Post-industrial wave washes over Mount Pleasant?s buildings

Evan Duggan
The Vancouver Sun

New developments that are blending light industry with office space in Mount Pleasant are accelerating the transformation of a neighbourhood once known more for its elbow grease shops than the digital commerce emerging there today.

One of those developments is at 34 West 7th Ave., where Chard Development is redeveloping the former Far-Met Importers warehouse into a four-storey commercial strata development.

Set to break ground in May, the project will have 49,500 square feet of space. The new building will blend light industrial space on the bottom floor with more traditional office space above, said Byron Chard, the company’s chief financial and acquisitions officer.

The building used to have about 10 workers.

“We moved the company to South Burnaby,” said Matt Smith, the project’s leasing agent with Colliers International. “We sold them a strata unit down there because they were able to capitalize on the land value here in Mount Pleasant.”

He said Far-Met bought a high-ceiling building with lots of space for delivery trucks and ample parking.

Chard expects between 100 and 400 workers will soon toil in the new building, which is expected to be completed by the summer of 2018.

The building is being designed to suit the creative class that is emerging in the neighbourhood. “Light industrial could be a variety of companies,” Chard said. “It could go from manufacturing to basically anyone who makes widgets, essentially.”

The developers are trying to sell the units for $850 per square foot on average, Smith said.

“There’s just not really been a lot of strata available in the area,” he said. “Financing is incredibly favourable still right for owner-users. We’ve done a couple of deals, not just in this area, but at our Workspaces Strathcona project, where we’ve sold to owner-users who have got up to 100 per cent financing.”

Meanwhile, at 22 East 5th Ave., PC Urban is converting a Second World War-era industrial building into a six-floor tech and office hub.  Built in 1942, the building once housed the Cemco Electrical Manufacturing Company, which made radio and radar components for the allied war effort.

That two-storey structure, now called the Lightworks Building, is becoming a 54,000-square-foot commercial building, while preserving the existing art deco facade.

When the project was announced at the end of 2015, PC Urban Principal Brent Sawchyn told Postmedia they expected to lease the space to high-tech tenants.

“A lot of the manufacturing today is intellectual property, so the Hootsuites of the world and the post-media production people like DHX Media and Image Engine, those are the types of people that are gravitating toward Mount Pleasant,” he said.

Colliers’ Smith said PC Urban and Chard were wise to get on the post-industrial wave now sweeping the neighbourhood. “They had the foresight to build these creative buildings that captured the demand and they appeal to those creative classes.”

Smith said that section of Mount Pleasant, between Main and Yukon streets, and Broadway and 2nd Avenue, has been in a long-term transition, with heavier industry giving way to more tech workers, artists, breweries and designers.

Residents of the area now include Hootsuite, and craft breweries such as 33 Acres, Faculty Brewing, and Gener8, a 3D effects conversion company.

“Heavy industrial users who don’t need to be in the downtown, they can be in other markets like Campbell Heights out in Surrey where they can get on the transportation routes there,” Smith said.

Last year, Hudson Plating, a chrome finishing company, left its space at 221-275 West 5th Ave. It now operates in Burnaby on North Fraser Way.

Smith said his firm recently sold that building and PC Urban has plans to redevelop it.

Most of land from Yukon to Main is zoned I1 for light industry to allow for more flexible use that folds-in higher density office space, said Russ Bougie, a principal with Avison Young. “You could produce movies, you could produce software, and you’re not necessarily producing hard goods.”

Bougie said the number of tenants looking for space in that area now outnumbers the buildings available for lease by nearly 10:1. 

Michael Wiebe, a director of the Mount Pleasant Business Improvement Area, has mixed feelings about the changes in the area. He said projects like Chard’s and PC Urban’s are certainly bringing in new workers and residents to the area, which is welcomed, but the changes could also tamp down commercial diversity while eliminating cheaper, older work spaces.

