PETER MITHAM
Other

A rising tide lifts all boats and, for waterfront properties in B.C., that’s good news.

A recovery of residential real estate markets across the province and the emergence of more patient buyers and sellers are underpinning an upswing in recreational property activity.

“I’m seeing a lot more activity in the past two months than I saw at any period last year or in the past 18 months,” said Mark Lester, who oversees the specialized assets group at Sotheby’s International Realty Canada in Vancouver.

Waterfront properties on the coast are seeing a greater number of inquiries, offers and purchases; in the Okanagan Valley it’s a similar story, and even developers are beginning to approach planners regarding new projects.

But if the turnaround is a significant change from a year ago, Lester doesn’t harbour hopes of a return to the heady days of the mid-2000s. It was an ebullient era, with more ambition than caution and prices that haven’t been matched since.

The pace of activity in the Kootenays remains slow, while prices on the Gulf Islands, Vancouver Island and elsewhere are – by Lester’s estimate – down by between 20 per cent and 30 per cent

“They’re still not where they were six years ago,” Lester said. “When you fall off a cliff, it takes a long time to climb back up.”

Some properties have fallen harder than others.

Lester and partner Alan Johnson still have the listing for the 360-acre property in Ucluelet where Marine Drive Properties Ltd. planned to develop the ambitious Wyndansea Oceanfront Golf Resort. Debts overtook the project, however, and the oceanfront property was listed for sale in 2008 at $35 million.

Today the same site is available for just short of $10 million.

Discount prices

On the other side of Vancouver Island, north of Qualicum Beach, the final six homes at Qualicum Landing are being offered at “unprecedented pricing,” some at less than assessed value, with the real discounts seen in the top-end luxury models.

Originally launched in 2009, the project has a total of 62 units. Sales ticked up last year as pricing aligned with an upswing in buyer demand. This year the aim is to move the properties, with a starting price of $399,000 for a 1,065-square-foot cottage.

The patience of owners with the base price for properties is indicative of both the patience and the strength returning to the market.

Those handling recreational property elsewhere in the province spoke about the need, in the wake of the recession, to give a clear signal to the market that prices had stopped falling by pricing properties at a level where they wouldn’t fall further. This would, theoretically, leave room for investors to reap rewards.

Now that strategy seems to be at play across the province, as buyers recognize that it’s safe to return to the market and make the purchases they’ve deferred for so long.

“This year, as far as recreational waterfront property is concerned, is better than we’ve seen since 2008,” said Joel O’Reilly of Royal LePage Sunshine Coast in Sechelt.

O’Reilly sold seven waterfront properties in March, a sharp contrast from the lacklustre activity of the past few years.

“Buyers are feeling more confidence in the marketplace, and also they’re tired of waiting,” he said. “Some of these buyers we’ve been working with for a year or two years. They’ve been watching and waiting.”

With prices for waterfront cottages down 20 per cent relative to 2005 and in a stable place for the past year, O’Reilly said buyers are ready to act.

“Buyers are seeing some good value, and that’s why they’re moving forward,” he said. “You are seeing some prices now that you would not have seen back then [2005].”

The waterfront deals extend to the commercial sector, according to Jay Cousins of Re/Max Jay Cousins Realty in Nanaimo, who notes that trophy Island resort properties have been deeply discounted and says that a baby boomer could sell a West Vancouver or Vancouver house and purchase a going recreational business opportunity with Gulf Island waterfront.

An example is the renovated Surf Lodge on Gabriola Island, with 7.4 acres of waterfront, a fully equipped lodge with guest rooms, a 50-seat pub and dining room, a three-bedroom home for the owner and a separate cottage, all on six separate parcels with a further five acres for future development. The property, which Cousins said would have fetched about $2.5 million at market peak, is listed now for $1.79 million, with a possibility of negotiation.

Even at the list price, though, it is still below the “benchmark” near-$2 million price of a detached house on the West Side of Vancouver or West Vancouver according to March figures from the Real Estate Board of Greater Vancouver.

Domestic demand

It is local demand, in fact, that is expected to buoy waterfront sales.

