Archive for September, 2016

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Decline in luxury sales pulls down Vancouver value?think tank

Monday, September 26th, 2016

A downturn in transactions has taken effect on the real estate market

Ephraim Vecina
Mortgage Broker News

A sharp downturn in transactions in Vancouver’s luxury housing segment has led to a decline in the value of the city’s real estate, according to a fresh report.
 
In its latest announcement, the Conference Board of Canada revealed that the number of completed luxury sales in Vancouver was way down last month. This coincided with the implementation of a new 15 per cent tax on foreign home buyers, News Talk 980 CKNW reported.
 
The average home sales price in Vancouver saw a year-over-year drop of 6.9 per cent in August, down to $846,244.
 
“It is one of only four cities where prices were down year-over-year,” the Board’s report noted. “Price growth continues to be brisk across Southern Ontario. The drop in prices in the Alberta and Saskatchewan cities appears to have levelled off.”
 
The Lower Mainland area also saw an 8.9 per cent month-over-month decline in listings, further aggravating the supply issue that has been plaguing many Canadian housing markets as of late.
 
“Listings fell in 17 areas between July and August,” the report added. “They remained below year-earlier levels in most Ontario markets, while Regina, Sherbrooke, and Halifax saw big jumps.”
 
“Despite widespread drops in sales, the sales-to-listings ratio rose in 15 areas last month. Sellers’ conditions prevail in eight Ontario cities. Sixteen markets, including Vancouver, are balanced. Four markets face buyers’ conditions.”

Copyright © 2016 Key Media Pty Ltd

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Demand for Lower Mainland commercial real estate booming: REBGV

Sunday, September 25th, 2016

Shannon Brennan
other

 

Over 800 commercial real estate sales were registered in the second quarter of 2016, a jump of 30 per cent over last year and the dollar value of commercial sales in the Lower Mainland was up a hundred percent over 2015.

Dan Morrison with the Real Estate Board of Greater Vancouver notes the sale of the Bentall Centre boosted those numbers but believes the Lower Mainland is an attractive place for commercial real estate buyers because of our low-interest rates, weak loonie, and strong employment record. “Both the number of sales and the dollar volume are just reflecting the strong commercial market. We still have a still have a great economy in British Columbia and the economic growth is projected at three per cent.”

“One difference between the residential market and the commercial market is the commercial investors and developers tend to take a longer view of the Vancouver economy, and I think this is showing that there is a lot of optimism for it,” he adds.

The data was collected before the 15 per cent foreign buyers’ tax for residential properties came into effect.

© 1996-2016 Rogers Media

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Time ripe for free trade deal with China: business leaders

Saturday, September 24th, 2016

Trudeau touts ?vast? potential as Chinese premier wraps up visit

DAMON VAN DER LINDE
The Vancouver Sun

As Prime Minister Justin Trudeau and Premier Li Keqiang wrap up the first official visit of a Chinese leader to Canada since 2010, members of the business community say that although China might not be perfect in terms of environmental regulations and human rights, now is the time to forge closer ties with what will arguably be the world’s most influential economy in coming decades.

“The discussions between our two countries lately has centred on the idea that the economic potential between us is vast and that we’d be doing a great disservice to our people if we didn’t tap into it,” Trudeau told an audience Friday that included a 150-strong delegation of Chinese business leaders at the Canada China Business Forum in Montreal.

Li called for a “new golden decade” in the relationship between the two countries, following an icier relationship under Stephen Harper’s Conservative government. 

“If a free trade agreement is established between our two countries it will open up boundless opportunities for investors and business leaders,” said Li during the luncheon. 

Li and Trudeau announced in Ottawa Thursday that the two countries were beginning exploratory free-trade talks, saying they aim to double trade by 2025 and had resolved longstanding issues of access for Canadian beef and canola to China, while several companies signed commercial deals. 

This meeting of the two leaders in Canada comes less than a month after Trudeau’s visit to China surrounding the G20 summit in Shanghai, which included the signing of $1.2 billion in trade deals. 

Former Quebec premier Jean Charest said he interprets this sudden warming between the two countries as a result of the upcoming U.S. presidential elections with both Hilary Clinton and Donald Trump talking tough on trade with China. Trump has accused China of stealing millions of U.S. manufacturing jobs, while Clinton has been critical of human rights in the country. 