“Vancouver needs to have those industrial type businesses as well,” he said. “We can’t move everything over to these tech companies. We have to have that mix. … I think the city needs to continue to evaluate their zoning process and make sure we can do a balance of both.”

He said space is still needed for artists, makers, and other small businesses that can’t afford to lease or buy space in the new projects.

“Small business is such a key component to a healthy neighbourhood and right now with all the changes and the price increase of land, it’s making it harder and harder for small businesses to start,” Wiebe said. “That’s something that could have a really long-term effect moving forward. That could really kill the neighbourhood.”

© 2017 Postmedia Network Inc.

One-quarter of Vancouver homes could be torn down by 2030 because of rising land costs, study warns

Joanne Lee-Young
The Vancouver Sun

About a quarter of single-family, detached homes in Vancouver are at risk of being torn down between now and 2030 due to rising land costs, predicts University of B.C. architecture professor Joseph Dahmen.

He developed the “teardown index,” which compares the value of a residence to the value of the overall property, also known as its relative building value (RBV). The lower this RBV, the more likely a house will be torn down and replaced by a new one.

The RBV — based on municipal data and B.C. Assessment records on detached homes bought and sold between 2005 and 2015 — has been the single, most important predictor of whether a house will be kept or torn down, said Dahmen.

The scenario has persisted as land costs keep increasing, leaving what seem to be expensive and just-built homes quickly in jeopardy of being demolished again and again in order to keep pace, he said.

“I have been intrigued, cycling by many different (teardown) sites. The city is actively remaking itself,” said Dahmen, who grew up in Norway and studied in Boston before moving to Vancouver five years ago.

With the recent rise in real estate values, half of single-family homes in Vancouver have RBVs under 7.5 per cent, according to mathematician Jens von Bergmann of MountainMath Software, who collaborated with Dahmen.

A relative building value or RBV of 60 to 70 per cent would be considered healthy for a new building. One below 10 per cent means the likelihood of a home getting razed and replaced goes up significantly, they add.

“If you have $2 million in dirt, unless you build a $4-million house, which is hard to do, you can’t get to a RBV of 50 per cent. Most new builds only get 38 per cent. That’s the median. So they get demolished again,” said Dahmen.

“I have an outside perspective when it comes to single-family homes in Vancouver. It caught my interest seeing quite shabby single-family homes fetch high prices,” said von Bergnann, who grew up in Germany before moving to Calgary and Vancouver for school and work.

The two set out to first dig into the economics and extent of tearing down single-family homes in Vancouver. Eventually, they hope to examine the environmental and financial impact of constant construction and demolition.

Upgrading old housing stock that may be “poorly insulated and not airtight” improves energy consumption and makes homes more efficient, argues Dahmen. In the long run, this could lower carbon emissions. However, the buildings need to stand long enough for the cost of reconstruction to be recovered. Aside from waiting long enough to recoup expenses for materials, there is also a need to consider the energy poured into building a new home, he added.

An optimal way to add value to a residence, in order to raise its RBV, is to allow for more multi-family, low-rise homes in areas that are currently not zoned for this, said Dahmen.

The researchers acknowledged the city’s desire to expand areas where homes built before 1940 cannot be demolished, which would halt some of their forecast. “It’s not to take away from this. Architectural heritage is important, but we should do it with a clear eye, taking into account, competing agendas such as sustainability and affordability,” said Dahmen.

© 2017 National Post

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Steve Randall
Canadian Real Estate Wealth

The restricted supply of multifamily units in Vancouver’s lower mainland will continue to hamper affordability, the Urban Development Institute says.

In its latest State of the Market report, the UDI highlights that at the end of December 2016 only 8 new townhome units were completed and available for purchase across the entire lower mainland.

“The report confirms that doing nothing, blaming foreign buyers, or introducing new, punitive taxes have not made housing more plentiful or affordable for home-seekers,” says UDI President & CEO Anne McMullin.