A decade ago, buyers from the U.S. were using favourable exchange rates to seek a safe haven in the wake of the terrorist attacks on New York and Washington, and the shadow of conflicts in Afghanistan and Iraq.

Now, it’s downsizers from the North Shore and the West Side realizing the great value waterfront properties a short ferry ride away can offer.

“They’re selling their non-view tear-down family home for $3 million, [and] what they can get up here is remarkable,” O’Reilly said. “It’s incredibly inexpensive here in comparison.”

He has listings for oceanfront properties five minutes from the ferry in Gibsons at $3 million, for example; the same properties in West Vancouver would command four times as much.

The attractive pricing makes waterfront properties in areas like the Sunshine Coast appealing to investors, too. With a mix of young families and vacationers seeking furnished getaways in a popular locale with few hotels, waterfront properties can command enough to cover monthly expenses.

There’s no shortage of demand for a comfortable waterfront cottage. Rents typically run at $2,500 a week for vacation rentals; less for monthly rentals.

Lester adds that the rental market has also received a boost in recent years from people who would like a cottage but haven’t felt confident about jumping in. This is something he expects more people to do this year.

But he believes buyers are returning to the notion that recreational properties, and real estate generally, is a long-term hold rather than a quick play.

A tighter financing market initially helped set the tone, with many of the major banks refusing to bankroll purchases in areas deemed to be marginal, and buyers are now accepting that appreciation won’t take care of their mistakes.

“You’re buying for the lifestyle, but you’ve got to look long term,” Lester said.

from Western Investor May 2013

Big-selling tiny condos could set regional trend

Other

With nearly half of the smallest condos in Canada selling out during a one-day sales event in Surrey, the time of the micro-condo appears to have arrived in Metro Vancouver.

Twenty-seven of Tien Sher’s 56 tiny condos were snapped up within hours of them going on the block at the four-storey Balance building in North Surrey. Tien Sher had labelled them as the smallest new condominiums in the country.

The smallest suite in the building is 297 square feet and the largest is a 648-square-foot two-bedroom unit. Sixty per cent of the suites at Balance are 308 square feet or less.

Prices started at $109,000. With a 5 per cent down payment, mortgage payments would be around $600 a month, meaning the units offer the potential for positive cash flow for investors.

The condos are aimed at young professionals, single parents and retail workers who make $22,000 to $55,000 a year and are looking to buy their first home, according to the developer. But first buyers were primarily parents of Surrey students, investors, professionals and senior citizens.

“It is exciting to see that this size, style and price of small homes has hit the mark with homebuyers who would otherwise not be able to buy,” said Charan Sethi, president of Tien Sher.

Meanwhile, Reliance Properties of Vancouver has unveiled an ambitious plan to build “about 500” micro condos, mostly in the East Village area of East Hastings Street. Most of the tiny condos will be in the 300-square-foot range, according to company president Jon Sovell.

Reliance tested the market with the completion of the successful Burns Block renovation in downtown Vancouver, a rental project with apartments as small as 270 square feet. Reliance rented out all the tiny apartments for an average of $1,000 per month. Despite critics, Sovell said all the units rented in a week through free ads on Craigslist, nearly all to young downtown workers.

After proving small can be popular, Reliance is now renovating an old hotel in Victoria into 100 micro condos that Sovell said would start at $120,000, or about one-third the average price of a Victoria condominium selling through MLS. Sovell expects buyers to be a mix of owner-occupiers and investors.

from Western Investor June 2013

Mixed-use development could house 4,000 residents, add industrial and commercial space

GLEN KORSTROM
Other

Developers plan to spend more than $500 million to transform a triangular slice of eastern Port Coquitlam into Metro Vancouver’s newest planned community.

No residents currently live in the Fremont district, most of which was part of the agricultural land reserve (ALR) and known as the Dominion Triangle 23 years ago.

The area is now primarily grassland with about 350,000 square feet of retail but, by 2018, Fremont is expected to be home to up to 4,000 people while also having nearly double the retail square footage and about 300,000 square feet of industrial space.

