34.8 per cent, amid a weakening in the oil-producing economies.

Meanwhile, Ontario housing starts increased 21.3 per cent, led by Toronto condos and Quebec was up 15.4 per cent.

 

The Canadian Press

Mortgage stress test could become election issue

The Conservative Party of Canada plans to make the mortgage stress test a hot button issue in time for next year’s election, but explaining such a convoluted issue to Canadians could pose a challenge.

The party’s Deputy Shadow Minister for Finance tabled two motions this year to study the impact of the stress test, known as B-20, but they were both rejected by the Liberals. Nevertheless, MP Tom Kmiec has vowed to put the mortgage stress test on the agenda in time for the Oct. 2019 federal election.

“It will be an election issue, absolutely,” said Kmiec. “I’m willing to use procedural tools to get this study done. I’m not necessarily saying to get rid of B-20 completely; I’m saying take a look at the data and then make a decision on it. I’m asking the Liberals to provide any internal documents they have showing why the mortgage rules were introduced in the first place.”

Kmiec has started a website to pressure the Liberals into studying B-20’s effects. He claims that he was initially told B-20 wouldn’t be examined in the absence of more data, however, much has since come to light about Canadians being shut out of the housing market.

Kmiec is dogged, to be sure. He participated in the electoral reform committee’s filibuster.

“If it comes down to it, I’m happy to use up every two-hour time limit on every single committee until we agree to do a mortgage study,” said Kmiec. “I’m not asking for the moon, either. All I want are a few meetings in Ottawa where we can invite people with data who can then tell us what’s happening with the market.”

But communicating the message will doubtless be challenging for the Conservatives. Ron Butler of Butler Mortgage can attest to how difficult buying homes has become this year, but too few Canadians have born that brunt for the impact to truly be understood.

However, given that mortgage renewals are subject to the same stringent B-20 qualification rules, Butler believes it is still possible to make Canadians understand how detrimental the stress test is.

“It won’t be hot button, but if it’s messaged right, it could be,” he said. “If it’s presented properly as a group of themes about the incompetence, in terms of the ability to handle the file—why has Mexico settled NAFTA already and Canada hasn’t? Why did we buy a pipeline that got shut down? It’s a good thing to add to the general list of incompetence. On its own, it isn’t a hot button issue, but if you want to weave it into a tapestry of every day, practical fiscal management, it could work.”

 

by Neil Sharma01 Oct 2018, www.canadianrealestatemagazine.ca

Vancouver council approves duplexes in most neighbourhoods

Decision came despite opposition from some residents

City council voted to allow duplexes in most single-family neighbourhoods in Vancouver in a 7-4 decision after a two-day contentious public hearing that ended Sept. 19.

NPA councillors George Affleck, Elizabeth Ball and Melissa De Genova, as well as the Green's Adriane Carr, voted against the proposal, which was considered one of the "quick start" actions in the city's new Making Room program that aims to increase housing diversity in Vancouver.

Council's decision means duplexes will be allowed with or without small lock-off suites. It's an option for new construction only, and it doesn't include an increase in floor area over what's currently permitted. Laneway houses also won't be allowed in conjunction with duplexes. City staff say they don't anticipate land value to escalate thanks to those restrictions.

The rationale for allowing duplexes wasn't based on affordability, although they will be cheaper than single-family homes. It's meant to increase housing options.

Before voting in favour of the proposal, Vision Vancouver mayor Gregor Robertson said the city needs more options between single-family and higher-density housing forms. He pointed out laneway homes and secondary suites were also controversial, but allowing them has worked out well.

"The big challenge that we have as a council is, in these neighbourhoods, we need to make decisions that are not just for the people who live in the neighbourhoods right now, but as Coun. [Raymond] Louie said, for the people who want to live there and who, hopefully, will be able to live there for many years to come," he said.

Coun. Andrea Reimer said despite complaints there wasn't enough consultation, a great deal took place through the Housing Vancouver strategy, which led to the Making Room program.

