Once the next US president is sworn in, things are likely to take a turn

Steve Randall
Mortgage Broker News

A global recession would bring challenges for the global real estate market but it is unlikely next year according to one major firm’s leader.

Dann Conn is chief executive officer of Christies International Real Estate and he is not expecting a recession in 2020; but once the next US president is sworn in, things are likely to take a turn.

“If you looked at it in the ordinary course, my guess would be 2021 at the earliest, but probably not much later either,” he told Bloomberg.

Conn believes that lower interest rates would be a good thing to protect real estate from current challenges including the US-China trade dispute, Brexit, and tax factors that are impacting real estate investors.

On geopolitics, he says two of the biggest world real estate markets are seeing different outcomes.

For London, UK, where Brexit uncertainty has been a factor for three and a half years, Conn says that the battering that home prices have taken in recent years could result in a strong rebound for investors.

“If you’re a buyer now, you can take advantage of the last four or five years that have been not so great,” he said.

But there was a note of caution with current prime minister Boris Johnson considering a Canada-style tax on foreign investors to cool the market which is overinflated even after the recent declines. The tax is expected to be 3% on top of the usual land tax known as stamp duty.

“Evidence shows that by adding significant amounts of demand to limited housing supply, purchases by non-residents inflate house prices,” Chief Secretary to the UK Treasury Rishi Sunak said in the statement. “That is why we are introducing a higher rate of stamp duty for non-UK residents that will help to address this issue.”

Buying in Asia
Meanwhile, in Hong Kong, the civil unrest means that the economy – and home prices – are weak. Conn suggests those investors looking at real estate in Asia should consider Taiwan as “a perceived relatively safe place to deploy capital because it has great infrastructure, and there’s a good concentration of wealth.”

Copyright © 2019 Key Media

Partnership to build a resale residential property price index

Kimberly Greene
Mortgage Broker News

Teranet and National Bank of Canada recently announced an agreement with Statistics Canada to build a unique Resale Residential Property Price Index. This new index is part of Statistics Canada’s Residential Property Price Index (RPPI) released in response to the federal government’s request to improve access to housing price statistics in Canada.

A direct result of the collaborative work between the three organizations, the resale component of the RPPI will produce indices in the house and condominium segments for the following Census Metropolitan Areas: Montreal, Ottawa, Toronto, Calgary, Vancouver and Victoria.

“We are very excited to be collaborating with National Bank and Statistics Canada on this endeavor,” said John Robinson, Vice-President Commercial Solutions at Teranet. “Our combined strengths and capabilities are ideally suited to deliver new, valuable market insights to Canadians.”

As Canada’s statistical agency, Statistics Canada has long been a source of timely information on housing.  Teranet and National Bank’s work with Statistics Canada is the result of a standard public service procurement process, and stemmed from a Request for Proposal put out in February 2018.

“We’re pleased to partner with Teranet and Statistics Canada in the release of the Resale Residential Property Price Index,” said Darren Ablett, Managing Director & Head, Mortgage Business, Global Funding & Treasury at National Bank. “We’re committed to providing Canadians with greater insight and analytics in the housing market to support them in the decision-making process. The Resale Residential Property Price Index will help make information on housing even more accessible.”

Teranet designs, develops and operates world-leading land information systems for the legal, real estate and financial services industries. In addition to owning and operating the electronic land registration systems for the provinces of Ontario and Manitoba, Teranet has developed specialized offerings to assist real estate agents, lawyers and financial institutions to better manage their decision, document and risk management processes.

Recently, Teranet extended its registry services business through the acquisition of D+H Collateral Management Solutions. Teranet is a wholly owned investment of OMERS Infrastructure, the infrastructure investment arm of the Ontario Municipal Employees Retirement System.

Copyright © 2020 Key Media

Region’s ‘bad retail’ disrupted by online sales and poor locations, but well-placed malls are thriving

Frank O’Brien
Western Investor

Despite a recent U.S. report claiming “retail is dead,” bricks-and-mortar shopping is thriving in Metro Vancouver, with approximately 3.8 million square feet planned or under development and property sales of $450 million so far this year.

In a survey released November 19, San Francisco-based retail research firm Leanplum claims the upcoming holiday season will expose the final nail in the bricks-and-mortar casket.

“Retail is dead,” the survey concludes, noting “consumers are shunning bricks-and-mortar this holiday season with over 95 per cent choosing to buy half or more of their gifts online.”

“Not in Vancouver,” quipped Neil McAllister, senior vice-president of retail market strategies with commercial real estate firm Lee & Associates.