New cycle paths, parks and other amenities will make recreation more accessible for the community on the western shore of the Pitt River, across from Pitt Meadows. 

Residential

Mosaic Homes is building the first 48 of its planned 650 homes that will be across from a park that borders the river. Sales are scheduled to begin in May for the homes earmarked for occupancy this summer.

“We’ll be initiating construction of additional homes within a couple months so that by the end of the year we will have either completed or started construction on 150 of the planned 650 homes,” Mosaic spokesman Geoff Duyker said of his company’s $180 million investment.

All of Mosaic’s homes will be in multi-family buildings and include about 200 apartments and 450 townhomes that vary in price up to $500,000.

Retail

Onni Group is in the permitting stage of its plans to build up to 650 units in two residential towers at its Fremont Village retail complex.

The 350,000-square-foot shopping complex now has big-box tenants such as Canadian Tire and Walmart. John Middleton, Onni vice-president of leasing, said recent tenants include Shoppers Drug Mart, RBC, CIBC, A&W and Burger King. Despite the buzz about the construction of the Evergreen rapid-transit line into neighbouring Coquitlam and Port Moody, Middleton said transit wasn’t a factor in Onni’s retail plans.

“We see it as great location with good highway access,” he said, noting it is situated at the intersection of Lougheed Highway and the Mary Hill Bypass.

The company expects to announce within weeks the name of the grocer it has landed as the anchor tenant for its final 330,000-square-foot retail phase.

Onni plans to spend hundreds of millions of dollars to develop that space.

“The concept for the new retail is to create a real village out there instead of just big boxes and a sea of parking,” Port Coquitlam Mayor Greg Moore told Business in Vancouver.

Moore pointed to Larco’s Village at Park Royal in West Vancouver as the inspiration for the kind of retail that Port Coquitlam council wanted to see in the Fremont district.

“That whole meandering street with lots of bricks and lights and water features and landscaping is what we’re going for,” he said.

Another novel aspect of the neighbourhood’s evolution is that it will include industrial land with warehouses designed and built with the understanding that residential homes are nearby.

Industrial

Conwest Group of Companies was scheduled to complete a 50,000-square-foot industrial building with six strata units in May before starting work on a 22,000-square-foot industrial building with five strata units.

Conwest principal Tony Marinelli said construction on the project will be completed by year’s end. He added that his company plans to develop a further 228,000 square feet of industrial strata space on its 26-acre parcel within the next two years.

Conwest and Mosaic teamed up to build the new Fremont Connector between Dominion Avenue and Lougheed Highway.

Moore said the City of Port Coquitlam also spent about $12.1 million to upgrade Dominion Avenue about six years ago.

The city didn’t need to offer financial incentives, according to the mayor: “We encouraged the development by being open-minded about approvals and having a unique urban-planning formula.”

from Western Investor June 2013

FRANK O’BRIEN
Other

When you talk about Okanagan real estate, the real focus is the residential and resort properties that have dominated and defined the market for years. And, as the busy summer season begins, it appears that real estate is poised to continue an uptick that started last year.

Residential sales in the central Okanagan, anchored by Kelowna, were up 3.3 per cent during the first quarter of this year – compared with 2012, which had posted a near-12 per cent rise in sales from 2011 according to the BC Real Estate Association. In the south Okanagan – think Osoyoos – sales were up 2.8 per cent after posting a similar increase in early 2012.

Prices are holding steady, with central Okanagan’s average MLS detached-house valued at $379,000 and south Okanagan’s at $305,000, both virtually unchanged from a year ago.

Encouraging for the resort market, Alberta buyers appear to be returning.

“We are seeing more buyers from Alberta than from the Lower Mainland,” confirmed developer Rick Bruschinsky, who has only eight building lots remaining at his 40-lot Casa Loma Estates subdivision near Kelowna, where lots sell from $300,000 for one-third of an acre.

Bruschinsky, who is also selling 2,900-square-foot Casa Loma lakeview townhomes from $700,000, said sales have been steady this spring.

