Frances Bula, (THE GLOBE AND MAIL) — Sales are stalled and prices are wobbling in the resale sector of Vancouver’s real estate market, as part of both a general slowdown and also uncertainty in the wake of a new property tax for foreign buyers.
But things couldn’t be more different in the region’s presale market for apartments and townhouses, where units in most projects are flying off the shelves and non-resident buyers are still turning up.
“It’s unprecedented. It’s broken every local record,” said Elva Kim, the vice-president of sales and marketing for Anthem Properties. The company, which is developing the project in partnership with Beedie Living, just signed 700 contracts for two towers at Station Square in Burnaby, B.C., in 30 days in September and October, with prices at $870 a square foot in the first tower marketed and $970 in the second one. “The prices we’re getting are ground-breaking.”
And, in those projects, the percentage of foreign buyers actually went up slightly compared with previous years.
About 55 buyers in the two towers were non-residents, 8 per cent of the total, Ms. Kim said. The last time Anthem sold 650 units in a block, in its first phase a few years ago, only 3 per cent were non-resident.
Other builders are reporting similar results.
But none of those trends have caught much media attention, because presale numbers and prices aren’t recorded by the local real estate boards, nor are they captured by the province’s system, introduced earlier this year, to track the influence of foreign buyers in the market.
The 15-per-cent tax, which applies to buyers in the Vancouver region who aren’t Canadian citizens or permanent residents, took effect on Aug. 2. The province’s land-title office began tracking the nationality of buyers in June. In the weeks leading up to the tax’s introduction, foreign buyers accounted for 13.2 per cent of purchases in Metro Vancouver. In the two months after the tax, that proportion fell to just 1.3 per cent.
“The impact of the tax on the presales market was not that great,” said Michael Ferreira, whose company Urban Analytics is one of the few sources of general information about presales.
He noted that the very high-end Cardero tower on Georgia Street, by Bosa Properties, saw most of its units sold very quickly after going on the market in August.
Thirteen of the 111 sales in the tower, selling at around $1,700 a square foot, were to non-residents.
The one type of condo project that seems to have been affected are those with very large units on the city’s west side, aimed at residents there cashing out of their single-family homes.
The McKinnon project in Kerrisdale by Cressey Development Corporation, with units priced at $2-million and up, launched the week before the province announced that a new foreign-buyer tax would take effect almost immediately, on Aug. 2.
There are still 10 of the 40 units unsold.
“Our client is not the foreign buyer. It’s locals, but they’re nervous now about selling their homes,” said vice-president Hani Lammam.
However, many others are saying that both sales numbers and prices are exceptionally strong and that they didn’t see a lot of foreign buyers try to rescind deals, even if the tax caught them by surprise.
In Richmond, Intracorp has sold two towers at its River Park Place development, one before the tax came in, one after. In the one before, 15 foreign buyers purchased units in the 200-unit building, which was then selling for $550 a square foot. In the one marketed after the tax, priced at $675 a square foot, 11 of the 129 units went to foreign buyers.
Vice-president Barrett Sprowson said he thinks the resale and presale market are operating so differently because buyers of not-yet-built projects feel like their units are bound to gain by the time the building is finished.
As for foreign buyers, many of them are planning to immigrate.
“So, you’ve got two years to figure it out. They’re going to roll the dice on the idea that their immigration papers will be complete by then.”
Condo marketer Bob Rennie, whose company markets many high-profile projects in the region, said he expects that, of all the foreign buyers now purchasing, a third will be legal immigrants by the time their projects close, a third may flip to locals and a third may just decide to pay the tax if the market seems strong.
Tracie McTavish, executive director at Rennie Marketing Systems, said the proportion of foreign buyers in all the projects the company has marketed has stayed steady at around 7 to 12 per cent of all purchases amid strong sales all around.
“There’s been a decoupling of the resale market and the presale market,” he said.
“It’s unprecedented. It’s broken every local record”
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