Foreign caution
The past several months have seen talk of foreign investment shifting from finished projects to development partnerships, with parties from as far afield as Beijing showing an interest in Vancouver.
The prospect of overseas capital playing a greater role in local development projects is greeted by some as a sign of Vancouver's coming of age on the world stage, and the world's comfort with the city.
“We have seen many immigrants that have come here and they are buying development land, and they are now talking about developing,” George Wong, principal of Magnum Projects Ltd., remarked earlier this year. “That's going to make the Vancouver market even more vibrant.”
But those new entrants face significant challenges in Vancouver's sophisticated market, said Shaadi Faris, vice-president of Vancouver-based Intergulf Development Group.
“There is definitely an interest from investors, often that have real estate experience elsewhere but realize that they don't here,” he said.
The lack of expertise – familiarity with municipal processes, in-house teams that can steer projects to completion and a track record of completing projects without delays – can pose problems that more established developers don't face, Faris said.
“You'll never find a hole in the ground that's an Intergulf project that didn't come through,” he said, referring to projects that ran into trouble and failed to complete in 2007-2008.
Yet in the wake of those experiences, Gary Powroznik, managing director of Vancouver advisory firm G-Force Group, said many companies opt to find ways to avoid creditor protection and receivership. He hasn't seen an increase in troubled projects, but he also doesn't believe every project works out perfectly.
“If they can afford to eat the troubled projects, they'll eat it – they'll just take less or merge it into the rest of what they do,” he said. “Some of this stuff is just looked after informally.”
Non-resident tax
Non-resident investment in B.C. real estate was a target when the BC Chamber of Commerce passed a motion at its annual general meeting May 23 to 24 encouraging tweaking of the little-loved Property Transfer Tax (PTT).
Originally introduced in 1987 to discourage speculation, the tax contributed an estimated $740 million to provincial coffers in the last fiscal year.
While the province lifted the exemption for first-time buyers to $475,000 from $425,000 earlier this year, a measure that stands to benefit 1,700 to 1,800 buyers annually, it didn't touch the underlying formula that sees purchasers pay 1% on the first $200,000 of value and 2% on the remainder.
However, the Kamloops Chamber of Commerce won the B.C. chamber's support for a “Primary Residence Grant” that would see Canadian citizens and permanent residents pay 1% up to $525,000 of value for a primary residence in B.C. (that's a maximum of $5,250, versus a maximum tax of $8,500 for the same property under the PTT).
The difference would be more than made up for by a flat 2% rate on property purchases by non-resident buyers; in the case of a $525,000 property, the tax owing would be $10,500.
“B.C., especially the city of Vancouver, has evolved into a world-class destination that now demands a world-class taxation formula,” the proposal stated.
Food for thought
Concert Properties Ltd.'s rezoning application for its Southeast False Creek property at Quebec Street and East 1st Avenue went to public hearing last week. One of the distinguishing features of the rezoning is the lack of commercial space proposed for the project, which could have up to 600 market units and 140 non-market rental units.
With the Village at False Creek next door, and its host of retailers, residents of Concert's new project may not go wanting for essentials – but as one area resident remarked, the upswing in population means the Urban Fare supermarket is the sole option for those unwilling to head to Kingsgate Mall and Buy-Low Foods at Kingsway and Broadway, or west to Cambie Street, with Save-On Foods, Whole Foods, No Frills, Safeway, Kin's Farm Market and commuter-friendly A&L Market within a five-block radius.
Asked if additional retail was planned for Southeast False Creek, city communications staff said the village remains the community's commercial core.
“Retail, service, office and other uses are also found in other areas of Southeast False Creek, notably along Main Street and Second Avenue,” staff said.
“But the primary commercial focus for the whole community is around the Olympic Village plaza.”
