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
