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Asian investments in BC "just the beginning"

Tina Mack, president of Asian Real Estate Association of America, Vancouver Chapter

Last March, China-born Owen Wang, a recent immigrant to Canada, purchased the 18-hole Sechelt Golf & Country Club and said he plans to sink $20 million into improvements, including the construction of a hotel on the site.
Investors from mainland China have also purchased a marine resort at Garden Bay on the Sunshine Coast, a 43-acre island off the coast of Pender Harbour and even the Gibson’s movie theatre. A Chinese group is also eyeing a multifamily development site in Gibsons.
Chinese offshore investors were behind the purchase of an Okanagan lakeside resort last summer and an equestrian centre in Langley and are backing a $50 million hotel project in Nanaimo and a ghost town near Whistler.
In Vancouver, the 120-room Best Western Sands Hotel at 1755 Davie Street, was recently sold for $30.3 million to a numbered company backed by Asian capital. According to study by hotel consultant HVS International, investors from China also purchased the Days Inn in Vancouver and a “good portion” of hotel-condos in the Westin Grand hotel.
In January, a Chinese-born Canadian with homes in Hong Kong and Vancouver bought a 234-acre development site straddling Port Moody and Anmore on the southeast edge of Metro Vancouver through Vancouver-based Brilliant Circle Group (BBG). 
This could be a “groundbreaking year for Chinese outbound investments,” according to Chadbourne & Parke LLP, an international law firm headquartered in New York City. Its 2014 report China Widens Door to Outbound Investment, noted that offshore Chinese investments “other than in the financial sector” reached US$90 billion in 2013 and hit US$20 billion in the first three months of 2014.
“This is just the beginning for Vancouver,” said Tina Mak, president of Asian Real Estate Association of America, Vancouver Chapter, and a realtor with Coldwell Banker Westburn Realty. Mak expects a huge increase in sales of B.C. commercial real estate to buyers from China.
Last April, China’s government relaxed constraints on citizens buying in other countries. Now, deals under $300 million may not even hit regulator’s radar. “China has opened the door to outbound investment more widely than ever,” Chadbourne & Parke commented.
While much of the offshore real estate money flows from China into New York, London, England and Los Angeles – the most popular cities for Asian investors – Vancouver is considered among the top secondary targets.
While Mak said return on investment is the primary aim, followed by “the brag factor”, some immigrant investors are apparently drawn to B.C. as much for the lifestyle. 
The new owner of Sechelt Golf and Country Club, for example, said the profit motive was not the main driver for his investment decision.
Wang said he wanted to purchase the course for three reasons: his love of golf, the quality of life and natural beauty in Sechelt and the possibility of retirement in the area.
“Sechelt is a great place to live,” he said.

Done Deals updated for January
Done Deals is our monthly feature highlighting some of the major real estate transactions in Western Canada’s vibrant commercial real estate market.

Innvest buys Hyatt Regency in Vancouver
Toronto-based Innvest has a definitive agreement to acquire the 644-room Hyatt Regency Vancouver from an affiliate of Hyatt Hotels Corp. for $140 million, or $217,000 “per key”. 
InnVest expects to finance the purchase with a $70 million, 3.8 per cent floating rate mortgage, with the balance to be paid in cash. The acquisition of the Hyatt completed in December 2014.
Built in 1973, the Hyatt is centrally located in downtown Vancouver. The Hyatt provides some of the largest standard guestrooms in the city and features 45 Regency Club rooms and 20 suites. The Hyatt also offers 40,000 square feet of meeting space and three food and beverage outlets.

From: Bentall Kennedy, Calgary. Bentall Kennedy senior vice-president Don Fairgrieve-Park reports the following purchase:
Deal: Three-quarter-acre real estate development site, zoned high-density multi-family and commercial, Eau Claire, Calgary. Purchased by Bentall-Kennedy on behalf of Prime Canadian Property Fund. Price: $39.6 million. 