McAllister, whose firm has just released a Metro Vancouver retail survey, said new regional shopping centres are leading commercial real estate development in much of the region.

Metro Vancouver, McAllister noted, is playing catch-up on shopping space because it has a relative shortage of shopping venues. This is in spite of the region posting an average of $3.3 billion in monthly retail sales in 2019, third highest in Canada.

Metro Vancouver has 11.6 square feet of shopping centre retail space per capita, according to a 2018 Altus Group study, compared with 18 in Calgary, 19.5 in Edmonton and a national average of 13.1 square feet per capita.

McAllister said online sales are a challenge to bricks-and-mortar retail, but not all retailers are affected.

“Bad retail is vulnerable,” he said, pointing to large traditional department stores “like Sears” and those located in areas that lack parking or transit “such as South Granville,” which has seen a number of retail stores close in the past 12 months.

This year the nearly four million square feet of new retail development being built or planned in Metro Vancouver includes a 150,000-square-foot addition to the McArthurGlen Designer Outlet mall in Richmond, 1.4 million square feet underway at the City of Lougheed on the Burnaby-Coquitlam border that is expected to be completed in 2020’s first quarter and an 80,000-square-foot shopping mall being wedged beneath the Vancouver House condo tower at the north end of the Granville Street Bridge.

The Westbank Corp. project, which opens next spring, includes a London Drugs, Vancouver’s first Fresh St. Market grocery and the city’s first Momofuku Noodle Bar.

As well, 105 retail properties changed hands this year, worth $454 million, Lee & Associates reports. They included a Chilliwack shopping mall that sold for $87.4 million and an 11,000-square-foot retail site on South Granville that sold for $1,265 per square foot.

It is no coincidence that most of the dozen new or expanding retail plays in Metro Vancouver are neighbourhood shopping centres with a lifestyle component.

Grocery stores and other “needs of life” retailers are proving nearly immune to online competition, according to a November GWL Realty Advisors study, which notes that food-anchored neighbourhood shopping centres are now among Canada’s top-performing retail platforms.

“Neighbourhood shopping centres catering to needs of life with grocery stores, pharmacies, restaurants and experiential food destinations appealing to millennials and ethnic communities are proving to be resilient and profitable investments,” said Steven Marino, GWL senior vice-president of portfolio management.

“Modern community shopping centres are less vulnerable to large-scale e-commerce.”

Metro Vancouver retail is not dead, McAllister said; it is simply evolving.

Copyright © Western Investor

New rental building at 1303 Kingsway & 3728 Clark Drive

Kenneth Chan
other

A newly released report by City of Vancouver staff builds on the conclusion that incentives are critical to the creation of new purpose-built rental housing supply.

The findings and recommendations to city council come after much scrutiny this past year over the incentives provided to developers, with critics asserting incentives are not necessary nor equitable, arguing the rental rates are not at below-market affordable levels, while supporters argue it is a key driver for encouraging developers to build rentals instead of more condominiums.

This divide along ideological lines has been very apparent in city council decisions on rental proposals, particularly applications under the Rental 100 Secured Market Rental Housing and the Moderate Income Rental Housing Pilot Project (MIRHPP).

But the forthcoming recommendations align with an independent report commissioned by the city that found developer incentives to build rental housing are working. The pace of approvals, at a rate that is well below the city’s 10-year goals for market rentals, is narrowing the vacancy rate to about 1% and pushing rental rates upwards.

Here are some major changes city council is set to consider:

1. Pre-zoning to allow six-storey mixed-use rental projects in commercial areas, and residential rental zoning

Commercial areas would be pre-zoned to allow for six-storey mixed-use rental buildings, which generally means commercial space within the lower level and residential rental space in the upper levels.

A sizeable proportion of the city’s new rental housing over the past decade has been built on commercial zoning, with 22 purpose-built rental housing developments and 1,165 purpose-built rental units approved under the Short-Term Incentives For Rental and Rental 100 programs. This in fact accounts for 18% of all new rental buildings and 14% of rental units approved over the last 10 years.

Between 2009 and 2018, a quarter of residential development projects in commercial zoning districts has been market rental development, with the vast remainder being strata development.

“These development trends in C-2 areas are generally consistent with the findings from Phase 1 economic testing, which found significantly higher profit margins for strata development in C-2, even with the city’s rental incentives including added height, density, Development Cost Levy (DCL) waivers, parking reductions, etc.,” reads a city staff report.

