Checking out
A month from now the Western Canada Lodging Conference comes to town and will look back on a year of record volume in investment deals signed – not only in the real estate market as a whole (word has it that the tally for the first half of the year alone will approach $6 billion), but specifically in the hotel sector.
With lacklustre activity in Alberta, deal volumes in B.C. dwarfed the rest of the West with 16 transactions worth a total of $201.3 million.
The scarcity of assets in Vancouver meant that properties in secondary locations, from Port Alberni’s Hospitality Inn to Chilliwack’s Vedder River Inn, drove the market in the first half of 2016.
“It’s very difficult to put deals together,” said Tom Andrews, senior vice-president specializing in hotels with Colliers International, noting that the tourism sector’s strong performance this year has made owners reticent to sell.
However, influences from the broader real estate boom were also evident.
Victoria’s Oak Bay Beach Hotel, which launched a makeover of its premises in the midst of the real estate boom of the mid-2000s, sold out of receivership in May for $62 million.
Meanwhile, an investor from China acquired the Park Inn & Suites on West Broadway in Vancouver “for eventual redevelopment,” according to Colliers International’s quarterly hotels report.
Colliers tips the construction of the Broadway rapid transit line as a key element in the buyer’s valuation and acquisition of the property. The corridor has the largest concentration of office space of any submarket in the region. It’s also one of the busiest in terms of new construction.
Deal-making seems set to continue into the latter half of the year, with the Fairmont Vancouver Airport among the highlights that could round out 2016.
Not for locals
“By 2011 our reputation as the most expensive was becoming our brand,” Bob Rennie told the Urban Development Institute earlier this year, and the branding continues to burn with the latest housing affordability measures from RBC Economics and market research firm Urban Analytics Inc.
Activity in 2016’s first half delivered numbers that led RBC to estimate that Vancouver residents need to spend 90.3% of their household income each month to afford one of the region’s homes (given a price nearing $1.1 million) – “the biggest deterioration in affordability during a six-month period in the area in 26 years.”
With a detached home requiring 126.8% of monthly household income – nearly four times what’s considered affordable – it’s small wonder that Urban Analytics issued its own report indicating that just 2.5% of wage-earners could afford one of Vancouver’s dwindling number of detached homes (which it tagged with a median value of $2.6 million).
Bearing out Rennie’s contention that the region as a whole is affordable, Urban Analytics said that detached homes on the outer fringes of Metro Vancouver are affordable to 35.4% of households (but those who want something really affordable should consider concrete condos in “outer Metro,” which are within reach of 73.6% of local workers).
RBC expects the province’s new property transfer tax will help cool demand, which it notes was already cooling, especially if it “triggers a sharp downgrading of future price expectations and suppresses speculative activity.”
However, NuStream Realty Inc. is counting on foreign buyers taking the tax in stride, offering Point Grey homeowners who list with them a chance at prizes that include a “romantic Hawaii trip” and “Ontario school district house tour” – although the fine print describes the house tour as relocation assistance, encouraging those who leave Vancouver to “plan in advance for your children’s education.”
NuStream promises to list the properties with a local Chinese-language website for instant exposure to overseas buyers.
