Posted Jun 4, 2008, 11:06 AM
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Join Date: Oct 2001
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Business in Vancouver June 3-9, 2008; issue 971
Builders facing continued cost hikes, Vancouver Regional Construction Association president says
Meanwhile under the “s” for SkyTrain: Planet Bingo eyes VCC Clark station site for new location
Real estate roundup: Peter Mitham
Construction costs rising
Developers should expect higher prices for concrete, steel and all manner of petroleum-based products for the foreseeable future, according to Keith Sashaw, president of the Vancouver Regional Construction Association.
Speaking to the National Association of Industrial and Office Properties on May 22, Sashaw projected annual increases of 8% to 10% in the cost of construction for the coming years.
Bearing out Sashaw’s remarks was news the same day that United Properties Ltd. is seeking additional funds from buyers to complete the 100-unit Anvil condominium project in New Westminster.
The project sold out when it was originally offered to the market, but United Properties president Victor Setton said buyers are now being asked to contribute an additional $20,000 to $40,000 toward the project.
Replies were requested by the end of last week.
By last Tuesday, half of the buyers had responded. Setton said the responses were split fairly evenly between those who wanted to stick with the project and those who didn’t.
Setton said delays, construction cost increases and poor costing on items such as fuel contributed to over-runs for the project.
Anvil is slated for completion by the end of the year, though financing will be critical.
Bearish member
While construction costs are helping keep new home prices high, as the Urban Development Institute recently heard from marketer Bob Rennie of Rennie Marketing Systems, a bearish note was sounded by Liberal MP Garth Turner during a swing through Vancouver after addressing a real estate conference in Whistler.
While many observers of Canada’s real estate market maintain that circumstances north of the 49th parallel are different (particularly in Vancouver), Turner maintains that Canada is just a couple of years behind the turmoil gripping the U.S. We may not have had subprime mortgages, but Turner believes the debut of 40-year mortgages in this country two years ago facilitated similar conditions.
“When you combine 40-year mortgages, which make people pay back more money but reduce the payments and zero down, we’ve done exactly the same thing. We’ve lowered the bar for homeownership. The impact? We’ve let our bubble continue to inflate,” he said. “It’s been just as bubbly as any U.S. market.”
Although home prices might not start to decline for another six or nine months, Turner believes a correction is just around the corner. Throw in the retirement of baby boomers seeking to recoup the equity that’s built up in their properties, and he expects a significantly dark future for residential real estate in Canada in the first half of the next decade.
It’s a future Turner has warned about since the late 1990s, notably in his book The Strategy: A Homeowner’s Guide to Wealth Creation. The book also points to the roots of his current optimism regarding real estate.
Diversification is key to a sound investment strategy, and while everyone needs a place to live, Turner would rather see people investing in financial assets and commodities – not a home.
“Real estate is fine,” he said. “Just buy it the right way.”
Transit —
Vancouver city councillors have expressed a willingness to consider rezoning a site adjacent to the VCC-Clark SkyTrain station on East 6th Avenue at Glen Drive from I-3 to CD-1 to accommodate Planet Bingo, which the Community Gaming Management Association operates on Main near Broadway.
Henriquez Partners Architects, architect of the Woodward’s redevelopment and an award-winning designer of several social housing projects on the Downtown Eastside, has been working on the project for several months.
The social impact of — was a critical element of council’s discussion regarding a potential rezoning of the site.
On the heels of speakers noting the destructive influence of — on the lives of some players, councillors made clear they wouldn’t consider any application for the site that would permit slot machines or tables.
The original motion before council asked if council would consider these uses for the site as part of Planet Bingo’s relocation plans. Planet Bingo does not offer slots or tables at its current site.
In addition to rejecting slots and table games, council expressed interest in a proposal for the site that would include “a multi-use, higher-density, more employment-intensive development.”
A summary of the project presented to council suggested that new premises for Planet Bingo could be ready for occupancy by 2010, an important point given that its current lease on Main Street expires at the end of 2009.
Wendy Thompson, executive director and general manager of the Community Gaming Management Association that operates Planet Bingo said in April that rezoning and development permit processes will take time and that Planet Bingo has no intention of relinquishing its current landlord just yet.
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