Chinese Investors Driving Up Metro Housing Prices

[Vin]

Now this is interesting......


http://www.biv.com/article/2015/4/in...-blocks-land-/


Investors scoop old Burnaby apartment blocks in land development rush
$850 rental apartments selling for $350,000 per door

April 29, 2015, 1:28 p.m.

Real Estate
By Frank O'Brien
Ben Williams of London Pacific Property Agents Inc. | Photo: Chung Chow

A wave of land speculators led by mainland Chinese buyers is snapping up old Burnaby rental apartment buildings, driving per door prices above $350,000 and razing the units for high-rise condominium construction.

The land rush is centred around four transit-linked Burnaby town centres where at least three dozen apartment buildings have been bought for demolition in the past year. Unlike Vancouver, Burnaby has no restrictions on tearing down low-cost rental apartments and building condominiums in their place. Last year, the suburban city issued 419 demolition permits and are averaging 34 per month so far in 2015.

While local developers once dominated the action, 95% of recent buyers are from China, according to Ben Williams, a broker with Burnaby-based London Pacific Property Agents Inc., which specializes in assembling and selling multi-family sites. Williams, working with Bill Goold, principal of Re/Max Bill Goold Realty, have sold the majority of Burnaby’s apartment buildings in the past few years.

The apartments are mostly in two and three storey wood-frame buildings that are 40 or 50 years old, with rents below the Metro Vancouver average.


According to Williams, all of the apartments deemed for development are being replaced by condominiums that will be sold to investors. “Most of these will be put back into the rental market, but they won’t rent for $850,” Williams said. Generally, tenants are given one-year notice and are offered an opportunity to buy or rent in the new condo tower, he said.

According to Canada Mortgage and Housing Corp., the average investor condominium in Metro Vancouver rents for $1,400 per month, and the vacancy rate for rented condominiums is 0.7%, or about half that of the conventional apartment market.

Old Burnaby apartment buildings outside of the top development zones sell for around $200,000 to $220,000 per suite.

Apartment blocks must fit a certain criteria to attract big-money real estate developers. First, it must be in one of the four areas designated as town centres under Burnaby’s official community plan. These are Brentwood, Metrotown, Edmonds and Lougheed, all with SkyTrain stations. The Patterson SkyTrain station area is not officially a town centre, but speculators are also bidding up multi-family sites in that area in anticipation of higher-density zoning.

The apartment site must also cover a minimum of 37,000 square feet of land to qualify for the maximum floor-space-ratio (FSR) zoning of five, or about 4.5 times the existing site coverage. Such a site could be potentially developed into 185,000 square feet of concrete strata space that could sell for $600 per square foot.

If a site is too small to qualify for maximum density, Williams and Goold will negotiate with adjacent building owners to assembly land into larger parcels.

Investors are attracted by the math. Even with per-buildable-foot prices of $120 to $140, money can be made if the condo and rental markets remain heated.

“I have 1,000 buyers looking for apartment sites,” said Goold, a specialist in multi-family sales. He said it is not uncommon to have 15 buyers lined up for an open house. “We are seeing multiple bids.”

Goold confirmed that nearly all his recent Burnaby land development sales are to investors from mainland China, which he visited last month on a successful sales trip. “One buyer from China flew over here and paid $40 million cash for a Metrotown site,” Goold said.

[Hourglass]

Originally Posted by Vin

Now this is interesting......


http://www.biv.com/article/2015/4/in...-blocks-land-/


Investors scoop old Burnaby apartment blocks in land development rush
$850 rental apartments selling for $350,000 per door

April 29, 2015, 1:28 p.m.

Real Estate
By Frank O'Brien
Ben Williams of London Pacific Property Agents Inc. | Photo: Chung Chow

A wave of land speculators led by mainland Chinese buyers is snapping up old Burnaby rental apartment buildings, driving per door prices above $350,000 and razing the units for high-rise condominium construction.

The land rush is centred around four transit-linked Burnaby town centres where at least three dozen apartment buildings have been bought for demolition in the past year. Unlike Vancouver, Burnaby has no restrictions on tearing down low-cost rental apartments and building condominiums in their place. Last year, the suburban city issued 419 demolition permits and are averaging 34 per month so far in 2015.

While local developers once dominated the action, 95% of recent buyers are from China, according to Ben Williams, a broker with Burnaby-based London Pacific Property Agents Inc., which specializes in assembling and selling multi-family sites. Williams, working with Bill Goold, principal of Re/Max Bill Goold Realty, have sold the majority of Burnaby’s apartment buildings in the past few years.