From: Melcor Real Estate Investment Trust, Toronto.  Melcor REIT reports the following transaction:
Deal: Acquisition by Melcor REIT of the 158,320-square-foot White Oaks Square, a mix of retail and offices, on 18.98 acres, in Edmonton. Price: $31.38 million.

From: The Kefalas Group, Homelife Benchmark Langley Corp., Langley. Homelife agent Theo Kefalas reports the following:
Deal: Station House Pub & Grill, with a 7,621 square feet building on a 58,810-square-foot lot, Station Road, Abbotsford. Price: $2.06 million.

From: Colliers International, Edmonton. Colliers vice-president Cam Picketts reports the following sale:
Deal: 4.03-acres of industrial land, 50th Street, Beaumont area of Leduc County, Edmonton. Price: $2.9 million

From: Shindico, Winnipeg. Shindico principal Sandy G. Shindleman reports the following transactions:
Deal: 15,000 square feet industrial, Mountain View Road, Winnipeg, leased for 10 years. Price: $2.80 million
Deal: 19,498 square feet of retail space, 3673 Portage Avenue, Winnipeg, leased for 10 years. Price: $3.99 million.
Deal: 11,595-square-foot office space, Broadway Avenue, Winnipeg, leased for seven years. Price: $1.56 million. 
Deal: 6,081-square-foot retail space, St. Mary’s Road, Winnipeg. Leased for 10 years. Price: $1.14 million. 

From: Homelife Benchmark Realty Corp. White Rock. Homelife Benchmark agents Todd Antifaev and Jon Moss, report the following sale:
Deal: 78-lot residential subdivision, South Surrey. Price: $30 million. 

From: Cushman & Wakefield, Surrey. Cushman & Wakefield agents Brett Aura, Scott MacPherson and Brad Newman-Bennett, with Farouk Verjee of Chase Realty Corporation, report the following sale:
Deal: 154-unit apartment rental complex on a four-acre site, designated for high-rise residential, City Centre area of Surrey. Price: $18.25 million. 

From: Frontline Real Estate Services, Surrey. Frontline agent Justin Mitchell, with seller agent David Herman of Re/Max 2000 Realty, reports the following:
Deal: 2.15-acre development site, 80th Avenue, Langley. Price: $1.5 million.

From: NAI Commercial, Vancouver. NAI agent Rick Lui reports the following:
Deal: 3.44-acre development site across from the Olympic Oval, Elmridge Way, Richmond. Price: $31.3 million. 
NAI agent Peter Seed reports the following:
Deal: Two apartment rental buildings, total of 74 units, Glenshee Road, Prince George. Price: $6.8 million. 
NAI agents Gary Haukeland and J.D. Murray report the following:
Deal: 144.5 acres of land, Rising View Way, Vernon. Price: $1.75 million.
NAI agents Terry Harding, Jackson Tang and Brandon Harding report the following:
Deal: Two townhouse rental buildings, with a total of nine units, East 21st Avenue, Vancouver. Price: $2.76 million. 

Closed a recent commercial real estate deal? Send details for a free listing here to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Done Deals updated for December
Our readers report on recent commercial real estate sales across Western Canada  

Melcor REIT snaps up $138M portfolio 

Alberta-based Melcor Developments Ltd. has sold a portfolio of six commercial properties comprised of 738,080 square feet
of leasable area to Melcor Real Estate Investment Trust for $138.25 million. The acquisition includes four new commercial
properties completed and substantially leased by Melcor Developments and two properties improved through recent redevelopment. 
The new 57,000-square-foot Village at Blackmud Creek mixed-use office and retail complex in Edmonton; Edmonton’s West Henday
Promenade retail centre; the mixed-use, 446,000-square-foot Lethbridge Centre in Lethbridge; the Telford Industrial Park and
Leduc Common retail centre in Leduc; and the University Park retail centre in Regina are included in the done deal. 

