It was a week of big announcements for the Canadian real estate market, from tax increases affecting both commercial and residential properties, to the B.C. government’s announcement of the HOME Partnership program, helping first-time residential buyers afford a down payment on a homes.
In the commercial sector, a sizable Oceania-based transaction at the hands of a Canadian Pension Plan fund made news, as did another multimillion-dollar deal involving commercial development land, purchased by a foreign investor.
Here is Western Investor’s media content roundup of the top stories covering what was new and notable in commercial real estate this week.
Canadian Pension Plan board purchases $545M New Zealand property portfolio – Western Investor
It was announced this week that the Canadian Pension Plan Investment Board made its first foray into the New Zealand property market, for a cool $545 million. CPP Investment Board will share ownership of a property portfolio in New Zealand with a fellow Canadian pension fund manager.
The Canadian Pension Plan Investment Board has purchased 50 per cent interest in 13 properties based in Auckland and Wellington, from fellow Canadian investment group, the Public Sector Pension Investment Board. PSP Investments will continue to own the remaining stake.
The portfolio features office and retail spaces, including what the CPP Investment Board considers, “high quality shopping centres.” The properties total approximately 2.9 million square feet.
AMP Capital out of Australia will manage the portfolio on behalf of Ontario-based CPP Investment Board and PSP Investments.
The CPP Investment Board’s recent acquisition adds to its $38.4 billion in real estate investment worldwide. PSP Investments holds 20.4 billion in real estate assets.
City Approves 3.9% Property Tax Hike, Including 0.5% to Pay for Fentanyl Crisis – REW.ca
The City of Vancouver council approved the 2017 city budget on Dec.13, which included the implementation of a 3.9 per cent property tax increase. The city budget proposal had a controversial, last-minute addition of a 0.5 per cent increase tacked onto the original 3.4 per cent hike, intended to help combat the Fentanyl epidemic. The budget did not pass without debate, as REW.ca reports.
The total 3.9 per cent property tax hike, and the overall 2017 budget, was approved – although not unanimously – by City council December 13. This was despite strong objections from opposition councillors who insisted that the fentanyl epidemic was a provincial problem and should be dealt with and funded by each province’s provincial governments, rather than being “downloaded” to municipalities and ultimately charged to property tax payers.
“The crisis is now,” said NPA councillor George Affleck. “We need funds now, in December 2016, not in 2017. We have several mechanisms to pay for these kinds of issues, there’s usually ways that these funds are found, some magical way, often under the line item 'Timing Uncertain' – which is my favourite, the mysterious 'Timing Uncertain.'"
However, he added that the City and its taxpayers should not be on the hook for the fentanyl epidemic at all.
“Stop the downloading,” he said. “We should be putting the heat on the provincial and federal governments to deal with healthcare. The issue of the fentanyl crisis is beyond our scope of work.”
[REW.ca]
Booming investment continues; tech workers seek cheaper digs – Business in Vancouver
A hush-hush sale to the tune of $400 million made in the Lower Mainland last month by a foreign buyer is a sign that demand for property in Canada is as strong as ever, Business in Vancouver reported. BIV quoted statistics from the Real Estate Board of Greater Vancouver, who recorded a 6.3 per cent increase in commercial real estate sales from the third quarter of 2015 to the third quarter of 2016. The high demand has caused competition among TAMI companies.
With all the sales activity, cap rates for top-tier office space now rival those in Manhattan (according to CBRE Ltd.) and many brokers have been talking about affordability issues.
CBRE names Vancouver’s office space the most expensive in Canada for tech companies, which signed 28.5% of office leases in Vancouver last year and, by some accounts, represent half the active parties in the market.
Tech demand has boosted prospects for everything from strata office space to suburban premises for companies that don’t need to be downtown.
Housing could be next, as wages in the tech sector lag behind rental rates.
CBRE notes that Vancouver has the highest rent-to-wage ratio for the sector at 21%. While the city boasts the top average rent for tech employees, it ranks fifth in terms of wages (low wages help keep expenses in check, with CBRE ranking Vancouver fifth for overall tech operating costs).
Mount Baldy Resort reopens, offers low-cost homes and accommodations – Western Investor
South Okanagan’s Mount Baldy Resort reopened this month, after its new owners bought the property out of receivership either this year. Now, the Vancouver-based investors plan to kick-start the resort’s appeal with new, luxury residential homes.
Joey O’Brien, the managing director, said he’s working to ensure the hill has a solid foundation of support to avoid depending on holiday business. He has already sold more than 370 seniors’ season passes at $20 a pop and aims to top 5,000 passes total this winter. He hopes to boost traffic to 20,000 “active participants” by 2020.
“If I can get it to 20,000, then I know that we have a very stable company,” O’Brien said.
Judging from the crowds on opening day, that should not be a problem.
“It was packed," said Scott McKenzie, director of real estate development for Baldy Mountain Resort.
“We have a couple of lots available but mostly we will be marketing complete packaged homes as we have aligned ourselves with a very large Vancouver-based builder who already owns property up here and wants to grow with us,” McKenzie said.
The first step into improving accommodation will be the development of 24 mini-cabins, he said, which will be operating as nightly rentals and not available for sale.
Investors may be interested in the start of 35-lot detached-villa subdivision where turnkey homes will be available in the $300,000-to-high-$300,000's range by next season.