The apartments are mostly in two and three storey wood-frame buildings that are 40 or 50 years old, with rents below the Metro Vancouver average.


According to Williams, all of the apartments deemed for development are being replaced by condominiums that will be sold to investors. “Most of these will be put back into the rental market, but they won’t rent for $850,” Williams said. Generally, tenants are given one-year notice and are offered an opportunity to buy or rent in the new condo tower, he said.

According to Canada Mortgage and Housing Corp., the average investor condominium in Metro Vancouver rents for $1,400 per month, and the vacancy rate for rented condominiums is 0.7%, or about half that of the conventional apartment market.

Old Burnaby apartment buildings outside of the top development zones sell for around $200,000 to $220,000 per suite.

Apartment blocks must fit a certain criteria to attract big-money real estate developers. First, it must be in one of the four areas designated as town centres under Burnaby’s official community plan. These are Brentwood, Metrotown, Edmonds and Lougheed, all with SkyTrain stations. The Patterson SkyTrain station area is not officially a town centre, but speculators are also bidding up multi-family sites in that area in anticipation of higher-density zoning.

The apartment site must also cover a minimum of 37,000 square feet of land to qualify for the maximum floor-space-ratio (FSR) zoning of five, or about 4.5 times the existing site coverage. Such a site could be potentially developed into 185,000 square feet of concrete strata space that could sell for $600 per square foot.

If a site is too small to qualify for maximum density, Williams and Goold will negotiate with adjacent building owners to assembly land into larger parcels.

Investors are attracted by the math. Even with per-buildable-foot prices of $120 to $140, money can be made if the condo and rental markets remain heated.

“I have 1,000 buyers looking for apartment sites,” said Goold, a specialist in multi-family sales. He said it is not uncommon to have 15 buyers lined up for an open house. “We are seeing multiple bids.”

Goold confirmed that nearly all his recent Burnaby land development sales are to investors from mainland China, which he visited last month on a successful sales trip. “One buyer from China flew over here and paid $40 million cash for a Metrotown site,” Goold said.

Property market also slowing significantly in China, with flats being offered by some developers at 10-20% above cost -- and still few takers.

[st7860]

http://www.wsj.com/articles/cmhc-ove...ern-1430411156
"Despite high house prices in Vancouver, CMHC said demand for housing there is buttressed by a growing population and gains in after-tax income, and classified Vancouver as a “low” risk market."

[dleung]

Originally Posted by Pinion

I'm not envious, I despise them and their culture. I want them to stop ruining Vancouver economically and culturally. European, Chinese, Persian, Indian, whatever. Trash is trash.

I'm surprised you haven't mentioned purple people yet

[whatnext]

Originally Posted by Vin

Now this is interesting......


http://www.biv.com/article/2015/4/in...-blocks-land-/


Investors scoop old Burnaby apartment blocks in land development rush
$850 rental apartments selling for $350,000 per door

.... Unlike Vancouver, Burnaby has no restrictions on tearing down low-cost rental apartments and building condominiums in their place. Last year, the suburban city issued 419 demolition permits and are averaging 34 per month so far in 2015..

How typical that the supposedly left leaning Corrigan has put nothing in place to protect the working lower class from having their homes demolished. He's such a blowhard hypocrite.

[cornholio]

Originally Posted by st7860

a person is not a criminal until convicted.

The civil forfeiture office disagrees with you.

[Vin]

Originally Posted by Pinion

Convicted

I'm not envious, I despise them and their culture. I want them to stop ruining Vancouver economically and culturally. European, Chinese, Persian, Indian, whatever. Trash is trash.

During the 3rd Reich, I think it was this kind of stereotyping that caused 6 million human beings to perish in concentration camps and gulags.

[st7860]

A person has to be convicted to be a criminal

[st7860]

Originally Posted by whatnext

How typical that the supposedly left leaning Corrigan has put nothing in place to protect the working lower class from having their homes demolished. He's such a blowhard hypocrite.

Takes 1 to know 1

[whatnext]

Originally Posted by st7860

Takes 1 to know 1

That makes no sense (unsurprisingly).

[st7860]

Originally Posted by whatnext

That makes no sense (unsurprisingly).

Thank you for the compliment

[st7860]

I noticed that in this new May 4th article they don't make discriminatory statements

http://www.vancouversun.com/business...605/story.html
METRO VANCOUVER - Buyers continued to snatch up homes in Metro Vancouver last month, and realtors are warning that the region’s real estate demand is outpacing the supply.

The number of all types of residential property sales last month was up 37 per cent over April 2014 to 4,179, according to the Real Estate Board of Greater Vancouver. Meanwhile, the number of new listings was down 0.9 per cent compared to a year earlier.