From: Pemberton Holmes Ltd.-Commercial, Victoria. Pemberton agents Stephen Shea and Clive Townley report the following sale:
Deal: 82,635-square-foot Custom House, a commercial landmark on Victoria’s Inner Harbour. Price: $12.1 million.

From: Frontline Real Estate Services, Surrey. Frontline agent Garth White, with buyer agent Don Viner of Colliers International, sold the following: 
Deal: 69,696-square-foot industrial building, Production Way, Langley. Price: $2.40 million. 

From: London Pacific Property Agents Inc.?, Burnaby, London Pacific agent Grant L. Gardner? sold the following:
Deal: Two Vancouver residential lots, totaling 17,753-square feet for future multi-family redevelopment. Price: $1.80 million.

From: CBRE National Apartment Group, Edmonton.  CBRE senior vice-president Bradley Gingerich reports the following sale:
Deal: 105-suite ‘The Station on Whyte’ rental apartment building with 24,000-square-feet of commercial space. Price: $33.2 million.

From: William Wright Commercial, Vancouver.  William Wright agent Cory Wright reports the following:
Deal: 1,243-square-foot retail investment property, Hamilton Street, Vancouver. Price: $1.4 million. 

From: CBRE Ltd. National Apartment Group, Vancouver.  CBRE announces the following:
Deal: 14-unit rental apartment building, West 13 Avenue, (South Granville), Vancouver. Price: $3.85 million. 

From: Re/Max Blue Chip Realty, Yorkton, Saskatchewan. Re/Max agent Marcel DeCorby announces the following:
Deal: 2,643 acres of farmland, with 1,816 acres under cultivation, Rural Municipality (RM) of Wolseley, Saskatchewan Price: $3.2 million. 
Deal: 160 acres of farmland, RM of Saltcoats. Price: $215,000.
Deal: 480 acres of farmland, RM of Saltcoats. Price: $450,000.
Deal: 160 acres of farmland, RM of Rocanville. Price: $220,000.

From: NAI Commercial, Vancouver. NAI agents Angie and Don MacDonald report the following:
Deal: 13,108-square-foot, two-storey industrial building with showrooms and offices, 62 Avenue, Langley. Price: $1.85 million. 
NAI agents Terry Harding and Jackson Tang report the following sales:
Deal: 8-unit rental apartment building, Fremlin Street, Vancouver.
Price: $1.78 million. 
Deal: 22-unit rental apartment building, Agnes Street, New Westminster. Price: $2.9 million. 

Closed a recent commercial real estate deal? Send details for a free listing here to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Housing bubble “lead indicator” of recession
 Nobel laureate and economist Vernon Smith speaks in Vancouver. A sudden drop in housing starts seen as the first indicator of a recession.
- Dale Northey/ SFU

