Bruce Constantineau
Sun

Source: ReMax VANCOUVER SUN

More than 400 properties sold for at least $1.5 million during the first five months of this year — a 90-per-cent increase over the same period last year, according to a Re/Max report released Wednesday.

The most expensive home sold on the Multiple Listing Service in the first five months of this year is a 20,000-square-foot mansion on Drummond Drive in Vancouver that sold for $8.5 million. The most expensive property currently for sale on the MLS is an 11,000-square-foot waterfront home on Radcliffe Avenue in West Vancouver. It’s listed for $20.88 million.

Re/Max executive vice-president Elton Ash cited three main factors for the surge in luxury home sales all across Canada — a strong economy, solid consumer confidence and existing equity-rich homeowners moving up to the top end of the market. The report also said out-of-province and international buyers are significant factors in Greater Vancouver, Victoria, Kelowna and Edmonton.

Sixty-two residential properties in Victoria sold for $1 million or more between January and May of this year, a 48-per-cent increase. The number of $1-million-plus Kelowna home sales shot up by 125 per cent to 36.

West Vancouver realtor Malcolm Hasman, who sold the Drummond Drive mansion and is the listing agent for the Radcliffe Avenue property, said more than half of his buyers are from outside Canada — mainly families from the U.K., Australia, the U.S., Iran, China and Korea.

“They’re mostly cash buyers attracted by the city’s lifestyle and the most popular price range is from $3 million to $6 million,” he said.

Hasman said the seller of the $20.88-million West Vancouver home is a non-Canadian who purchased the property two years ago for $17 million. He said four offers have been rejected in the past eight months, mostly from foreign residents looking to move to Vancouver.

The Re/Max report said limited inventories of upscale homes in Vancouver, Calgary and Toronto have placed serious upward pressure on prices in “blue chip” neighbourhoods. Hasman said the inventory of West Vancouver waterfront properties has dipped to its lowest level in 20 years.

“There’s a total inventory of close to 400 waterfront properties, but there are fewer than eight available for sale now and only five are priced below $10 million,” he said.

The report said emerging $1-million-plus neighbourhoods in Vancouver include Kerrisdale, South Granville and Marpole, where teardowns and infill developments are creating exclusive new enclaves.

Vancouver real estate analyst Oswald Jurock said more than half of the high-end buyers around Vancouver are local residents but out-of-province buyers from Alberta, the U.S. and offshore locations play a major role in upscale markets in Vancouver Island and the interior of B.C.

He said the number of single-family homes valued at $1 million or more throughout B.C. has nearly tripled in the past two years, to nearly 22,000, and he expects inflationary pressures will force prices even higher.

“We’re in a worldwide inflationary environment and as long as we keep printing money, prices will go higher,” he said.

THE HIGH-END HOME IS IN HIGH DEMAND

Demand from local purchasers is largely driving a surge in Greater Vancouver luxury home sales, a Re/Max report says.

Most expensive Greater Vancouver home sold on MLS (to May, 2006): $8,500,000

Most expensive home currently listed for sale on MLS

(3330 Radcliffe Ave. in West Vancouver, shown at right and below): $20,880,000

Increase in sales of luxury homes ($1.5 million+) in Greater Vancouver, comparing January to May 2005 to same period this year: 90%

© The Vancouver Sun 2006

Sales of Vancouver houses over $1.5m are up 90 per cent

Gordon Clark
Province

This mansion on Drummond Drive in Vancouver sold for $8.5 million, the highest price paid in Canada this year. Photograph by : Jason Payne, The Province

When the mansion on Drummond Drive was put up for sale, some realtors argued that it was a steal, even with a list price of nearly $11 million.

The magnificent, more than 18,000-square-foot Vancouver home on nearly a hectare of land features fabulous views, a two-storey marble foyer, manicured gardens, a waterfall and the usual indoor swimming pool and gold-plated fixtures one expects in a home of that size and quality.

Chatter among realtors had the home possibly fetching as much as $15 million in Vancouver’s overheated real-estate market.

And even though it only sold for $8.5 million when it finally changed hands in February, the property still holds top honours as the most-expensive home sold in Canada so far this year.

According to a report on luxury homes released yesterday by Re/MAX, the mansion is part of a trend across Canada that has seen a huge surge in the sale of luxury homes worth more than $500,000 to $1.5 million, depending on the community.

“Million-dollar home sales are climbing at a rate never before seen in major centres across the country,” said Michael Polzler, Re/MAX executive vice-president for Ontario and the Atlantic provinces.

Of 13 markets in the survey, all saw increases in the sale of luxury homes except Windsor, where fears of a downturn in the auto sector is driving down sales.

In Vancouver, 403 luxury homes worth more than $1.5 million have sold so far this year, a 90-per-cent increase over the 212 that sold during the same period in 2005.

Sixty-two homes over $1 million sold this year in Victoria, 48 per cent more than the 42 that sold last year.

In Kelowna, 36 homes over $1 million were sold — 125 per cent more than in 2005.