She added that, despite plenty of land in the area, restrictive zoning ties up 85 per cent of it for single-family homes when multifamily units are desperately needed, especially around transit links.

The report reveals that the Metro Vancouver population grew by more than 30,000 in 2016 but rental units have a vacancy rate below 0.6 per cent; and there was a 92 per cent year-over-year decrease in wood framed condos in the fourth quarter of 2016, to the lowest level in 6 years.

“We all have to share in the solutions and consider the greater good and community health,” McMullin urged.

Copyright © 2017 Key Media Pty Ltd

Recent government rule changes allow Canadians more freedom, flexibility and safety to own Mexican real estate

Baila Lazarus
Western Investor

Former Canadian Olympian and current Calgary developer Cary Mullen has blown up some myths about investing in Mexican real estate, but it took diligent digging to discover a route to safety and potential profit. 

The 100-year-old regulations covering foreign ownership within 50 kilometres (31 miles) of a coastline have been relaxed somewhat, but using a “fideicomiso” (bank trust) is still required, Mullen found. Even so, there’s a lot of old thought and misinformation around about what can and can’t be done. 

Mullen, a World Cup champion downhill skier who represented Canada at the 1996 Lillehammer and 1992 Albertville Olympics, applied the same training discipline when he began to research Mexico’s real estate invesments. 

“When I first started, I believed the rumours rather than knowing the facts,” said Mullen. “I spent thousands of dollars with lawyers in Mexico learning about the specific steps and process.”

Mullen purchased oceanfront property near Puerto Escondido in Oaxaca to build Vivo Resorts, a 76-acre gated community of luxury residences. 

Some of the rumours Mullen refers to were that developers had to have property held by a Mexican bank trust and that they had to have Mexican partners.

Outright ownership 

“I learned that you could also have the trust be through some international banks such as HSBC or Scotiabank,” Mullen explained. “I learned the government had changed that rule [about partners] and a Mexican company can be owned 100 per cent by a foreigner and it can own Mexican property outright.”

Vivo, which offers built, under-construction and pre-construction condos, overlooks 800 metres (2,624 feet) of beachfront. At full build-out Mullen expects to have 114 home sites and 400 condos. Priced from US$249,000 to US$500,000, condominiums range from 1,288 square feet to 1,600 square feet. Private homes with pools range from US$329,000 to US$949,000.

Mullen said that despite some confusion in property ownership rules, sales have not been impacted. As soon as the owners find out the facts, they feel confident about buying, he said.

Diane and Bill Veniot of Edmonton were two owners who bought into the Vivo development in early stages when it only had one building up. They heard about it at a home show in 2012 and, knowing they didn’t want fractionals or time-shares, Vivo – and Mullen – attracted them.

“Cary was able to explain the ins and outs of buying,” said Diane Veniot. “He knew how to do business here, so we were confident.”

They estimate their $250,000 purchase has gone up by 40 per cent in four years.

Colin Richardson of Vancouver has had his eye on Mexican properties for about a decade, watching values tank with the rest of the world in 2008. When he started to see movement again in 2014, he began to look seriously. In November 2016, he paid US$70,000 for 15,000 square feet of property in a gated community in La Paz, in Baja California Sur, where he plans to build a vacation home. 

He chose La Paz for its stability, citing a strong middle-class and the presence of a research facility and university, as well as its proximity to swimmable beaches, but with less of a touristy crowd.

Richardson advises buyers to be clear around issues of purchase and construction currency.

Low construction cost

“You purchase the property in U.S. dollars but when you build, the construction cost is in pesos,” Richardson said. “Because the peso has devalued against our dollar, that’s a big advantage.” He said this is not the case everywhere in Mexico, such as in Cabo San Lucas, just a few hours away, so buyers need to add that to the list of questions to ask.

Les Twarog, a realtor with Re/Max Crest Realty Westside in Vancouver, has several investment properties in Mexico in his portfolio.