“These findings illustrate the overall economic viability challenges in developing purpose-built rental housing in Vancouver, even with market rents.”

2. New rental buildings in transitionary areas off arterial roads

Modifying the existing Affordable Housing Choices Interim Rezoning Policy (AHC IRP), more rental rezonings will be allowed within 150 metres off an arterial road, instead of the previous regulation of 100 metres. The project spacing requirement of no more than two projects within 10 blocks along an arterial street will be abolished.

Residential zones within 400-metres from parks, schools, and shopping can also be considered.

Depending on location, market rental projects of up to four or five storeys will be considered, but projects up to six storeys must dedicate at least 20% of the floor area for below-market rents. Additionally, community amenity contributions apply for these six-storey options with a below-market component.

“The AHC IRP was intended as a pilot to enable real examples of housing types to be tested for potential wider application. The policy was also designed to demonstrate the transition zone concept by enabling ground-oriented housing types to provide a transition between higher density areas along arterial streets and lower density residential areas,” reads the report.

3. Moderate Income Rental Housing Pilot Project extension

The MIRHPP stream for applications will be extended through January 1, 2021 to better enable developers to reach the city’s 20 project limit.

To date, the municipal government has received 10 rezoning applications falling under MIRHPP.

Further analysis in Spring 2020 will provide options and proposed directions to adjust rents over time to address “impacts on program goals and project viability, including longterm increases in renter incomes and project operational costs.”

“A report on the status and results of the MIRHPP in 2021 including information regarding affordability levels achieved, financial viability of projects and level of incentives required, and implementation, compliance, and long-term building operation.”

4. Permitting mass timber rental buildings up to 12 storeys

Aligning with changes to the BC building code and next year’s proposed changes to Canada’s building code, 12-storey mass timber buildings could be more widely considered and encouraged for rental housing.

“The provincial government announced today new changes to the BC building code that will allow the construction of taller wood buildings of 12 storeys — up from the current allowance of six,” reads the report.

“Currently, challenges exist to widespread mass timber construction in Vancouver, including costs, building codes, and lack of industry awareness and expertise. Mass timber construction could provide opportunities for taller wood-frame rental buildings, while codes currently only allow wood-frame construction up to six-storeys. Otherwise, taller buildings generally are required to construct in concrete, resulting in increased building costs and carbon emissions.”

5. Development Cost Levy changes

Some adjustments will be made to the various DCL waivers.

The Utilities DCL waiver, meant to be temporary, will be removed on September 30, 2020 on for-profit affordable housing, as the city needs more revenue to upgrade utilities infrastructure, which will decrease the risk of urban flooding and sewer backups from new developments.

Projects under MIRHPP will be able to qualify for the DCL waiver for the entire residential portion of the building from new eligibility criteria.

Overall, existing Citywide DCL waivers will be maintained as a key incentive to catalyze new rental housing.

“New rental development typically generates profit margins that are lower than the minimum returns expected to obtain construction financing and proceed with a new project,” reads the report.

“The return on costs is also typically lower than the profit margins that can be achieved through strata development under existing zoning. The DCL waiver is offered to new secured rental projects to help overcome the ‘viability gap’ and generate a return on costs that better competes with strata development.”

© DailyHive

Land parcel totalling nearly an acre, in Vancouver’s most exclusive neighbourhood, has potential for 85 rental units

Mark Goodman
Western Investor

Breakdown:

Property type: Residential development site

Location: 1464 West 32nd Street and 4750 Granville Street, Vancouver

Property size: 37,938 square feet

Zoning: RS-5 (low-rise residential)

Potential: 85 rental suites

Price: $12.7 million

Date of sale: October 25, 2019

Brokerage: Goodman Commercial Inc.

Broker: Mark Goodman    `

Copyright © Western Investor

The city’s rules regulating short-term rentals will remain in place

Clayton Jarvis
Canadian Real Estate Wealth

On October 15, Ontario’s Local Planning Appeal Tribunal (LPAT) concluded an appeal of Toronto’s short-term rental rules brought forth by landlords who charged that the almost two-year-old guidelines restrict their rights as property owners.

On Monday, LPAT delivered its decision. The city’s rules regulating short-term rentals will remain in place.

LPAT found that Toronto’s regulations provide a reasonable balance between the needs of the city’s tourist population and its cohort of renters. During the appeal, arguments against the regulations were made on the grounds that short-term rentals help fill an important gap where Toronto hotels, no longer able to handle the surging number of guests visiting the city, fall short.