The biggest increase in sales was in Edmonton, which had a 177-per-cent jump in sales of homes over $500,000.

More expensive homes are selling because there are more rich people, said Elton Ash, Re/MAX’s executive vice-president in Western Canada.

“The surge in upper-end sales can be directly attributed to three factors,” he said. “Existing homeowners cashing in on substantial equity gains to reinvest in the top of the market, strong economic performance across the country and solid consumer-confidence levels.”

The Re/MAX report said limited inventories of homes for sale in many markets across Canada, specifically Vancouver, Calgary and Toronto, are “placing serious upward pressure on prices in ‘blue-chip neighbourhoods,’ with many properties now selling in multiple-offer situation.”

The most expensive home currently for sale in Canada is a waterfront estate in Oakville, Ont., that is listed for $45 million.

© The Vancouver Province 2006

Bruce Constantineau
Sun

VANCOUVER SUN FILES The Presidio at 2088 Barclay

A luxurious two-storey penthouse condo overlooking Stanley Park has been sold for a record price of about $10 million — $2 million above the previous Vancouver condo record of $7.75 million paid for a Coal Harbour penthouse suite last year.

Vancouver developer Robert Quigg confirmed Tuesday that his massively renovated 4,200-square-foot condo at 2088 Barclay Street was sold last month to an unnamed buyer. He wouldn’t provide any other details but the 14-year-old unit in The Presidio at Stanley Park had a hefty asking price of $9.8 million.

“The property sold last month and there’s a firm and binding contract in place,” Quigg said in an interview. “Other than that, I can’t comment on anything.”

Land registry documents show the high-end luxury homebuilder bought the condo in January 2004 for $2 million. He gutted the unit to its concrete shell and spent an estimated $6 million on extensive interior and exterior renovations before putting it on the market early this year.

The penthouse — with floor-to-ceiling windows that offer panoramic views of Vancouver’s West End — features heated limestone floors, a stainless steel staircase, five balconies, handwoven wool carpets, custom-built furnishings (like a lacquered goatskin table), a media room and wine coolers that can store up to 800 bottles. The original drywall and paint interiors were replaced with limed oak panelling.

Quigg said the market for high-end condos in Vancouver remains strong, noting that his company brought 64 units to the market this year at prices ranging from $1.5 million to $10 million and only 11 remain unsold. The units won’t be ready for occupancy until this fall and the summer of 2007.

“There’s very strong demand from local buyers,” Quigg said. “The market at the high end is much less investor-driven and people are looking to live in the product.”

Before the sale of The Presidio penthouse, the highest prices paid for Vancouver condos included the $7.75-million sale of the yet-to-be built penthouse at Two Harbour Green near Coal Harbour and the $7.4 million paid for a penthouse at the Shangri-La development to be built near Georgia and Thurlow. Quigg said the market might experience a drop in the number of high-end condos sold in the next 12 months.

© The Vancouver Sun 2006

Lack of space and soaring rents lead to an exodus of firms from downtown to Burnaby and Richmond

Gillian Shaw
Sun

Downtown Vancouver is facing an exodus of corporate tenants as rent increases and a falling vacancy …

Chris Clibbon says the top rents in what are considered downtown’s “trophy buildings” can be as high as $35 to $38 a square foot. Photograph by : Vancouver Sun

Downtown Vancouver is facing an exodus of corporate tenants as rent increases and a falling vacancy rate force companies to move to the suburbs.

Burnaby is already benefiting from the space squeeze with an office vacancy rate of 7.6 per cent compared to two years ago when one-quarter of all Burnaby’s office space sat empty. Burnaby’s newest developments are commanding record rents.

Richmond, soon to benefit from the arrival of rapid transit with the Canada Line, is the next most popular suburban office destination. While its office vacancy rate is hovering around 15 per cent, it’s on a downward trend from 23 per cent two years ago.

“It is totally possible the vacancy rate could be two per cent in downtown Vancouver by 2010, which is nuts,” said Chris Clibbon, senior research analyst with CB Richard Ellis. “For the office market that is very, very low; it is market-leading in North America.

“It would mean further increases in rents and tenants relocating to the suburbs.

“Companies that don’t need to be downtown will relocate. It will just become too expensive and too complicated to find space downtown.”

Clibbon said tenants such as banks and law firms will likely “ante up to pay what they have to pay” to be downtown but other businesses will migrate to the suburbs.

“Consulting companies, high-tech firms, any start up companies and tenants in lower class buildings — eventually those buildings are going to see significant rent increases so they will be pushed out as well.”

Clibbon said tenants will face rent increases ranging from 25 per cent to 40 per cent in downtown Vancouver and Vancouver’s Broadway corridor as leases come up for renewal.

It reverses a trend that followed the tech meltdown and general economic malaise in the province earlier this decade. Tenants vacated 1.1 million square feet of office space in Greater Vancouver in 2001 and another one million square feet in 2002.

Clibbon said the top rents in what are considered downtown’s “trophy buildings,” such as the Bentall 5 building at 550 Burrard St. can be as high as $35 to $38 a square foot. Typical class A space downtown is $25 to $30 a square foot. By comparison, suburban rates for class A space range from $17.50 to $25 a square foot.