By Frank O’Brien 

Housing bubbles have been a leading indicator in 11 of the 14 economic recessions since 1929, but based on a formula presented by a Nobel laureate and economist, British Columbia and Vancouver appear bubble-resistant.
Vernon Smith, awarded the Nobel Memorial Prize for Economic Science in 2002 for his work in empirical economic analysis, is a professor at Chapman University in California and president and chair in finance at the International Foundation for Research in Experimental Economics. He spoke to a packed crowd November 14 in Vancouver in an event presented by Simon Fraser University and the Bank of Montreal.
Smith, 87, who recalls his family’s Kansas farm being foreclosed in 1934, said a downturn in the housing market was precursor to the Great Depression, the 2007 “great recession” and virtually every other recession in-between. “It is nearly 100 per cent accurate,” he said.
The key indicator, Smith said, is housing starts. Homebuilders, he said, are much more aware and reactive to changes in the market than typical homeowners, home buyers or lenders.  “They see what is happening first,” he said.
Early in 2006, starts of U.S. housing suddenly began falling from record highs while all other economic indicators were still increasing, Smith noted. A year later, home construction had virtually stopped, U.S. home equity had shed $500 billion in value and the world was in the grip of the worst economic crisis in 100 years.
However, in a follow-up interview with Western Investor, Smith noted, “all housing markets are regional.” Housing sales and prices in Prudhoe Bay, Alaska and North Dakota, for example, continued strong right through the 2006-2010 downturn, he said, because of strong job generation and high in-migration. 
Using Smith’s formula for housing bubble-burst scenarios, B.C. and Vancouver do not appear threatened, despite record-high prices in the latter. B.C. housing starts this year are up 3.1 per cent from 2013 and forecast to rise a further 1.4 per cent in 2015, according to Canada Mortgage and Housing Corp. In Vancouver, housing starts are up 5 per cent from a year ago and are projected to dip slightly next year, but increase about 3 per cent into 2016.
As well, the B.C. unemployment rate remains low; the province is attracting about 39,000 immigrants annually and, for first time in four years, is seeing a net increase in interprovincial migration.
“We do not see a housing bubble in the Metro Vancouver market, nor elsewhere in B.C.,” said Bryan Yu, ?regional economist with Central 1 Credit Union, which released a fairly bullish outlook for the B.C. housing market earlier this year.
“Currently, inventories are in decline in both the existing and new home market, suggesting a well-balanced market. There are risks, particularly related to external shocks of a sharp increase in interest rates or another recession, but these are generally offsetting risk, and perceived to be low probability.”
Smith cautioned that a huge inflow of easy mortgage credit started the last housing bubble and he sees parallels today in low-cost mortgage money.  The award-winning economist concedes experts were “blindsided” by the last recession and don’t know when the next one will appear.
“Prediction is impossible,” Smith said.
Done deals updated for November
Our readers report on commercial real estate sales across the west 
Done Deals is our monthly feature highlighting some of the major real estate transactions in Western Canada’s vibrant commercial real estate market.

Choices REIT closes super deal 

Choice Properties Real Estate Investment Trust of Brantford, Ontario has completed the acquisition of a portfolio of 16 properties from subsidiaries of Loblaw Companies Limited consisting of 15 retail properties and one warehouse. The properties include Real Canadian Superstores in Winnipeg, Abbotsford and Whitehorse; Extra Food stores in Saskatoon, Devon, Alberta and Yellowknife; and a No Frills brand outlet in Peace River, Alberta. The total purchase price for the portfolio was $211.9 million, excluding transaction costs. Choice now has a portfolio of 472 properties comprising 459 retail properties, 10 warehouse properties, one office complex, one industrial property and one parcel of land, totalling approximately 38.9 million square feet across Canada. 

From: Frontline Real Estate Services, Surrey. Frontline agent Garth White and buyer agent Jagjot Gill of Century-21 Coastal Realty Ltd. sold the following:
Deal: 6,800-square-foot industrial building, Scott Road, Surrey. Price: $1.12 million.
Frontline agent Garth White and buyer agent Willams Hobbs of Cushman Wakefield Ltd. sold the following:
Deal: 1-acre industrial lot, 154 Street, Surrey. Price $1.32 million.
Frontline agent Garth White and seller’s agent Terry Stephenson of Royal LePage Wolstencroft Realty, sold the following:
Deal: 0.88-acre industrial land, 192 Street, Surrey. Price: $1.8 million.
From: Avison Young, Vancouver. Avison Young agents Chris Wieser and Rob Greer sold the following: 
Deal: 37-unit rental apartment building, Manchester Road, Victoria. Price: $4.75 million.

From: Canadian Apartment Property Real Estate Investment Trust (CAPREIT), Toronto. CAPREIT reports the following acquisition.
Deal: 125-unit rental apartment building, Regina. (This brings CAPREIT’s Regina apartment building holdings to 234 units.) Price: $17 million. 