“The supply of homes for sale today in the region is not meeting the demand we're seeing from home buyers. This is putting upward pressure on prices, particularly in the detached home market," Darcy McLeod, the real estate board’s president, said in a news release.

[Vin]

Found on Vancitybuzz, something I already said the Canadian government should be doing:



Australia to fine and jail foreigners who buy property illegally
BY
http://www.vancitybuzz.com/2015/05/a...rty-illegally/
KENNETH CHAN

2:11 PM PDT, MON MAY 04, 2015


This is the latest policy proposal by Prime Minister Tony Abbott’s government’s tough new laws to combat the nation’s housing affordability crisis, which has been partially caused by foreign investors who have inflated housing costs and priced out local buyers.

“Foreign investment is integral to Australia’s economy and we welcome all investment that is not contrary to our national interest,” said the Prime Minister’s office in a statement.

“We will enforce the rules, ensuring that all foreign investors follow the rules and don’t profit from breaking them.”

The crackdown calls for fines of CAD$121,000 and up to three years jail for individuals found breaking the rules. Companies will face higher fines of CAD$605,000.

Third parties, such as real estate agents, who assist foreigners in breaching the laws could be fined up to CAD$40,400 for individuals and CAD$202,000 for companies.

There are even penalties to ensure foreigners do not profit from any forced sale. Foreigners will face a 10 per cent penalty of the transaction price while temporary residents will face fines of 25 per cent.

In addition to the new penalties, Australian taxpayers will no longer be responsible for the cost of screening foreign investment applications as the cost will instead be levied through new fees on applications.

Residential properties valued at AUS$1 million or less will include an AUS$5,000 fee. Higher fees will apply for more expensive residential, commercial and agricultural properties – an extra AUS$10,000 for every AUS$1 million increase in the value of the property.

Australia has previously encouraged foreign investment to increase its new housing stock, provided that foreign buyers receive government approval on the transaction. It generally does not permit foreigners to purchase real estate from the existing supply.

Temporary residents are permitted to buy a single home to live in, but they must sell the property when it is no longer occupied. Both temporary residents and foreigners can also buy existing property for redevelopment, as long as construction begins within two years after the transaction is made.

“Australia’s foreign investment policy for residential real estate is designed to increase Australia’s housing stock, but lack of enforcement over recent years has threatened the integrity of the framework.”

The ultimatum came just days after a new report by the nation’s Foreign Investment Review Board found that foreign spending on existing residential real estate jumped from AUS$2 billion to AUS$7.17 billion over the course of a year. This is an unusually high jump that has government and industry insiders speculating the increase could be partly driven by illegal transactions.

China has also outpaced the United States in becoming Australia’s most significant source of foreign investment, spending more than AUS$12 billion during the 2013-14 fiscal year. In contrast, Chinese investment on the nation’s real estate in 2012-2013 was just AUS$5.9 billion.

According to a recent survey on housing affordability by Demographia, Australia’s two major cities are amongst some of the world’s least affordable major metropolitan markets. Vancouver is ranked second place, just behind Hong Kong, but comes ahead of Sydney (#3) and Melbourne (#6).

[st7860]

https://www.humanrights.gov.au/news/...ugh-address-it
http://www.theage.com.au/it-pro/are-...512-1yjcp.html

[Vin]

Originally Posted by st7860

https://www.humanrights.gov.au/news/...ugh-address-it
http://www.theage.com.au/it-pro/are-...512-1yjcp.html

Addressing housing affordability problem makes one a racist? I think you should ponder about this more, because ignoring a problem makes one apathetic.

[Vin]

Only a few hundred people showed up for the housing affordability rally. I would consider that a flop as that actually sent a message to the government that when it comes down to action, few actually cares.

[st7860]

http://metronews.ca/news/vancouver/1...o-politicians/
"Rennie’s suggested tax would hit people quickly flipping homes to help first time buyers with a down payment. It’s a tax that could be scalable across the province, he said. (He thinks empty homes should be dealt with jurisdiction by jurisdictions.)

He entered the debate because he doesn’t like the racist undertones, especially towards Chinese people, in the conversation surrounding a tax on foreign investors. Research from five of his more controversial developments found that foreigners made up just 3.3 per cent of buyers, he said.

And he doesn’t care if people think he’s advocating that the government leave foreign buyers alone just to sell more condos.

“What affects affordability is speculation,” he said. “If I wanted more business, this isn’t a way to get it.”"

