Vancouver’s Rosewood Hotel Georgia isn’t sold, after all.
A deal announced in February to sell Delta Land Development Ltd.’s downtown hotel for $145 million to a Hong Kong consortium including Magnificent Hotel Investments Ltd., Shun Ho Property Investments Ltd. and Shun Ho Holdings Ltd. has collapsed. The due diligence period expired on April 21, and an announcement regarding the deal’s collapse occurred April 24. The deal is one of a number of international transactions Chinese companies have failed to complete in recent months.
Earnings or equity?
One of the key battle fronts in this year’s and 2013’s B.C. election campaigns is job creation.
An inflection point in the 2013 election campaign was the BC NDP’s flipped stance on resource development, and the jobs it promises. This spring, Premier Christy Clark has run on the province’s nation-leading employment growth.
But in addressing the hot topic of affordable housing, measures by Housing Minister Rich Coleman have taken a back seat to those of Finance Minister Mike de Jong, whose office administers the tax tweaks rolled out to hold foreign buyers in check and offer relief to first-time purchasers.
The role of well-paying jobs hasn’t received the same attention, and, as Andrew Ramlo of the Urban Futures Institute (now part of Rennie Marketing Systems) argued at the Urban Development Institute on April 20, maybe that makes sense.
Pointing to $221 billion of unencumbered equity at the disposal of those aged 55 and older in the high-priced Metro Vancouver market, Ramlo argued for the role that equity-flush relatives play in making housing affordable to younger buyers as well as driving up house prices.
“There’s a lot of equity out there,” Ramlo said. “There’s also a very significant impact on prices within the market as a result of some of this equity transfer.”
He gave the example of a two-person household earning a median income of $75,706 that scrimped to save just $17,472 for a 5% down payment. Most banks would limit them to a home worth $349,499, the kind of property that accounted for a fifth of all sales last year. But with parents kicking in $93,186 – enough for a 25% down payment on that home, or to boost the couple’s purchasing power – a property worth $442,635 is within reach.
“[The] historical metric of sales price to income is totally blown out of the water,” Ramlo concluded, noting that 42% of B.C.’s first-time homebuyers receive help from their parents.
“Let’s stop comparing sales prices to average household income, because it’s a fundamentally stupid metric – we can go buy it.”
Jobs that put money in people’s pockets not only give them the means to buy homes, but also let them buy other items. And at the Vancouver Real Estate Forum on April 11, presenters noted that cash is circulating in smaller circles than ever before.
According to a recent MasterCard study, consumers are shopping closer to home, whether it’s online or in the shop down the street.
The point underscores the importance and value of mixed-use projects, especially those sprouting along rapid transit lines. Raised in a discussion regarding the current financing environment, the point found practical expression in later discussion regarding future development in Metro Vancouver.
Quizzed on the connection between condo sales and proximity to retail, Shape Properties Corp. president John Horton said the connection is important but is one of a shopping basket of factors that make developments work in an increasingly networked world.
Speaking of Shape’s experience overhauling Brentwood (and, soon, Lougheed) mall, Horton said anything that improves a mall’s trade area can’t hurt.
“Trade area improvement for any retailer is going to be a big benefit,” Horton said, and with the right mix of retailers, home prices will also strengthen. •