Reimer said the duplex proposal isn't a huge step, but it's a matter of justice to give less affluent residents hope that council will use "tiny tools" such as zoning to try and help meet their needs.

Coun. Raymond Louie said "if this is not gentle density, I don't know what this is because there is no extra density."

But De Genova argued consultation wasn't robust enough before she voted against the proposal.

"Zoning needs to be led by Vancouver's 22 neighbourhoods," she said.

Carr said she didn't see any evidence that the zoning change was important or needed.

"The real point is that we need to build affordable homes through different kinds of housing types than the ones that are aimed [at] the upper end of the income scale," she said.

Affleck took aim at Vision Vancouver in his remarks.

"After 10 years of Vision Vancouver leadership, this council has become renowned for lack of public consultation," he said. "If you tear this city apart to achieve these goals, you've not achieved much at all."

Ball said the sense of betrayal some residents feel won't be a good legacy for council, while Hector Bremner, who supported the proposal, questioned how duplexes could be an affront to democracy.

In comments before the vote, senior planner Paula Huber said staff anticipate there will be a shift away from building single-family dwellings to building duplexes. Currently, the city gets about 800 applications for new single-family homes a year. She expects half of that figure might flip to duplexes so there's the potential to produce 800 duplex units.

She estimated new East Side duplexes go for about $1.2 million, while West Side ones go for upwards of $2.5 million.

Duplexes will likely appeal to households earning $150,000 or more, according to Huber, which accounts for about 15.5 per cent of the city's households.

There are currently 283,000 dwelling units in the city, she added, 4,500 of which are duplexes, which translates to 1.6 per cent of the housing stock.

During the first day of the public hearing on Sept. 18, there was mixed reaction about the proposal, while on the second day the bulk of speakers raised objections, including Judy Graves, the city's former advocate for the homeless. Graves said she spent the past two decades moving First Nation families, immigrants, single parents and working class seniors, as well as other individuals, into suites across the city, which she now fears will be torn down in favour of duplexes.

She called for amendments to the proposal that would guarantee that displaced families would be relocated into suites in the same school district and that displaced seniors would also be relocated into their same neighbourhoods because elderly people aren't comfortable with change.

Other critics, meanwhile, outlined many of the same complaints lodged on the first day of the hearing, including the fact that councillors, most of whom aren't running for re-election, were making a decision that they won't be accountable for, that there wasn't nearly enough consultation, that many residents likely didn't even know the proposal was up for consideration since notices weren't sent to individual homes, that character homes will be knocked down, and that it will lead to land speculation by developers, worsening the affordability crisis.

Colleen Hardwick, an NPA candidate in the upcoming election, called the process fundamentally flawed.

"That you would even consider sweeping changes without due process is unconscionable. You need to listen to the people, and you have not."

Hardwick argued if council passed the rezoning it would be like "putting out a fire with gasoline. It will be a feeding frenzy."

Janice Wong said the changes contravened community plans, which undermines residents' faith in the process.

"The public must have meaningful input in the planning of their neighbourhoods," she said.

The city says its Housing Vancouver strategy, which was adopted in 2017, included consultation with more than 10,000 residents over 18 months. That process identified a desire for "missing middle" housing options across Vancouver, which led to the Making Room program, which was adopted in June. The program included the duplex proposal as a "quick start" action.

Four information sessions were held this month about the proposal.

The meetings were advertised in the newspaper, at community centres and libraries, and through a social media campaign. Email notices were also sent to neighbourhood organizations and individuals who had signed up for notifications through the Housing Vancouver process.

Individual notices were not sent to homes. The Vancouver Charter only requires the city to notify the public about rezoning proposals in the newspaper and at city hall.

For site-specific rezonings, the city notifies residents within a certain proximity directly, which goes beyond what's required by the Vancouver Charter. Residents are typically not directly notified for citywide rezoning proposals. That was also the case when laneway housing was introduced in single-family districts in 2009 and when additional density was added to single-family zones to allow secondary suites that same year.