The strip between Cabo San Lucas and San José del Cabo is undergoing rapid development, he said.

“In the last year and half, there’s a building boom like I’ve never seen in 20 years,” said Twarog. “There were 20 to 30 cranes building hotels and
high-end developments, like
Coal Harbour, at $2,000 per square foot.”

Like Mullen, Twarog conceded some Canadians have doubts about Mexican real estate.

“Many investors are leery of buying.” said Twarog. “But really sophisticated investors will choose Mexico.”

Copyright © 2017 Western Investor

Bellevue units will have large outlooks ? and high-end spaces from which to enjoy them

KATHLEEN FREIMOND
The Vancouver Sun

Bellevue 

Project address: 2290 Marine Drive, West Vancouver

Project city: West Vancouver

Developer: Cressey Development Group

Architect: IBI Group Inc.

Interior designer: Insight Design Group

Project size: 35 units

Bedrooms: two and three bedrooms

Unit size: 1,954 – 3,900 square feet

Price: $4 million+

Sales centre: 204 — 1868 Marie Drive, West Vancouver

Sales centre hours: Open daily by appointment; open house Saturdays noon — 5 p.m.

Sales centre phone: 604-912-0105

Website: http://www.bellevuebycressey.com

Occupancy: Summer 2019

If the old adage is true and the three most important home buying considerations are location, location, location, then Bellevue — a planned luxury 16-storey development in West Vancouver — scores on all three counts.

The stunning views of English Bay – and on a clear day, Vancouver Island – check off the first requirement of an enviable site. Work will start this spring on the building, conveniently located a few minutes walk from the popular 1.7-kilometre Centennial Seawalk and the shops and services in Dundarave Village. Fulfilling the third location requirement is the site itself, with two stands of mature trees and extensive landscaping.

“Bellevue will be built on one of the last remaining pre-zoned highrise sites on the western edge of Ambleside,” says Jason Turcotte, vice-president of development at Cressey Development Group. “The homes are spacious, but there are only 35 of them, so it is a boutique offering.” 

The development, bounded by Marine Drive, Bellevue Avenue and 23rd Street, comprises the 16-storey tower and a two-storey amenities building.

Three elevators will serve the building. “One elevator is dedicated entirely to service, for activities like moving in or out and garbage removal. The other two elevators will never be interrupted by building services,” Turcotte says.

Floor plans include several options, from homes with two bedrooms and two and half bathrooms to three bedrooms with three and a half bathrooms They range from 1,954 square feet to 3,900 square feet, with only two or three homes on each level.

In addition to the spacious interiors, the large balconies present as outdoor rooms, Turcotte says. Those outdoor spaces, which connect seamlessly with the main living areas, are fitted with features that make them ideal for entertaining: built-in barbecues, sound systems and heaters.

“All the units have a south, southwest or southeast exposure and the indoor/outdoor flow and the tiled floor will make the balcony feel like an outdoor room,” he adds.

While buyers may be shedding the responsibilities that go along with owning a single-family home, they don’t want to compromise on being able to enjoy the outdoors, Turcotte says.

The development’s architect, Gwyn Vose of IBI Group, says the balconies average 13 by 30 feet (3.9 by nine metres) the entire width of the unit. He describes the site as a trapezoid shape with the residential buildings on the western side to maximize the sea views, while the amenities building, which houses a swimming pool, hot tub, steam and sauna rooms, gym and Pilates studio, overlooks the signature driveway and landscaping.

The building’s large circular driveway will make it easy to pick up or drop off residents and visitors. Bellevue’s porte cochere, a covered entrance to the building, enhances the classic elegance that will be hallmark of the development, Turcotte says.

Buyers have an array of design and finish choices that will make their homes feel customized to their tastes and needs, says Linda Gallo, a senior interior designer with the project’s interior design firm, Insight Design Group.