Kelowna

Confidence in the market is also seen in Kelowna, B.C.’s third-largest city outside of the Lower Mainland. The green light has just been given to two high-rise residential towers.

Construction of the $100 million Monaco project by Premier Pacific Properties is expected to start this fall, according to company spokesperson Tyler Dueck. The towers will contain 289 condos and apartment hotel suites and four levels of retail and office space.

“Our company and local realtors are already getting calls from people interested in the Monaco,” Dueck said. “There’s a lot of optimism about Kelowna’s future.”

It’s anticipated that most of the suites in the Monaco will sell for between $300,000 and $500,000. The towers are expected to complete by 2016.

Many of the buyers could be among the 1,000 employees of Interior Health, who in a few years will be working out of a new administration and client service centre to be built directly south of the Monaco.

The approval of the Monaco – it was its third application before city council – also signals a fresh approach to downtown development in the Okanagan’s premier city.

Myth buster

The city is currently promoting the downtown core as a “destination” for retailers, according to the city’s executive director of business development Jim Paterson.

“At the city, we have to play the long game,” said Paterson, who, prior to coming to Kelowna, helped rejuvenate Winnipeg’s downtown.

He said the myths Kelowna is fighting include:

• Kelowna is overbuilt with condos: Paterson said despite public perception, the supply of available condominium has dwindled and most purchasers now are “real owners,” not investors and speculators; and

• Kelowna’s population is an aging demographic living on fixed incomes: Paterson notes Kelowna is one of the fastest-growing cities in Canada and serves as a retail destination for an estimated 400,000 people. According to a Financial Post survey, Kelowna saw a 170 per cent increase in retail sales from 2000-11, compared with a 150 per cent increase for all of B.C.

He added there has been about $40 million in public investment alone in the downtown in recent years, including the current revitalization of the city’s main downtown street, Bernard Avenue, construction of a new Kelowna Yacht Club and expansion of the club’s marina (making it the largest of its kind in North America), plans for a new public pier and commercial dock and plans for private developments such as the new 150,000-square-foot office-tower headquarters for Interior Health that will amalgamate office space scattered throughout the region.

“We have got to the point where we are now comparing ourselves with places like Saskatoon, Regina and even Calgary,” said Paterson, adding that recent multimillion-dollar additions to Kelowna General Hospital, like the $28 million patient-care tower and construction of the $380 million Interior Hearth and Surgical Centre, as well as the growth of UBC’s Okanagan campus, has helped make Kelowna an even more attractive destination.

Key downtown sites

Further driving downtown is the future development of a 12.7-acre site formerly occupied by a fruit-growers co-operative. While that property has been sold, the closing date isn’t until September and details of the deal are not being revealed until it’s complete, though it’s expected to host industrial projects. It includes the co-operative’s packinghouse, offices and retail store, as well as storage facilities.

On June 21 the city will accept offers for a 12.5-acre downtown site known as Central Green that could be “ideal for residential and retail” according to Paterson.

Other potential sites include two that city planners have pencilled in for potential hotel properties.

The city also provides incentives for downtown developers, such as development-cost charges that are 29 per cent lower than in other parts of the city, a revitalization tax exemption program, lower parking requirements, cash-in-lieu of parking provisions and business and residential property tax rates that the city claims are some of the lowest in B.C.

At least two developers have taken advantage of the downtown incentives according to Colliers’ Kelowna office: Worman Developments with a new four-storey office tower and Troika Developments, which is planning a five-storey office building.

Tim Down of Coldwell Bankers notes that the multi-family market is seeing limited inventory with strong demand.

Capitalization rates for apartment buildings are in the 4 per cent to 7 per cent range, while prices also vary widely from $60,000 to $120,000 “per door,” depending on quality and location.

Vernon

Vernon, population 38,000, is rankled and reeling from a recent Conference Board of Canada report that rated the lovely north Okanagan city as having one of the worst economies among Canadian mid-sized cities.

According to its first-ever such survey, the conference board said Vernon’s economy has been declining for five straight years.

Vernon‘s total gross domestic product sank from $2.1 million in 2005 to $1.5 million in 2012, the board report states. Also, Vernon’s total employment declined.