Representatives from Abundant Housing Vancouver, who spoke in favour of the plan at the public hearing, were happy the duplex proposal passed but stressed it was a very small step.

"With all the work that the planning department put in, I would have been very disappointed if it didn't pass," Owen Brady told the Courier. "We've been saying it's a step in the right direction, but it's a very small step. I don't think any of the disaster scenarios are going to come true."

Stuart Smith agreed.

"It's just such a small thing that we are up in arms over the idea of simply allowing two families to share the same square footage that we currently require [single-family] homes to consume. The drama over this is crazy... This isn't any extra density and it was called an atomic bomb. What would you call it if the proposal was for a four-storey apartment? What would that be? Would that be the Death Star?" he said.

"So yes, it's a positive step. It's a positive step simply because it gives more options, more ways to live in Vancouver. Some people want duplexes, some people don't. That's fine. Some people want single-family homes, that's fine. You don't need to tell people how to live. It's one extra choice, so why not? There was a councillor, Geoff Meggs, who once said tiny homes are not the solution. And this is true, tiny homes are not the solution, but homes like that, and laneways, and duplexes, work for some people. We do not need to look for a housing typology that works for every single person in the population. We need to allow lots of different housing types that work for lots of different people."

 

Naoibh O’Connor Vancouver Courier
September 20, 2018
Westerninvestor.com

B.C.'s capital region sees rental housing construction boom, especially Langford

More than 900 housing units started this year in Langford, triple the amount of the next closest municipality

DB Services Victoria is so busy building rental projects in Langford that it turns away new projects every month, says the company’s director of development.

vka-construction-0392-jpg.jpg

Workers pour footings for the Arc, a 93-unit rental building at the corner of Bryn Maur Road and Hockley Avenue. August 2018 — ADRIAN LAM

The Langford-based firm is one of the developers supporting the West Shore’s building boom, where rental apartments, condominiums and single-family houses are under construction.

In the first seven months of this year, 911 housing units were started in Langford, far outpacing other Greater Victoria municipalities. Saanich followed with a distant 284 housing-unit starts.

So far this year, 2,185 homes have been started in the capital region, up from 1,913 for the same seven months in 2017, according to Canada Mortgage and Housing Corp.’s latest report.

And every CMHC report shows strong construction in the West Shore, where the population is growing and where councils say they are committed to an efficient approval system.

“We have been turning away work for about two years here. We have five years worth of work lined up on the books right now. It’s all rental stock,” said Matthew McKay, partner with his mother Margaret McKay and with Gary Lahnsteiner, in DB Services.

DB Services is building three rental projects in Langford. It builds and owns about one-third of its projects, with the rest constructed for clients. The Arc, at 2849 Bryn Maur Rd., is being built for a client. The six-storey, wood-frame building will have 93 units. “We just poured our first footing there today,” McKay said Thursday.

The Arc is next to Hockley Corners, 765 Hockley Ave., which will have 63 units and be owned by DB Services. It is the first residential building on Vancouver Island to be built with cross-laminated timber, although some local institutional buildings have used that product, he said. It replaces a traditional floor system.

“We erected today pretty much our whole floor system,” at Hockley Corners, McKay said. That work would normally take five days and require more workers.

Prefabricated cross-laminated timber floor panels, supported on glue-laminated timber and parallel strand lumber columns, were used in the University of B.C.’s 18-storey Brock Commons student residence, which opened in 2016.

DB Services’ third under-construction project is the 11-storey, steel-and-concrete Danbrook One, which will have 90 units in the core of Langford.

The company only builds rental. That type of housing is in demand in the growing West Shore and financing is easier to obtain with rental developments, because it is not conditional on presales, as with condominiums, McKay said.

In June, the company finished the 63-unit Peatt Commons Phase One, at 2854 Peatt Rd. “Before we even turned it over to the client it was fully rented,” he said.

Despite the year-to-date climb in housing starts, the 417 starts in July was lower than the 695 in the same month last year, CMHC said.