From HQ Commercial, Vancouver. HQ agents David and Mark Goodman report the following sales:
Deal: 12-unit rental apartment building, Knight Street, Vancouver. Price: $1.82 million.
Deal: 11-unit rental apartment building, built in 1955, East Boulevard, (Kerrisdale), Vancouver. Price: $4.71 million.
Deal: 10-unit apartment rental building, built in 1951, East Boulevard, (Kerrisdale),Vancouver. Price: $5.07 million.

From: Acquire Realty, Phoenix, Arizona. Acquire broker Dave Futcher reports the following investment sale:
Deal: 1,446-square-foot, 3 bedroom rental house, Surprise area, Phoenix, Arizona. Price: $154,900. 

From: Re/Max Penticton Realty, Penticton. Re/Max’s Team Green report the following sale: 
Deal: 3.57-acre serviced industrial land with office and workshop, Commercial Way, Penticton. Price: $1.4 million.

From: NAI Commercial, Vancouver. NAI agent Rick Lui sold the following:
Deal: 100,000-square-foot retail centre, No. 3 Road, Richmond. Price: $24.9 million.
NAI agent Aleem Thaver sold:
Deal: 9,000-square foot condominium development site, Coal Harbour, Vancouver. Price ($1,455 per square foot):  $13.1 million.
NAI agents Gary Haukeland and JD Murray sold:
Deal: 11,298-square-foot office building, Mill Lake Road, Abbotsford.
Price: $1.85 million.
NAI agent Peter Seed sold:
Deal: 23,000-square-foot Westview Plaza shopping centre, Powell River. Price: $1.37 million.

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Vancouver's new condo towers survive on Asian buyers

By Frank O'Brien

Metro Vancouver's startling multi-family land prices are creating a “disconnect” in a high-rise condominium market that increasingly must rely on immigrant buyers to survive, according to a noted real estate consultant.
“Without Chinese buyers, there won't be much local demand to support the Vancouver high-rise market,” said Frank Schliewinsky, principal of Strategics Marketing, which publishes the Vancouver Condo Report, a long-running industry newsletter.
A recent study shows that, at current “buildable-per-square-foot” prices, a typical new 750-square-foot condo has to have a baseline price of $112,000 just to cover land costs. On the West Side of Vancouver the same price is closer to $187,000, according to numbers provided in Colliers International’s recent Land Share report.
The report calculated what Metro Vancouver developers are paying for multi-family land based on the allowable floor space ratio (FSR), basically how much residential real estate can be achieved on the land.
As an example, Care Pacific Holdings Ltd. paid $13.9 million this year for a 36,000 square feet (0.8 acre) site on King Edward Avenue in Vancouver’s Kitsilano neighbourhood. The site has a 1.75 FSR, equating to a cost of $220 per buildable square foot, before any construction, finishing or marketing of the site is even started. In downtown Vancouver, such prices  approach $250  and average more than $150 in East Vancouver.
This level of prices exposes a disconnect from the Vancouver economy, Schliewinsky warns. “ In the past year, the new high-rise condo market has shifted so much away from its historical basis that it really can't be considered as a ‘Vancouver’ housing market anymore,” he said.
Over the past 12 months the average asking price for new high-rise condos in Metro Vancouver has increased by 26 per cent and the average price per square foot by 16 per cent, according to Strategics. And, based on what developers are paying for land, future condominium prices appear destined to keep rising.
Yet “[there has been] no big increase in average household income,” Schliewinsky said.
In fact, Vancouver ranks dead last in median incomes for university-educated workers among Canada’s 10 largest cities, according to Statistics Canada. The median income for a Vancouverite with a university bachelor degree is $41,981 compared to a Canadian average of $50,981.
Strategics and MPC Intelligence, which also tracks new condominium developments, report that 27 high-rise projects began marketing in Metro Vancouver this year, with an average price north of $625,000 per unit.
“Based in interviews with sales staff in these projects, 60 per cent are targeting investors and 70 per cent are targeting immigrant buyers,” Schliewinsky said. At the end of September, there were an 5,600 unsold high-rise units in new projects and another 1,460 units still to be released in projects now marketing, according to Strategics.

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