All kitchens have a high-end Sub Zero and Wolf appliance package, including a 36-inch stainless steel Wolf gas range or cooktop, an integrated Wolf built-in convection steam oven, and side-by-side 24-inch Sub Zero refrigerator and freezer columns.

The decisions begin in the kitchen, where three floor plans accommodate preferences for sink placement. One option has it in the island, while another choice places it in the perimeter quartz countertop.

“The choice on the placement of the sink depends on how people live. Those who entertain a lot and want a large, clear surface to present the food will choose a sink in the perimeter while the person who may enjoy the view while using the sink, will choose to place it in the island,” Gallo says.

The next step is choosing the design style.

“The West Coast-inspired design has flat-panel cabinet doors, the hood fan is behind an integrated panel and the major Wolf appliances are more streamlined. The classic design option shows more detail, the cabinetry has raised panels and features the more traditional Wolf appliances that people are more used to seeing,” Gallo explains.

As buyers customize their space the next step is choosing the wood palette. Hardwood options include classic American Walnut, a warm Natural Oak or Silver Oak. Quartz is selected for the countertops and the 8-foot-five-inch by four-foot-seven-inch island.

One of the most dramatic design elements in the kitchen is the ceiling-high marble backsplash. The choice of marble – Statuarietto, Calacatta or Bianca Oro – also impacts the use of stone in other rooms, like the single-slab for the statement fireplace in the living room and the bathrooms.

The sales centre at 204 — 1868 Marine Drive in West Vancouver features the warm and creamy tones of the Bianco Oro palette.

Cabinets and drawers in the kitchen feature all the conveniences, like pullout corner-cabinet storage systems, drawer dividers to organize cutlery and flatware and inserts to keep herbs and spice containers easily accessible.

The kitchen ceilings are just shy of nine feet (2.7 metres) and while upper cabinets maximize storage for seldom-used items, a pulldown mechanism to more easily reach the top shelves is also available.

The master ensuite bathroom is standard across all the homes in Bellevue. The ensuite has a separate toilet room, a shower with heated stone bench and rain shower head, and a freestanding tub. The two vanities are separated by a spacious linen cabinet. Elegant faucets are by Dornbrecht while tubs, sinks and toilets have been selected from the Kohler range.

In the powder room, the sink sits on an onyx or quartzite vanity. “Both these stones backlight beautifully and give a nice glow – an ethereal ambience,” says Gallo.

All the walls will be painted with Benjamin Moore’s Chantilly Lace, a clean white that provides a neutral backdrop for the other finishes in the space.

Parking is below grade, and each home has a garage, with ample space for storage, Turcotte says.

© 2017 Postmedia Network Inc.

Newcomers? dreams of ownership are a big reason for the industry?s rising prices

Garry Marr
The Vancouver Sun

The mayor of Caledon, a town of about 60,000 northwest of Toronto, says government can try all it wants, but the dream of owning a home will persevere.

Allan Thompson should know. His town, like many others that ring around Ontario’s capital, has become a launching site for new communities as people priced out of the core look to the suburbs (or what was once rural) for slightly cheaper housing.

An average new single-family detached home in the Greater Toronto Area (GTA) was $1,264,604 in 2016, according to the Building Industry and Land Development Association. But housing prices range from an average of $666,220 for a semi-detached home in Durham, northeast of Toronto, to $1.8 million for a detached home just north of the city.

“I remember I had this neighbour who was Portuguese,” said Thompson, who was a Caledon councillor for 11 years before becoming mayor two years ago. “He said to me, ‘For 20 generations back in Portugal, we all lived and rented houses in town. We had our sheep and our goats and our cattle.’ He said to me, ‘I was the first one ever to have a home.’ ”

That dream of homeownership is central to the escalating prices in Canada’s housing market, especially in larger cities such as Toronto where immigrants tend to settle.

Even though worries about socalled foreign buyers inflating prices dominate some discussions about runaway housing prices, the housing boom is more likely being driven by new immigrants looking to get a piece of that Canadian dream. It’s a mentality that says home ownership is a sign you have made it.