“It’s probably safe to assume that the relationship with China is going to be tougher south of the border the day after the campaign than it is today, and I think the Chinese see Canada as a counterpoint to what’s happening in the United States,” said Charest, who has headed trade missions to China as premier and now does business there with the McCarthy Tétrault lawfirm. 

“Strategically for the Chinese government, it’s an opportunity.”

The visit has also addressed the rockier issues with the relationship, including China’s human rights record — it is one of a few countries that employs the death penalty — and domestic opposition to a proposed extradition treaty.

Francis Pang, who heads heads Toronto-based AKD International Inc. and has has been doing business between China and Canada for more than 40 years, said while Canada and China might not see eye-to-eye on certain issues, that shouldn’t slow economic cooperation between the two countries.

“As different countries we can always have different political agendas, but economically, this is for the benefit of our own people, both in Canada and in China,” said Pang, whose firm signed a more than $100 million pipeline manufacturing investment in 1994 that at the time was the second-biggest trade deal between the two countries.

“We cannot wait to make every political concern right before we can do economic development together.”

In interviews at the luncheon, several business representatives said that removing restrictions through a free-trade agreement will provide access to capital, helping to develop investments in the Canada’s resource sector,  which is of interest to China building infrastructure and manufacturing consumer goods for a rising middle class. 

Alan Gorman, CEO of Montreal-based Oceanic Iron Ore Corp., said that although human rights in China should be a concern to Canadians, he believes the influence should be through partnerships, not through imposing conditions.

“Chinese society ought to be defined by Chinese citizens,” said Gorman, whose company in August signed an agreement with the Power Construction Corp. of China to provide financing for a mining project. 

“We can be critical about China, however, I don’t think that serves much purpose,” Gorman said. “I think we have to look at what’s being achieved there.”

© 2016 National Post, a division of Postmedia Network Inc

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Landmark West End hotel likely to be demolished to make way for condo development

Saturday, September 24th, 2016

Vancouver’s Empire Landmark hotel facing demolition

John Mackie
The Vancouver Sun

The Empire Landmark hotel has been a West End icon since it went up in 1973. It’s tall (42 storeys, 120 metres), thin, and has a nifty revolving restaurant/bar on top that offers breathtaking views.

But it also sits on a full block in the 1400-block Robson, in the middle of a neighbourhood that’s being transformed into a forest of luxury highrises. And it looks like the 43-year-old structure will be coming down for a new condo development.

Plans went up on the city of Vancouver’s website Friday for two towers in the 1400-block — one 28 storeys high, the other 30.

The towers would be around 100 metres high, which is almost 25 per cent shorter than the existing building. But with high-end condos going for up to $1,800 per square foot in the neighbourhood, the redevelopment would probably be far more lucrative than running the current 357-room hotel.

The plan by Musson Cattel Mackey architects would see a mixed-use project with 223 market condos, 57 social housing units, two floors of offices and retail on the main floor. The overall project would have 393,850 square feet of floor area.

The site is owned by 1488 Robson Holdings Ltd., whose directors have the same address as the Hong Kong-based Asia Standard Hotel Group. Property records showed it sold in April for $46,528,000. It has had Hong Kong owners since 1997.

Heritage expert Don Luxton isn’t surprised the Landmark may be redeveloped.

“We’re watching this happen all over the city,” he said.

“The new frontier for developers is stratas and 1970s buildings. They’re buying them up all over the place and looking to tear then down, because they’re often underbuilt for their zoning potential.”

The Empire Landmark may be tall, said Luxton, but it isn’t really all that big.

“It’s actually a very slender floor plate,” said Luxton.

“It’s tall, but there’s not that much square footage. And seismically (1970s buildings) are not anywhere near what they need to be. So you look at upgrading these buildings and it costs a fortune — it’s easier to tear them down.”

There has been a lot of speculation about what effect the provincial government’s new 15 per cent tax on foreign ownership will have on the condo market. But Luxton doesn’t think it will be much of a deterrent to rich foreign buyers willing to spend $2 million for a pied-a-terre.

“At those prices, pffff, a 15 per cent tax is nothing,” Luxton said. “It’s lunch money.”

Kirk Kuester of Colliers International notes that Bosa recently sold out a luxury condo development at Cardero and Georgia, with prices in the $1,700-$1,800-per-square-foot range.