The ruling comes as a blow to Toronto-area Airbnb entrepreneurs, who have been using short-term rentals as a way to greatly increase cash flow. Landlords renting out their entire properties on a nightly or weekly basis will now have to limit their short-term stays to no more than 180 days per year. Individual rooms in a landlord’s residence can be rented out with no limit.

Advocates for more stringent regulation of Airbnb have to be pleased. The ruling comes down definitively on the side of city’s residents, who have, by some estimates, 10,000 fewer properties to choose from because their status as entire-property Airbnb listings has removed them from the market. But it’s unclear just how closely the rules, first approved by Toronto city council in December 2017, will be enforced.

“Is there going to be a new department that’s going out there to make checks? Are they relying solely on complaints? Are they making the fines really high for people if the complaints do come in?” asks Sahil Jaggi, a Toronto investor and Mink Realty agent.

“There should be proper rules in place so we’re not paying more tax payer money to create a new board,” Jaggi says. “At the same time, I think there’s should be heavy fines if people aren’t following the regulations.”

Jaggi is surely not alone in that sentiment. Just how seriously Toronto’s growing number of Airbnb barons take the regulations remains to be seen.

Copyright © 2019 Key Media Pty Ltd

Short-term rentals in Toronto allowed in principal residences

Steve Randall
Canadian Real Estate Wealth

Plans to regulate the short-term rentals market in Toronto will go ahead following the dismissal of an appeal.

It means that short-term rentals through platforms such as Airbnb will be allowed in all housing types across the city but only in homeowners’ principal residences.

Secondary suites are also permitted to be used for short-term rentals but only where it is a principal residence.

Companies such as Airbnb will be required to pay $5,000 per year to the City plus $1 for each night booked through their platforms.

Those doing short-term rentals will also have to pay a new Municipal Accommodation Tax (MAT) of 4% on all rentals that are less than 28 consecutive days.

“This is good news for Toronto residents and a step in the right direction when it comes to regulating short-term rentals and keeping our neighbourhoods liveable,” said Mayor John Tory. “When we approved these regulations in 2017, we strived to strike a balance between letting people earn some extra income through Airbnb and others, but we also wanted to ensure that this did not have the effect of withdrawing potential units from the rental market.”

Right balance The Mayor added that he believes the policy achieves the right balance in falling more on the side of availability of affordable rental housing and the maintenance of reasonable peace and quiet in Toronto neighbourhoods and buildings.

The City of Toronto approved the regulation of short-term rentals of homes in December 2017 and January 2018; but an appeal to the Local Planning Appeal Tribunal followed.

On November 18, 2019, the Tribunal dismissed the appeal, allowing the City to proceed with its plan. Further details are expected in December.

Copyright © 2019 Key Media Pty Ltd

Vancouver ranked 44th in global cities for luxury homes

Steve Randall
Canadian Real Estate Wealth

The luxury real estate market slowed in the third quarter of 2019 according to a new global index.

The Knight Frank Prime Global Cities Index shows that 76% of the 45 cities included saw static or rising prices in Q3 2019 compared to 12-months earlier.

The average annual prime price growth was 1.1% while the extended period of economic growth and wealth creation should have produced stronger gains.

Leading the pack is Moscow, where prices are up 11% during the 12 months to September 2019 amid stronger demand and several high-end projects being completed. Quarter-over-quarter growth was 1.3%.

Frankfurt (10.3%), Taipei (8.9%), Manila (7.4%), and Berlin (6.5%) complete the top 5 cities for luxury price growth.

In North America, Toronto is the best performer, in 19th place with growth of 2.2% year-over-year but it declined 1.4% quarter-over-quarter.

Miami (in 26th place with 1.3% year-over-year and 0.6% quarter-over-quarter growth), is the only other North American city to post both year-over-year and quarter-over-quarter growth.

Los Angeles (33rd place) has growth of 0.2% compared to 12 months earlier but declined 1.0% from Q2 2019; San Francisco (34th) saw no annual growth and a 1.5% quarterly decline.

New York, Vancouver decline The only other two North American cities included saw luxury residential prices slide in the third quarter.

New York (42nd) posted a decline of 4.4% year-over-year and 1.4% quarter-over-quarter; and Vancouver (44th) saw prices slide 10.2% year-over-year and 1.1% quarter-over-quarter.

The worst performer among all 45 cities included was Seoul with a 12.9% annual drop and a 1.5% quarterly decline.