Kevin Poole, manager of Vernon’s economic development office, is “perplexed” by the conference board ranking. Poole notes that total building permits in Vernon last year hit $591 million, twice the level of west Kelowna, as an example.

Vernon‘s real estate market is not helping the economic picture, however. Despite a modest rise in April, MLS sales are down 10.9 per cent through the first four months of this year, compared with 2012 at 377 units. The bulk of sales are around the Predator Ridge golf course.

Osoyoos

The resort and wine centre of Osoyoos in the south Okanagan is seeing an economic recovery, if sales of resort properties are to be measured.

Two major developments by Calgary-based Bellstar Hotels & Resorts with the Osoyoos Indian Band are selling very well, according to marketing manager Curt Jansen.

Canyon Desert Resort, which hugs the Nk’mip Golf Course near Oliver, has seen 17 of the golf villas sold at around $300,000 each.

And, in the hills above Osoyoos, the Residences of Spirit Ridge has seen strong sales of villas priced from $414,000, Jansen said. About 40 per cent of the buyers are coming from Alberta.

from Western Investor June 2013

Other

Vancouver Island north of Victoria is emerging from a five-year real estate downturn with fresh optimism and a fresh round of new real estate developments, including an audacious bid from Chinese investors.

Northwest of B.C.’s capital city, Vancouver developer Michael Thornton believes he has hit the “sweet spot” for recreational buyers with his Silver Spray waterfront development at Sooke Point near Victoria – but it has taken 17 years to do it.

“This place has everything,” Thornton said, noting it’s less than an hour’s drive from downtown Victoria, the airport and the BC Ferries terminal.

The development, now taking shape, features 95 oceanfront or oceanview cottages, priced from $300,000. Due to a special setback allowance because of the solid rock base, some oceanfront cottages are within 16 feet of the water. “It is like you can step from the deck into the ocean.”

Situated on a point of land jutting into the Pacific, the cottages are arranged to capture much different experiences, ranging from big surf and sunsets to sheltered hot spots to mountain and ocean views with immediate access to neighbouring Wilderness Park, boasting miles of hiking trails.

Thornton, with investors, bought the 172-acre site in 1996 from local owners for just under $4 million. Originally the plan was for a high-end resort with a hotel, golf course, marina and 274 luxury homes, but the 2008 financial crisis – and public protests – put an end to that.

“Investments just dried up,” he said.

Over the years and through controversy that split the East Sooke region, the development has evolved into its current form.

Thornton has spent $1.6 million for a pump station to service higher-elevation lots, built a reservoir and ran a water line costing more than $4 million across Sooke Harbour and along more than 12 miles of road. Now the entire development boasts 127 lots – 50 of which have been sold for $14.5 million to help finance the project, though only a handful have single-family homes built on them. There is a 115-berth marina being excavated while the remaining single-family lots remain on the market.

At the heart of it all sits Possession Point and its 2,850 feet of oceanfront.

Eco-tourism

“This is where we always envisioned the destination resort, something with eco-tourism and a world-class flavour,” Thornton said. “This is where Victoria meets the wild west coast.”

While zoning allows for both full-time residency and rentals in the cottages, he’s hoping most buyers will see the cottages as seasonal retreats.

“We’re hoping most owners, when they are not in use, will put them under rental management,” said Thornton, who has held talks with a number of hotel-management companies to consider the possibility.

The fully finished and furnished cottages will range in size from 600 square feet to 850 square feet per floor. There are bungalows as well as two- and three-level options. Prices will start at $300,000, though most are likely to be in the high $300,000s and beyond.

Construction crews are completing a fully furnished show cottage, with sales to begin in July and August.

Thornton feels both relief that it’s actually happening and some disbelief that it’s taken nearly 20 years to do.

“I never went to land-development school,” he said with a laugh. “I thought, ‘How difficult could it be when you have a beautiful piece of property?’ But there are no regrets. It’s been a wonderful experience.”

Sooke Mayor Wendal Milne said his council has endorsed Thornton’s most recent plans: “I think he’s changed focus a bit and now he’s looking at a different type of market. It’s a beautiful piece of property and the concept he’s into now I think is a good one.”