Month-to-month housing starts numbers can vary significantly depending on timing of projects. Longer-term figures reveal a more accurate picture of the state of housing construction.

The number of Greater Victoria homes under construction — some projects can take two years to complete — stood at 4,731 as of July, CMHC said.

As well, the value of building permits, which signal builders’ plans, has climbed.

The value of building permits in the region was $160.4 million in June, up by 29.5 per cent from June 2017 when the value was $123.8 million, Statistics Canada said in its monthly report.

June of this year was up by 9.2 per cent from May, when permit values reached $146.9 million.

“It is definitely the residential market that is driving some of our bigger numbers with the permit data. It’s continuing to demonstrate that it is a strong market,” said Rory Kulmala, chief executive of the Vancouver Island Construction Association.

Greater Victoria’s low rental vacancy rate is one factor driving market demand for more housing, he said. “I think we are seeing that in a lot of communities on Vancouver Island.”

Carla Wilson Times Colonist, August 10, 2018, Westerninvestor.com

Commercial sales volumes down – except in multi-family market

Multi-family assets continue to be crowd favourite among investors, while sales in office and industrial properties slow due to limited supply

 

Sales volumes in nearly every commercial real estate sectors have declined in the second quarter of 2018 – though not for a lack of demand, according to a new report. 

The growing disconnect between supply and demand in Canadian real estate has lead to a decrease in sales velocity and an acceleration of lease rates, according to research by the Morguard Corporation

"A drop in transaction volume in the second quarter is very much a function of low product availability rather than a drop in demand," said Keith Reading, director of research at Morguard. "With quality office and industrial space at a premium, apartments are a crowd favourite as investors search for yield."

Office sales have dropped nearly 50 per cent across Canada year-over-year, while industrial volume has plunged 17.8 per cent. Meanwhile, multi-family sales increased 17.5 per cent.

Average sale prices for multi-family properties also increased year-over-year, from $8.5 million in the first half of 2017 to $13 million during the same period of 2018. 

Morguard expects investor sentiment in residential rental properties to remain strong into next term. 

 


 

 Tanya Commisso | Western Investor | July 18, 2018

Zoning could be key to funding downtown relief line

Toronto’s downtown relief subway line—should the political will needed to build it ever materialize—could partly fund itself, to say nothing of the skyrocketing valuations that will result.

According to Andy Manahan, executive director of the Residential and Civil Construction Alliance of Ontario, the municipal government can use zoning as a bargaining chip with developers to pay for the proposed network expansion by negotiating additional storeys.

 

“If a building is only zoned for five storeys but the developer is given 20 storeys, that extra 15 storeys is worth a lot of money and developers would be willing to pay it,”said Manahan. “If we build a relief line, we have to place more density at the station so that there’s more land value capture. If you do that link between land use and transit, you can do some creative financing in the long-run as well, and get some more developers on board.”

Many existing TTC subway stations were created as architectural monuments rather than into the sides of buildings, which is what would adequately succour density.  And if the mere rumour of below-grade infrastructure is enough to cause property values to rise, imagine what a unit 25 storeys above a subway platform would be worth.

“Typically, once an announcement is made about where the line will go, property values do increase, so the trick is how we ensure we can capture some of that increase in value,” continued Manahan.

However, more is at stake than optimizing real estate values. Toronto’s current subway network is overcapacity and its platforms dangerously brim with people. Given how many skyscrapers will continue sprouting downtown, not to mention the already low office vacancy rate, Manahan warns that the network’s capacity troubles are worsening.

“We have a lot of growth in the downtown core, and it’s not just residential,” he said. “There’s about 5.7mln square feet that will be added to the downtown office segment by 2020.”

Davelle Morrison of Bosley Real Estate echoed Manahan: “Right now, without further additional building of office space downtown, we already know we need the relief line. If you add more people working downtown and more people living downtown, because immigration numbers are high and more and more people are moving to Toronto in particular, it’s a no-brainer to me about why you would need the downtown relief line. It’s already needed, but 10, 15 years from now, it’s going to be needed even more.”