“Demand seems to be holding for ultra-high end, really rare, unique type product, based on some recent sales,” said Kuester.

Green councillor Adriane Carr laments the way the redevelopment along Georgia, Alberni and Robson seems to be high-end.

“Do we really need a ton more high-end condos in this city?” she said.

“The building of them is turning Vancouver into a resort city, where we don’t have affordable housing for people who work here, who’ve grown up here, who have brought their families here and want to live here, but can’t afford to.

“It’s a crisis. Everyone knows it’s a crisis in this city.”

The redevelopment has come in the wake of the city’s new West End Community Plan, which raised the heights in certain areas.

“It’s rather tragic that the West End plan has pointed development along the Robson corridor and over towards Burrard, with very tall buildings, (up to) 60 storeys,” said Carr.

Luxton said there may be many more ’70s and ’80s buildings downtown coming down in the current real estate boom.

“1090 West Pender is up for demolition, it’s part of a rezoning and will be replaced by a much larger office tower,” he said.

“Anchor Point (at Burrard and Pacific), there’s rumblings about that one. Pretty much everything in the city is up for grabs. We’re into a new stage in Vancouver, I would say.”

The Empire Landmark was originally known as the Sheraton Landmark. It is an example of the brutalist style of architecture popular in the early 1970s, with an exposed cement exterior. The proposed buildings that will replace it are light, airy glass towers.

© 2016 Postmedia Network Inc.

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Yahoo says 500 million user accounts hacked

Friday, September 23rd, 2016

News of 2014 attack comes just as Verizon plans to buy web portal

BRIAN WOMACK AND JORDAN ROBERTSON
The Vancouver Sun

Yahoo Inc. said the personal information of at least 500 million users was stolen in an attack on its accounts in 2014, exposing a wide swath of its roughly 1 billion users ahead of Verizon Communications Inc.’s planned acquisition of the web portal’s assets.

The attacker was a “state-sponsored actor,” and stolen information may include names, email addresses, phone numbers, dates of birth, encrypted passwords and, in some cases, un-encrypted security questions and answers, Yahoo said Thursday in a statement. The continuing investigation doesn’t indicate theft of payment card data or bank account information, or unprotected passwords, the company said. Affected users are being notified, accounts are being secured, and there’s no evidence the attacker is still in Yahoo’s network, it also said.

“Yahoo is working closely with law enforcement on this matter,” the company said in the statement. “Online intrusions and thefts by state-sponsored actors have become increasingly common across the technology industry.”

The disclosure of the data theft comes at a particularly sensitive time for chief executive Marissa Mayer, as she navigates the company toward a planned US$4.8 billion acquisition by Verizon, set to close by early next year. Mayer, who has dealt with difficulties and complaints about Yahoo’s email service in the past, needs to keep users logging in to drive traffic and draw the advertising that fuels the company’s revenue growth, which has been sluggish under her leadership.

Verizon was notified of the incident within the last two days, the company said in an emailed statement. “We understand that Yahoo is conducting an active investigation of this matter, but we otherwise have limited information and understanding of the impact,” Verizon said in an email. “We will evaluate as the investigation continues through the lens of overall Verizon interests, including consumers, customers, shareholders and related communities.”

The confirmation that accounts were compromised came almost two months after the company said it was investigating claims that a hacker was offering to sell user account details stolen in a data breach. The same hacker, who previously sold data taken from LinkedIn and MySpace, posted information from 200 million Yahoo accounts on a dark web marketplace, Motherboard reported in early August. The stolen information being offered was most likely from 2012, Motherboard reported, citing the hacker, who uses the name Peace.

“All of this compromised information is very useful for criminals in order to hijack user identities and use them for fraudulent purposes,” Avivah Litan, an analyst with Gartner, said. “Identity impersonation has become a global criminal epidemic and there are no simple solutions.”

Yahoo is encouraging users to review their accounts for suspicious activity and to change their password and security questions — along with answers for other online accounts where they use the same or similar information. The company also recommends users avoid clicking on links or downloading attachments from suspicious emails.

Many of the stolen accounts in a sample of data obtained by Motherboard were no longer in use and had been cancelled. The sale of all of the data for just under US$2,000 suggested much of the information was obsolete, made up, or useless because the hackers had already attacked legitimate accounts and exhausted their need for the material.