[Klazu]

North Shore News: $4-million West Vancouver 'teardown' fuels housing debate

A $4-million “teardown” that sold for $1 million over asking price in West Vancouver this week is renewing debate about money flooding into the top tiers of the Lower Mainland’s real estate market and its ripple effect on affordability.

Debate about issues like foreign buyers and real estate flipping is in the forefront after a home listed for $2.98 million in the Bayridge area of West Vancouver prompted a bidding war and eventually sold for $4.1 million to a buyer from mainland China.

The 60-year-old, four-bedroom home with a swimming pool at 4130 Burkehill Place had never been listed before, said Viv Harvey of Royal LePage Sussex, who represented the sellers in the deal.

“It’s a lovely little rancher,” she said. But that wasn’t what most of the real estate agents and prospective buyers who attended an open house last week were interested in.

“When you’re looking out from the lot, all you see is water,” she said. “There are no homes, there are no wires.” “It’s basically a teardown,” she said. “The value is in the lot.”

Harvey said at $2.98 million, the property was “sharply priced.” “It probably was under the value,” she said. “That is the best way to make sure you get full exposure.”

Harvey said she expected the property to perhaps fetch as high as $3.5 million, but having it reach $4.1 million was a surprise.

Nine offers were made on the property — the lowest among them for the full asking price. Harvey said having the house sell for $1.1 million over asking price is a first for her.

The buyer, from mainland China, already owns a home in the Lower Mainland, and plans to tear the existing home down and rebuild on the lot, said Harvey. He hasn’t decided if he’s going to live in the house or resell it, she added.

While a deal like this is still unusual, it’s indicative of what’s going on in high-end real estate markets like West Vancouver.

“It’s a market on steroids,” said Harvey. “The market has gone a little crazy.”

Increasingly the West Vancouver real estate market is attracting offshore buyers.

“With things escalating in the world, there’s a real need for people to put their money in a safe haven,” said Harvey. “Our dollar is so low that Canada is really on sale.”

Just how much real estate is being sold to foreign buyers isn’t clear, because it’s not well tracked by government statistics. Harvey estimates about 15 per cent of her business comes from overseas buyers.

Allan Angell of Angell Hasman, a West Vancouver real estate company that caters to the high end of the market, puts that figure higher. “I’m selling 80 per cent of my high-end houses to Chinese,” he said.

Most see investment in real estate as a good way to bring money into the country, he said. Others are making money by quickly flipping properties — sometimes assigning their contract of sale to a third party for a premium.

Those kinds of issues recently prompted Vancouver Mayor Gregor Robertson to call for a speculation tax on real estate. Houses that sit empty until they are flipped is another issue garnering attention.

That can contribute to the problem of housing affordability by putting pressure on housing supply, said David Wachsmuth, an urban geographer at the University of British Columbia. “It exacerbates the whole affordability crisis the city faces,” he said.

It can also lead to problems because people who leave their homes empty aren’t participating in the community, he said. West Vancouver Mayor Michael Smith said he’d support measures like a higher tax rate for homes that aren’t used as a principal residence — a practice common in other parts of the world.

“We hear that people are buying houses and they’re not renting them out,” he said. “That does not create a neighbourhood and does not create a community.”

Money made by quickly flipping real estate should also be taxed as business income, said Smith.

“There’s too much of an incentive right now for people buying houses and flipping them.

“I don’t personally believe in speculating in houses. It’s a house. It’s a place to raise your family.”

But Smith said any such measures would need approval from the province, something that hasn’t happened yet. Angell said if it wanted to preserve affordability, the government should have brought in those kinds of measures before the market exploded. “By the time they bring this in, the market will have changed,” he said.

Wachsmuth said the issue isn’t about where buyers are coming from, but what they’re doing with the properties.

“The housing market’s a weird thing,” he said. “Houses are simultaneously a possible investment and a human necessity. Because they are both of these things at the same time, you can get some really tough situations. Vancouver’s in the face of one of those right now.”

http://www.nsnews.com/news/4-million....xqEmEZut.dpuf

[WarrenC12]

Are cities free to adjust mill rates based on property value, or are they mandated to tax all residential properties at the same rate?

[ssiguy]

If any Vancouver mayors were even slightly interested in bringing prices down to earth they could put a moratorium on teardowns. You know, actually living in the place you buy.

If they had done this the house that sold would have been lucky to get half that price. This is something that is 100% the responsibility of the cities and not the province as it has to do with local planning and has no input from the province. There is nothing the province could do to stop it even if they wanted to {which they definitely would} as the province knows how vital real estate speculation is to the BC economy and the massive amounts of revenue it brings into Victoria coffers.

This would require the cities putting their money where their mouths are and it won't happen.