Canada has a home ownership rate of about 70 per cent, one of the highest in the world, and immigrants are buying in.

A report from real estate consulting firm Altus Group Ltd. in January found that immigrants — defined as someone whose country of origin is not Canada — are purchasing one out of every two new homes in the GTA.

Matthew Boukall, senior director of residential products and data solutions at Altus Group, said demand could get even stronger as the federal Liberals boost immigration totals from the annual base target of 260,000 that existed from 2011 to 2016.

“The Liberal government has announced their immigration targets will increase to 300,000 per year. The fact that half of our new home market is going to new immigrants and we are going to get (more) immigrants to Canada bodes well for the new housing market,” said Boukall, noting Toronto gets about 30 per cent of those immigrants every year.

Sales of existing Canadian homes continue to be hot and set another record in 2016. Numbers released Wednesday from the Canadian Real Estate Association show that sales activity in January 2017 was 1.9 per cent better than a year earlier.

The key problem in some markets is that there is simply not enough homes hitting the market to satisfy demand.

This past week, Douglas Porter, chief economist at Bank of Montreal, said Toronto was in a housing bubble driven by foreign wealth, coupled with record-high demand and a shortage of detached properties.

Others say the bubble is less likely to pop anytime soon.

“The shortage of homes available for sale has become more severe in some cities, particularly in and around Toronto and in parts of B.C.,” said Gregory Klump, chief economist at the Canadian Real Estate Association. “Unless sales activity drops dramatically, the outlook for home prices remains strong in places that face a continuing supply shortage.”

Royal Bank of Canada economist Robert Hogue said immigration has been a driving force in the Canadian housing market for some time in the major markets where immigration has been the strongest.

Hogue points to a Statistics Canada study released in December that showed how the earning power of immigrants begins to rise over time and, while it didn’t address housing, it’s easy to see how increased income could translate into home ownership.

The median employment income of immigrant tax filers who landed in 2004 was estimated at $16,800 in 2005 (one year after landing). The same cohort’s median income increased to $26,000 in 2009 and $33,000 in 2014.

“It takes time for immigrants to earn the same income as those born in Canada,” Hogue said. “I suspect immigrants buying today are not as much those that came in the last year, but those who got established financially.”

Hogue said it’s unclear to him whether immigrants arriving in Canada today have more wealth and are entering the market more quickly. But the Altus survey found that 19 per cent of people buying new homes in the GTA do not take on a mortgage.

“Lucky them,” Boukall said with a laugh. “Are they foreign investors? If you’re asking me that, we don’t collect that information.”

How much foreign buyers — often really just speculators — have entered the Canadian market is a hot topic for both prospective homebuyers and governments.

The British Columbia government clearly believes that foreign buyers are having an impact on the Vancouver market and slapped a 15-per-cent additional property transfer tax on them in August 2016. Prices there have since slightly declined while sales, already in decline, are off about 40 per cent from a year earlier.

The Toronto Real Estate Board (TREB) surveyed its members in December about foreign transactions and concluded only 4.9 per cent of the market came from that segment.

All of which begs the question of whether foreign buyers are being confused with immigrant buyers.

“People are having the conversation in Toronto and it’s been much more intense in Vancouver,” Hogue said. “Don’t confuse the two. I’d like to comment on Toronto statistics, but other than the survey done by TREB, we don’t have much (data). In B.C., we’ve had data since June and I would say the percentage of buyers from out of the country has not been trivial.”

But Dianne Usher, senior vicepresident of Royal LePage’s highend division Johnson & Daniel, said the real growth in the market has come from immigrants she calls “end users,” those who come to the country and plan to live in their homes.

“I’d say it’s happening in Toronto and Vancouver and then I would say Montreal,” she said, adding more immigrants are coming in with money, or are trying to get it out of their country of origin for good. “Canada as a whole is a safe haven because of the stable government, the education system, the healthcare system. We’re a destination and it’s going to continue.”