While the breach is a blow to Yahoo, more broadly it underscores the danger of large data sets spilling into the hacker underground and being used for criminal purposes for years without the breached companies knowing, or with them only taking minimal action based on whatever data hackers tell them was taken.

© 2016 National Post, a division of Postmedia Network Inc

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See the reality of independent school funding

Friday, September 23rd, 2016

Cutting their money hurts everyone, writes Deani Van Pelt and Sazid Hasan

Deani Van Pelt and Sazid Hasan
The Vancouver Sun

In B.C., the provincial government partially funds independent schools, which are not government-run. Calls for the reduction or elimination of independent school funding, which we often hear at the start of every school year, rest largely on misunderstandings, and in some cases, outright myths.

ndependent schools generally receive between 35 and 50 per cent of comparable per-student spending in public schools, but receive no funding or support for capital spending such as the construction and maintenance of facilities. (These additional costs are borne by the families who send their children to independent schools.)

Proponents of reducing or eliminating government funding of independent schools often argue that public schools are “starved” of resources. But the B.C. government will provide public schools with a record $5.1 billion this school year. Further, from 2004-05 to 2013-14, per-student spending in public schools increased by 18.3 per cent (after adjusting for inflation). Clearly, the public school system in B.C. is not starving. In fact, it’s hard to see any evidence of actual spending “cuts.”

It’s also not entirely clear that reducing or eliminating funding for independent schools would actually result in higher levels of perstudent spending in public schools — unless the provincial government is willing to increase total spending quite dramatically. Consider this: In 2013-14, the latest year of available data, 340 independent schools operated in the province — about 88 per cent of these schools received some level of government funding. If the government reduced or eliminated funding for independent schools, some share of students currently attending such schools would inevitably migrate to the public system. Consequently, the public system would incur the full cost of the new student who formerly attended an independent school, where the government paid only part of the cost when the student was in an independent school. Not a good deal for taxpayers or the public system.

We calculate that if more than 37,464 (47.2 per cent of the total) full-time equivalent students migrate from independent to public schools following a discontinuation of funding, the money the government saved by cutting that funding would be consumed by covering the full cost of those students in the public system.

Were any more independent students to migrate to the public system, overall government spending on education in the province would have to increase or per-student funding levels in public schools would fall. And given the finances of the provincial government, it’s not inconceivable that per-student funding would decline. In addition, the government would likely need to spend additional monies to renovate and expand existing public schools to accommodate the new students.

Another common argument made to justify reducing independent schools funding is that B.C. taxpayers shouldn’t subsidize elite schools for the wealthy. But according to a recent analysis, less than 10 per cent of all B.C. independent schools conform to an “elite” stereotype. Thus, if government discontinues funding for independent schools, it would affect the other 90 per cent of schools, which include almost all religiously oriented schools in the province as well as schools offering alternative approaches to teaching.

Finally, it’s worth noting that independent schools provide most of the choice and diversity offered to parents, and most of the competition between schools, in K-12 education in B.C. In addition, parents who choose independent schools shoulder the burden of taxes plus additional tuition costs well above funding provided by government. Reducing or eliminating independent school funding would reduce parental choice, educational diversity, and may lower perstudent spending in public schools. That’s bad news for education in the province.

© 2016 Postmedia Network Inc

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Plunge in foreign buyers leaves onlookers guessing

Friday, September 23rd, 2016

Transfer tax one factor in big shift in Metro residential real estate

JOANNE LEE-YOUNG
The Vancouver Sun

Pundits and industry representatives took best guesses Thursday on what the sudden plunge in foreign buyer activity means to Metro Vancouver’s residential real estate market.

According to latest figures, there was a rush of land title office registrations in the days leading up to the B.C. government’s Aug. 2 introduction of a 15 per cent foreign ownership tax. And since that time the number of foreign buyers entering the city’s once red hot real estate market has dropped from 1,974 between June 10 and Aug. 1 to 60 from Aug. 2 – 31.

“These drops in foreign buyer (numbers) surprise me,” said Andrey Pavlov, professor of real estate finance at Simon Fraser’s Beedie School of Business. “Even with the caveats that transactions piled up before the tax took effect and that the periods before and after the implementation are not perfectly comparable (in the exact number of days), these drops are very dramatic and bigger than I expected.”