“The problem with downtown is that land prices are so expensive and construction costs are so high,” said Clibbon. “It is expensive to build, they have to excavate and build huge underground parking lots, which are very expensive.”

While downtown Calgary has the lowest office vacancy rate in North America at 0.6 per cent, Clibbon said there are projects underway in that city, as in Toronto, that will add new space. Greater Calgary has 3.8 million square feet of office space under construction and greater Toronto has just over two million square feet under construction.

Greater Vancouver has just 500,000 square feet of office space under construction, including 238,000 square feet in the second phase of Bentall 5 downtown.

“In downtown Vancouver, the problem is there are no sites, there are no empty parking lots or sites that developers have been holding and can build on,” said Clibbon. “The only way you can create a new supply is to look at assembling older sites and building a larger building, which is complex and difficult.”

Clibbon said Bentall’s Broadway Tech centre near the Renfrew street Skytrain station and close to the Vancouver-Burnaby border, is already 30-per-cent pre-leased at rents around $27 a square foot which he said leads the market for Burnaby office space .

“It is supply and demand and now the landlords have control of the office market,” he said. “For the past three or four years, tenants have benefited from the great deals.

“Now the tables have turned, the rents are back up to where landlords want them to be.”

Vancouver’s Broadway corridor, that stretches from Cambie Street as far west as Macdonald Street in Kitsilano, is also facing increased pressure for office space with the vacancy rate there at four per cent and rents up 25 per cent from two years ago.

© The Vancouver Sun 2006

Martin Crutsinger
USA Today

WASHINGTON — Construction of new homes and apartments, after three months of declines, increased in May, helped by dry weather.

The Commerce Department said builders started construction at a seasonally adjusted annual rate of 1.957 million units last month, up 5% from April’s pace. The better-than-expected increase came after declines of 5.5% in April, 7.5% in March and 5.9% in February.

Analysts attributed the rise to an unusually dry spring in many parts of the country, which allowed builders to start work on more homes. But they cautioned that construction activity is likely to slide in coming months as the housing industry slows under the impact of rising mortgage rates.

In a sign of that expected slowdown, permits for new construction dropped 2.1% in May to an annual rate of 1.932 million units.

David Wyss, chief economist at Standard & Poor’s Ratings in New York, said the data showed the housing market “is holding up … better than what we had thought.”

“This suggests less of a slowing economy, and the Fed’s concern about inflation is still there. This is one more reason to jack up interest rates. This is going to be a negative for the market.”

For May, construction of new single-family homes was up 2.1% to an annual rate of 1.586 million units while construction of multifamily units was up an even stronger 19.7% to an annual rate of 371,000 units.

The strength in May was led by a 15.8% jump in construction activity in the West. Construction rose 8.5% in the South and was up 1.7% in the Northeast. However, construction fell 15.8% in the Midwest.

The National Association of Home Builders reported Monday that its builder confidence index fell in June to a reading of 42, lowest point in 11 years.

The housing industry set record sales of both new and existing homes for five straight years as home buying was propelled by the lowest mortgage rates in four decades.

But rates have been rising steadily this year as the Federal Reserve keeps tightening credit in an effort to keep inflation under control. The 30-year mortgage currently averages 6.63%, a full percentage point higher than a year ago. Rising mortgage rates have made it harder for some potential home buyers to qualify for loans.

David Seiders, chief economist for the home builders, says sales could fall 13% from last year’s record and construction of single-family homes is likely to drop about 9% from last year’s record level.

Doug Ward
Sun

The era of cheap gasoline is over, and projects such as the B.C. government’s Gateway Program will lead to developments that will soon become obsolete, University of B.C. professor William Rees said Monday.

Rees, who is among a number of prominent planners and academics attending the World Planners Congress in Vancouver this week, said urban planning is largely based on the misguided belief that cheap energy will be around forever.

The Gateway Program, which includes expanding Highway 1 and twinning the Port Mann bridge, will exacerbate land use patterns that will become unsustainable as gas prices rise sharply in coming years, he said.

Transportation infrastructure being built now “may be seen in a very short period of time as a colossal waste of public resources and the Gateway project fits into the category,” he said.

Sixty of his fellow planners agreed strongly enough to sign a giant petition on the wall of the conference calling for the B.C. government to halt the Gateway plan to expand Highway 1 and twin the Port Mann bridge. The petition says the Gateway Program will spur more car dependency and sprawl.

Andres Duany, a prominent North American planner and critic of suburban sprawl, similarly said the cost of fuel is “going to change our living arrangements. And that is happening right now.”

Duany warned that new alternative energy sources, including wind and tidal power, will also be expensive.

Meanwhile, Vancouver planning director Larry Beasley said the city needs to provide choices of dense living other than downtown highrise towers.

Beasley said “putting a house in a rear garden or putting one more unit in the main house or putting some townhouses at the end of the block to me is equally important as the downtown towers.”

© The Vancouver Sun 2006