Copyright © 2019 Key Media Pty Ltd

Latimer Village the urban hub of master-planned Langley community

Simon Briault
The Vancouver Sun

In 2013, Vesta Properties approached homeowners in the Carvolth neighbourhood of Langley with an offer to purchase and then develop their lots. Fast forward six years and a landmark master-planned community – the largest in the Fraser Valley – is beginning to take shape. Set on no fewer than 74 acres and comprising 31 lots in total, Latimer Heights will provide the area with just under 2,000 new homes.

Latimer Village is the newest section of Latimer Heights to go on sale and represents the urban hub of the entire community with 487 condos. Set for completion in the late summer of 2021, it will include restaurants, retail outlets, amenities and an urban village space. The community will also have more than 17 acres of park space and provide easy access to the Carvolth Exchange, which in turn connects to the SkyTrain system.

Community building on this scale offers potential homebuyers all kinds of options. For Fisher Lietz, it’s the opportunity to own a home for the first time.

“It was very affordable,” said Lietz. “I’m a pretty young guy and don’t have a crazy amount of money to work with so it was really nice to be able to get into a new development like this. It’s not something that I expected to be able to do.”

“It’s a really great area in my opinion or, at least, it will be soon,” Lietz added. “I work in downtown Langley and it’s getting to be really busy. I wouldn’t want to live right downtown, but this is just close enough to it that I can still get there, but still have access to the highway and good transit options.”

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Tara Desmond, sales manager at Vesta Properties, said that Latimer Heights will allow different generations to live in the same location based on their different needs.

“We have young families who have bought one of the townhomes and their parents are going to be moving into one of the condos,” said Desmond. “It’s a very walkable community that’s completely sustainable on its own – people can very much age in place if they want to and have the amenities and the facilities they need right on their doorstep.”

“There are schools, there’s shopping and there’s recreation in abundance here,” said Desmond. “I think it also offers a certain amount of accessibility and less traffic congestion than you might find in places like South Surrey. Langley seems to appeal to people because you have all the restaurants and all the shopping, but you’re also close to the border and close to the airport.”

The first two buildings of Latimer Village, comprising approximately 100 homes, are on sale now, with new phases to be released shortly. Homes range in size from 507 to 1,331 square feet. Available homes have between one and three bedrooms – some with a den as well – and are priced from the mid-$300,000 range.

Homes at Latimer Village will have nine-foot-high ceilings, oversized windows and laminate hardwood-style floors. There are three colour schemes to choose from – grey, caramel and dark – and the kitchens come with Samsung appliance packages, gas ranges and french door fridge freezers with ice and water dispensers.

Bathrooms have dual sinks, frameless glass shower doors, large format tiles on shower surrounds and floors, and quartz countertops.

“There’s a ton of variation here,” Desmond said. “A lot of the time with condo buildings you’ll see the same plans repeated on every floor. That’s definitely not the case with the architecture and the design at Latimer Village. There are at least 40 different floor plans – it’s really unique.”

“We are a local, Langley developer so we know what people are looking for,” she added. “We’re very much involved and invested in the community and our head office is here. We’ve been part of the initial transformation of this area and it’s become one of the most popular places in the Lower Mainland to purchase a home as a result.”

At Latimer Village, Desmond said there has been lots of interest from residents of Burnaby and Coquitlam who are attracted by the value on offer, as well as people who already live in the area. Lietz is one of them and he jumped at the chance to own a condo in what is set to become a highly desirable new area of the Lower Mainland.

“I live in Brookswood, south of downtown Langley,” he said. “I like it where I am but I’m really looking forward to going to the new place. I find renting to be kind of an unfortunate situation. All the rent is just going away to nothing, but with a mortgage you get to keep a lot of your monthly payment as equity. It will be really nice to not have to be losing $1,100 a month.”

The Latimer Discovery Centre, showcasing a typical two-bedroom condo at Latimer Village, is open from noon to 5 p.m. every day except Friday.

Latimer Village at Latimer Heights

Project location: 8242 200 Street, Langley

Project size: The first two buildings of Latimer Village, comprising approximately 100 homes, are on sale now, with new phases to be released shortly. Homes range in size from 507 to 1,331 square feet. Available homes have one to three bedrooms – some with a den as well – and are priced from the mid-$300,000 range

Developer: Vesta Properties

Architect: Ciccozzi Architecture

Interior designer: Area 3 Design

Sales centre: 8242 200 Street, Langley Township

Sales centre hours: noon to 5 p.m., Sat — Thurs

Sales phone: 604-371-1669

Website: http://www.latimervillageco

© 2019 Postmedia Network Inc.