Ministry of Finance figures show the proportion of total value of purchases involving foreign buyers for Metro Vancouver before the tax, June 10 to Aug. 1, was 16.5 per cent and fell to 0.7 per cent in Aug. 2 – 31. In Richmond, it was 27 per cent and fell to 1.3 per cent; in Burnaby, it was 24.2 per cent and fell to 0.5 per cent for the same time frames.

“I was astounded by the $800 million figure (amount of deals closed on July 29),” said NDP housing critic David Eby. “I think everybody knew there was a rush at the land title office, but the scope of the rush should have the people who were claiming that international buyers are only three to five per cent of the market hanging their heads in shame, because clearly there is an issue here.”

The total value of purchases by foreigners plunged from $2.1 billion in the June 10 to Aug. 1 period, to $17 million since the tax was introduced — meaning the province had reaped just $2.5 million in property transfer tax by the end of August.

The government’s new property transfer tax for purchases by nonCanadians applies to residential real estate in Metro Vancouver. However, the government also released information showing far fewer foreign buyers outside Metro Vancouver were investing in real estate. From June 10 to Aug. 1, the total value of property transactions involving foreign nationals accounted for 4.6 per cent of the total. After the tax, between Aug. 2-31, it was down to 2.5 per cent.

There was a slight jump in the Victoria area, where the value of purchases by foreign nationals before the tax was 4.8 per cent of the total and rose to 5.2 per cent after the tax was imposed.

The government did not break out numbers for other areas outside Metro Vancouver.

There has been market chatter about foreign buyers heading from Vancouver to Toronto and Seattle. In a nutshell, UBC professor Tom Davidoff said that between overall market trends and possible tax avoidance, the numbers were “striking.”

“But (there are) too many factors to say what is driving (them),” Davidoff said.

Pavlov, the finance professor, believes there could also be some external factors.

“One is that the Chinese government is taking ever more serious steps to curb capital flights from China,” he said, citing new reports this week that China’s foreign exchange regulator is cracking down on Chinese firms and individuals moving assets out of China by making investments overseas.

“Even more importantly, both the stock market and the real estate market in China have recovered and are doing well again. So a Chinese investor might be tempted to invest their money at home. Plus, they are likely learning that investing in Vancouver is very risky. The real estate market is likely to drop, plus the Canadian dollar is at risk.”

“Bottom line, numerous forces are combining to all reduce foreign investment in Vancouver real estate. This is likely good news for the city in the long run, but homeowners should take precautions to ensure they can survive a market downtown.”

Anne McMullin of the Urban Development Institute, which represents developers, said she was “not surprised that foreign buyers would stay on the sidelines when it comes to single family homes. Whether they come back or not, it’s difficult to say.”

The government did not break down its Thursday numbers into different kinds of housing units, but McMullin said since the tax’s implementation there has not been a similar drop in pre-sale condo purchases nor a drastic change in the number of foreign buyers.

“There have been record sales and the foreign buyer composition hasn’t really changed much. It’s about three to five per cent across the region with slightly higher numbers in Richmond and Burnaby, near nothing on the North Shore, lower in Surrey.”

“We are not seeing the same (falls) in the pre-sale condo market because when it comes to foreign buyers buying, they are looking at a 30 month or two to three year close, hoping that by then they’ll be landed immigrants and they won’t have to pay the tax,” said McMullin.

© 2016 Postmedia Network Inc

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Vancouver Market Prices Peaked Before 15% Tax Average Price to Drop Early 2017

Friday, September 23rd, 2016

The Vancouver real estate prices expected to drop

Justin da Rosa
Mortgage Broker News

One bank’s long-term forecast includes expected “gradual softening” and the possibility of further policy implementation.

“Our baseline forecast is for a gradual softening in overall Canadian housing activity over the next two years. To the extent that yields stay at current levels, or decline further, upside risks to our baseline forecast would materialize,” TD Bank said in its quarterly economic forecast. “Should this occur, however, policy makers would come under pressure to implement further macro-prudential rules above and beyond those already implemented or in the pipeline.”

On a more local scale, TD argues Vancovuer’s market had already peaked prior to the 15% foreign sales tax. However, that policy move will contribute to a softening market, according to the bank.