Nanaimo

The Nanaimo real estate market started to perk up this year – and it’s neither just the 12 per cent uptick in May housing sales that’s causing a stir, nor retailers’ expectations of the start of cruise season.

The key reason behind the excitement is a bid from a Chinese investment firm to build a luxury hotel on a long-vacant site next to Nanaimo’s downtown convention centre. The city has been trying to convince a developer to build there for a decade, once offering the land for $1 to any eligible buyers.

But, in June, representatives from the Chinese group pitched an audacious plan to city council.

Under the proposal, the investors would build a $50 million, 200-suite hotel with a rooftop restaurant on the city-owned vacant site.

Nanaimo Economic Development Corp. (NEDC) CEO Sasha Angus said that the NEDC has been working with the travel company for the past four months on the plan.

Vancouver-based lawyer Perry Ehrlich presented the bid to council on behalf of SSS International Travel Co. Ltd., which is a B.C. subsidiary of Suzhou Youth Travel Services Co. Ltd.

Suzhou Youth Travel Services is ranked 13th in the top 100 Chinese travel-service companies. It’s also ranked first in the same category in Jiangsu province, where it’s headquartered. According to Ehrlich, the company posted $175 million in gross revenue in 2012 and moves 41,000 tourists from China across the world each day. He said the travel firm now wants to add Nanaimo as a destination on its routes.

A contingent of businesspeople was in the audience during Ehrlich’s presentation, including Junhao Chen and Xiaoan Dong of SSS International.

The company has also set aside $9 million as a deposit in a show of good faith to ensure the funds are available. This includes purchasing the land at an appraised value of $565,000 and leasing up to 200 parking spaces from the conference centre.

“You want to know that this is not a pipe dream. It’s not,” said Ehrlich, adding that not only does his client want to promote the Vancouver Island Conference Centre, but has expressed interest in partnering with the city to run the facility.

Nanaimo Mayor John Ruttan says the new proposal goes a long way to address concerns about how much a potential hotel project would cost city ratepayers, since the developers are not requesting an operating subsidy.

Ruttan said the company, one of the largest youth tourism operators in China, could fill the new facility with its own customers from overseas.

City councillors appeared receptive to the presentation, and Angus said he was optimistic about getting a deal done. He said there will be ongoing discussions with city staff, and expects a draft purchase and sale agreement will be brought forward for consideration.

Bilingual commercial real estate agent Sandy Liu of Coast Realty Group in Nanaimo is not at all surprised with the proposal for a new hotel from Chinese investors.

“I have been dealing with a lot more Asian buyers recently,” said Yiu, adding that “there is a lot of tourist dollars from China coming onto the Island.”

In fact, investment interest in lodging properties is so strong, Liu recently listed a 35-unit Nanaimo motel and restaurant that she owns herself.

“I think Chinese people are just starting to discover Nanaimo and the Island,” she said.

Housing sales

Meanwhile, there are also hopeful signs in the housing market, according to the Vancouver Island Real Estate Board.

Real estate selling prices rose 2 per cent year-over-year, compared with the same month last year, based on 122 units sold last month. That itself was a 12 per cent jump in sales over the 109 properties sold last May.

The news may be promising for Nanaimo, the largest urban area in the region, and for the region as a whole, but the outlook isn’t the same across the entire Island north of the capital region.

The average home sold for slightly more than $357,000 in Nanaimo in May – a $24,000 improvement over April and $7,000 more than a year ago.

Nanaimo and Port Alberni were alone in that department. Every other market in the region saw average selling prices decline.

They fell 6 per cent in Parksville to $405,000, and 2 per cent in the Comox Valley.

But the number of sales increased in every market except the Cowichan Valley and Comox Valley, where sales fell 16 and 1 per cent, respectively.

“This is the second month, seasonally adjusted, that we see a rising trend in consumer demand,” said Cameron Muir, BC Real Estate Association chief economist. “I think we’re about to embark on another upswing.”

from Western Investor July 2013