The RCCAO has been an outspoken proponent of the downtown relief line, taking out full-page newspaper ads and even launching a Twitter campaign called #GimmeRelief.

The earliest the downtown relief line could complete is 2031, however, there’s no official plan to build it. In fact, it’s as much of a pipe dream today as it was a decade ago—and making matters more frustrating for commuters, the Scarborough subway line has been given priority.

Backwards thinking, says Manahan, because sequencing is important and dictates building the network outward rather than inward, where support infrastructure is presently non-existent.

But he takes solace in Ontario’s political parties acknowledgment that the downtown relief line needs to be built.

“Over the last 50 years, the relief line is talked about occasionally and never gets built. It’s an important project and recognized by all four provincial parties. After June 7, no matter which party is in power, they will have to continue.”

by Neil Sharma30 May 2018 | Canadian RealEstate Wealth

Chinese e-commerce giant seeks real estate for Vancouver office

Alibaba is seeking to lease real estate for a Vancouver office that within “two to three years” will employ at least 30 people, Alibaba Group North America general manager Steve Wang told Business in Vancouver May 11 at a forum that the Chinese e-commerce company hosted at the Hotel Vancouver.

“We do not have a specific announcement about an office opening today,” he said. “Today, we are focused on educating on Alibaba’s solutions to help Canadian businesses access the China market. We are committed to Canada and Vancouver for the long term and intend to expand our operations here.”

Wang, who lives in Vancouver and travels extensively, oversees hundreds of Alibaba workers, who now are based in six North American locations: Seattle, San Francisco, Los Angeles, San Mateo, Washington D.C., and New York City.

Alibaba has yet to base any staff in Canada and no Canadian office outside Vancouver is currently being contemplated, although small teams may be created across Canada, said Candice Huang, who is Alibaba’s senior manager of international corporate affairs.

The move to make Vancouver the first city in Canada to get an office, instead of Toronto, is a surprise given that Alibaba's first Gateway conference was in Toronto, and the company had seemed to be making Toronto a first priority.

Huang said that staff in the future Vancouver office will likely work to help B.C. and other Canadian entrepreneurs understand and access Alibaba’s platforms. Other employees are likely to work to link tourism-related businesses with  Alibaba’s online travel platform Fliggy, which facilitates travel mostly for Chinese residents.

Canadian tourism-related businesses, such as Air Canada or the Capilano Suspension Bridge, would be able to create their own online stores on Fliggy, Huang explained.

B.C. businesses have long been selling products on Alibaba, and the number of those businesses has risen considerably since September 2016, when Prime Minister Justin Trudeau went to China, met Alibaba CEO Jack Ma, and announced an agreement between the Canadian government and Alibaba.

That agreement aimed to make it easier for B.C. companies to reach what is now 500 million or more consumers who use Alibaba platforms.

The Canadian government then set up an online store on Alibaba’s Tmall platform.

 

Lululemon Athletica Inc.Arc’Teryx and Norco Bicycles are among the other B.C. companies selling products on Alibaba platforms.

By 2022, the combined population of Canada and the U.S. is expected to reach 378 million, while China’s middle-class population is projected to exceed 600 million people.

Cross-border retail e-commerce spending in China is expected to grow six-fold between 2015 and 2020, to US$245 billion, according to AliResearch, Accenture.

The largest import categories for products sold on Alibaba are beauty, fashion, healthcare, home supplies, baby supplies and snacks and beverages.

Selling on Alibaba, however, can be complicated.

The company operates various platforms, including Taobao, Alibaba.com and Tmall sites.

 

Chinese entrepreneurs pay to create online Tmall stores and then set up web pages to sell their products.

Canada’s Canadian Pavilion site is an example of one of those stores. When buyers click to buy items, they get redirected to one of the Canadian stores operating on Tmall.

SunRype’s Chinese partner, for example, operates a Just Order store, but the Kelowna-based company also resells SunRype products to owners of other stores so they can sell the goods.

Glen Korstrom Business in Vancouver

May 14, 2018