“The tax will help to reinforce the near-term slowdown in the Vancouver market, with average prices expected to fall from current levels by some 10-15% by early next year,” TD said. “This is similar to the correction that occurred in the region in 2010.”

And that tax is forecasted to help inject even more life into Toronto’s already hot market.

“Toronto’s market is likely to remain more buoyant, and may even see a modest filip to activity as investor demand moves from Vancouver,” TD said. “But, it too is likely to show the markings of cooling by late next year in response to eroding affordability (see report) and some modest upward pressure on borrowing rates.”

Copyright © 2016 Key Media Pty Ltd

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Vancouver speculator aims to clear his name

Friday, September 23rd, 2016

Ephraim Vecina
Mortgage Broker News

Developer/speculator Kenny Gu recently stepped forward to prove himself innocent of the various claims of illicit financial activity on his part that have sprung in the wake of a recent investigation by a major publication.
 
Speaking to The Globe and Mail on September 20, Gu vowed that he will be coordinating with the Canada Revenue Agency (CRA) to ensure proper payment of his taxes and other obligations.
 
“I don’t fight. Any time, I will meet with them,” Gu said. “Because I don’t want to do anything to break the law here or to avoid the tax, so everything I am giving to the accountant and the lawyer and they help me to do these things. Maybe they do something not so good. But from my side, I don’t know.”
 
Recent CRA assessments indicated that two of Gu’s ventures have nearly $42,000 in delinquent taxes, stemming from newly reported income.
 
“I want to show you I am a good guy. I am not that kind of guy,” he added. “My family is here. My children are here. They will live in this country forever. For a long time. So, I don’t want them to see or to look at me as if I break the law or don’t want to pay the taxes to the country.”
 
Gu has been accused of engaging in fraud and tax evasion via home flipping. The allegations stemmed from official paperwork provided to The Globe and Mail by Gu’s ex-employee Demetre Lazos. According to the documents, Gu’s corporate and personal bank accounts saw the influx of millions of dollars over the past few years, in stark contrast to his declared 2015 income of $45,865.
 
Gu insisted that his lifestyle—which includes lavish purchases such as a property in West Vancouver worth more than $2-million, as well as high-end vehicles like a BMW and a Mercedes—is funded not through real estate laundering, but by $3 million that he and his wife brought from China in 2009.

Copyright © 2016 Key Media Pty Ltd

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Regulator Tightens Capital Rules for Canada Mortgage Insurers

Friday, September 23rd, 2016

CMHC, Genworth and Canada Guaranty Mortgage Insurance Co. are in the forfront

Theophilos Argitis
Mortgage Broker News

Canada’s financial services regulator released new draft capital requirements for federally regulated mortgage insurers to better reflect growing risks in the country’s housing markets.

The Office of the Superintendent of Financial Institutions said Friday the new requirements, which will come into force Jan. 1, are aimed at allowing insurers to better withstand “severe but plausible losses.” The new measures include provisions that trigger supplementary capital requirements for regions with high home prices relative to incomes, it said.

“When house prices are high relative to borrower incomes, the new framework will require that more capital be set aside,” Jeremy Rudin, head of the agency, said in a statement. “Ultimately this will continue to provide a level of protection to both policyholders and unsecured creditors.”

OSFI is strengthening its oversight as Canadians continue to tap banks for mortgage loans amid low interest rates and escalating property prices, including efforts to ensure lenders and insurers have proper controls in place. The regulator is inviting comments on the draft requirements until Oct. 21.

According to the draft rules, a scaling factor would be used to determine when supplementary capital requirements should be imposed. Based of OSFI’s methodology, had the the draft rules been in place for the second quarter, Vancouver, Toronto, Calgary and Edmonton would have faced supplemental capital requirements.

Drivers of Risk
The new approach will incorporate new drivers of risk “such as borrower creditworthiness, remaining amortization, and outstanding loan balance,”

OSFI said in a letter distributed to mortgage insurers.

Capital requirements for insurers were last updated almost 15 years ago, the regulator said. State-owned Canada Mortgage and Housing Corp. is the country’s biggest mortgage insurer. It competes with private-sector companies Genworth MI Canada Inc. and Canada Guaranty Mortgage Insurance Co.

Copyright Bloomberg 2016

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