She adds immigrant buyers will continue to purchase properties in and around large cities partly because of work and educational opportunities, but also because large urban centres are what many are accustomed to.

The biggest problem might be meeting all the demand, especially if immigration quotas are increased.

Brian Johnston, chief operating officer of Mattamy Homes, which has development projects in Caledon and throughout the GTA, agrees the supply side continues to drive prices. He figures he’s selling more than 50 per cent of his homes to immigrants.

With immigration increasing, he said the solution is for government to create more low-rise housing to accommodate what is a growing segment of the population.

“Coming to Canada, part of the process is buying housing,” Johnston said. “You’ve got people coming from countries like China where they may own the house, but not the land. Owning a house is a very powerful thing for some people.”

In Caledon, the mayor doesn’t think the push into his city is going to ebb any time soon.

“From here on in, as we know it, our population is just going to keep compounding,” Thompson said. “A lot of people are coming here from other parts of the world to live, quite a few of them don’t have mortgages. It tells you people are coming here by choice.”

© 2017 Postmedia Network Inc.

Douglas Todd
The Vancouver Sun

No question is more on the minds of Metro Vancouver homeowners and renters than how and when the region’s housing bubble could burst.

After stratospheric escalation, a punctured bubble would be disaster for hundreds of thousands of over-mortgaged homeowners. Yet it could bring relief to those desperate to get into housing.

Last summer’s B.C. government 15-per-cent tax on foreign buyers and the federal government’s stress test for mortgages have slowed the volume of sales in Metro Vancouver, particularly at the top end.

But, despite suggestions from a few voices in finance and real estate, the city’s bubble is intact: Prices remain at record highs after jumping by 40 to 60 per cent in two years.

Unaffordability continues to be a crisis, especially for the young. No meaningful link exists between the city’s tepid median wages and runaway real estate values.

The conventional wisdom is you can’t be sure you’re in a housing bubble until it bursts. Yet there is little doubt Metro Vancouver is extremely vulnerable to a free fall.

The Swiss Bank USB rates Metro real estate as the most likely to experience a sudden downward correction of 17 large cities, including London and Hong Kong. And the longer the bubble lasts the harder the crash.

China is key to Metro’s housing future

What is most likely to cause the bubble to rupture?

SFU urban studies professor Wu Qiyan, UBC geographer David Ley and others are most closely watching China, the fast-growing powerhouse of 1.4 billion people.

They make a convincing case that no other factor — including interest rates — is as important, as surveys showing 40 to 60 per cent of China’s wealthy individuals want to emigrate and buy housing in another country.

In 2016 China’s rich injected more than $33 billion into U.S., Australian, British and other global housing markets. We don’t know how much they bought in Canada because, as Ley said, this country ranks among the few “in the civilized world” that doesn’t publish foreign investment data.

Yet it’s clear the West Coast of Canada and the U.S. is the most popular destination for China’s elite, according to the Hurun Report. China is now a “fundamental” of Metro’s housing market, says Ley, author of Millionaire Migrants: Trans-Pacific Lifelines.

Even though Metro is small, the Hurun Index shows China’s moneyed class are more attracted to Metro than even large “gateway” cities such as Sydney, London and Singapore.

Metro’s housing market has long been tied to China’s economy. Our real estate prices have gone up and down in tandem with China’s fluctuating economy since the 1990s, according to data compiled by Bloomberg News.

China’s citizens are especially drawn to Metro Vancouver, Ley said, for its clean air, climate, trusted universities, relatively short flight times and existence of a Chinese-speaking community that makes up one fifth of the population.

Given the key role China’s wealth plays in Metro, the question both Wu and Ley ask is: Will the country’s hardline Communist leaders finally succeed in stopping the illicit flight of its capital?

All eyes should be on China’s new edict, which began Jan. 1, say Wu and Ley. Will it be more effective than others? It demands a written pledge that yuan converted into U.S. dollars will not be used to buy property overseas. It also creates a government black list and harsher penalties for violators.

“If China can control the outflow of its currency — and keep it to only $50,000 US per person a year — it would greatly impact the housing market in Metro Vancouver,” said Wu.

“I think this … crackdown will be much more strictly enforced and will be longer lasting,” adds Victor Shih, of the University of California, San Diego, who researches the impact of elite networks in China.

China’s Ministry of Commerce reported this week that Chinese investment in offshore property has fallen sharply since last year. But Chua Han Teng, of Fitch’s BMI Research in Singapore, said “I think the impact (of capital controls) is probably limited.” China’s financial systems are porous and there is still, he said, “a great desire for people to try to bring their money out.”

It’s likely the latest restrictions will mostly make it difficult for middle- and upper-middle-class Chinese to transfer money out, Ley said.

But the problem for Metro Vancouver is that China’s ultra-wealthy, including its billionaires, have probably already transferred much of their money to secret accounts, with the Panama Papers revealing Hong Kong as the most crucial hub for laundering capital to tax havens.

“The most important factor for Metro housing is whether capital keeps coming out of China,” Ley said.

“China has tried to block it before, but each time it keeps coming. As long as that capital keeps coming, I do not anticipate our bubble bursting.”

Interest rates could be secondary factor

Even though Ley puts great weight on China, he adds that rising interest rates could also play a role in a downturn.

British financial analysts, he said, have noted the country has the “cheapest mortgage rates in 300 years.”

They cannot last. “One day we will get cumulative rate increases,” he said, and they will affect overstretched Canadians as well as offshore investors.

Metro residents are among the most leveraged. The Bank of Canada reports hundreds of thousands of Metro households have indebtedness that exceeds their annual incomes by 150 to 450 per cent.

“It’s especially the people in the newer suburbs of Langley, Surrey and the Tri-Cities who are mortgaged up to the hilt,” Ley said.

Even though Metro Vancouver and Toronto residents have experienced housing bubbles that deflated since the 1980s, Ley believes most remain in denial. They haven’t paid attention to just how bad the subprime mortgage crash of 2008 was for Americans.

Millions of Americans not only lost their jobs, but their homes were foreclosed. Ley thinks their sense of betrayal fuelled the rise of populist President Donald Trump.

Ley is also convinced the outrage Metro residents felt over inflated housing prices was the political reason for Premier Christy Clark breaking out of her usual pro-foreign-investment stance and applying the 15-per-cent tax.

An Angus Reid poll revealed 90 per cent of Metro residents supported the move. That included most of those “profiting” on paper from the bubble, whom Ley said worried for the future for their children and grandchildren.

It appears the 15-per-cent tax may have had some impact on China’s elite.

The Hurun Index reports China’s wealthy now rank Metro Vancouver sixth, instead of third, as the city they most want to emigrate to and buy dwellings in.

Los Angeles and San Francisco remain in first and second. Vancouver has been replaced by Seattle. New York and Boston fill the fourth and fifth spots.

But the 15-per-cent tax apparently did not puncture the bubble. One Metro Vancouver index reported housing prices began nudging up again in January.

Offshore investors, says Ley, recognize the purchase tax is not permanent. They see Clark has already relaxed the rules, making it possible for non-citizens who pay Canadian taxes to not pay it.

That means, for instance, 170,000 foreign students and non-permanent residents, the largest group of which is from China, are again allowed to freely buy luxury or other homes in Metro as proxies for foreigners.

Some speculate the NDP would be tougher than Clark, whose party is politically indebted to the real-estate industry, at restricting offshore capital in order for Metro housing to return to some semblance of affordability.

But neither party has made crystal-clear promises about housing policy. So we won’t really know what will happen until after the May 9 B.C. election.

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