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F O C U S I N G O N M E M B E R S I N I N D U S T R Y
What Makes a Great Neighbourhood?
Market Implications of Foreign Buyers on
BC Real EstateDigital Disruption in
Commercial Real Estate
A Look at BC’s Real Estate Industry
S U M M E R 2 0 1 5
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SUMMER 2015 | page 3
S U M M E R 2 0 1 5
BUILDING PERMITS BY THE NUMBERS
HOUSING DEMAND3
Commercial Real Estate Outlook
HOUSING MARKET UPDATE2
Average Home Prices
Residential Real Estate Outlook
Real Estate Industry in BC
Source: BC Stats, residential & non-residential building permits, July 8, 2015
Finance, Insurance, Real Estate & Leasing Industry:
25% of BC’s total GDP.1 $48 billion investment in residential real estate in BC by consumers in 2014.Source: BCREA
Economic Spin-OffAverage BC residential housing transaction generated $64,500 in related expenditures in 2011. Source: BCREA
Industry employed
153,500 British Columbians in 2013.1
$884 Average weekly earnings of British Columbiansin the real estate and rental and leasing industry.Source: Statistics Canada, CANSIM Table 281-0083, May 2015
Residential Construction
Victoria
Drivers of housing demand:
Housing demand for 2015
is expected to produce
the highest level of
unit sales since 2007.
BC Multiple Listing Service
(MLS) residential sales
are forecast to rise 12%
to 94,300 units in 2015.
Industrial
Commercial
Institutional & Government
+30.4%
+3.7%
+8.8%
-1.6%-5 0 5 10 15 20 25 30 35
Value of building permits issued in British Columbia rose 22% in the first five months of 2015 compared to 2014.(unadjusted, Jan-May 2015 versus same period in 2014)
Nine of BC’s 11 real estate
board areas are forecast to
experience increased housing
demand in 2015.
• Vancouver & Fraser Valley
are forecasted to lead the
province with a 16% to 17%
increase in residential sales.
Kamloops
Okanagan Mainline
Kootenay
BC Northern
Greater Vancouver
Fraser Valley
Investment in Non-Residential Building Construction in BC (Q2 2015):
The non-residential construction sector
is strong in BC, as work continues on
3.2 million sq. ft. of office space in
Metro Vancouver. This space is
expected to become available
throughout 2015-2016.
low mortgage interest rates
economic growth
$318,020
$409,162
$296,011
$262,384
$922,326
$572,888
$536,553
Investment is up 0.3%Spending is up: +4.5% +1.0%
institutional buildings
industrial sector
1 WorkBC industry profile: finance, insurance, real estate and leasing, workbc.ca 2 BCREA Housing Market Update (July 2015) 3 BCREA Housing Forecast, second quarter – June 2015
Indicator Vancouver Calgary Toronto
Vacancy downtown 7.2% 10.7% 2.7%
Vacancy suburbs 11.5% 10.4% 9.1%
Net rent downtown $27.31 $28.00 $28.55
Net rent suburbs $19.21 $23.00 $14.88
Source: Colliers Q1 2015 Office Market Outlook report
Office Market Outlook by Canada’s Major Markets (Q1 2015)
Source: BCREA Housing Market Udpate, July 2015
Source: BC Stats, non-residential building investments, July 28, 2015
Permits Issued by Sector
consumer confidence
7 Urban Development in Vancouver: The Rise of Vancouverism
8 Designing New Neighbourhoods
10 Digital Disruption in Commercial Real Estate
16 Building BC: Member Q&A on BC’s Real Estate Industry
18 CPABC Career Connect Profile: Ledcor
20 Market Implications of Foreign Buyers
In this Issue
Where We Live and Work – The Real Estate and Development Industry in British Columbia
A key driver of the BC economy, the real estate and development industry
has fuelled growth in our province for many years. The price of residential
real estate, the rise in popularity of mixed-use developments, and the ever-
shrinking size of condominiums are hot topics with British Columbians.
BC is one of the hottest real estate markets in Canada, with $48 billion
invested in residential real estate in the province in 2014. Over 153,500
British Columbians work in the finance, insurance, real estate, and leasing
industry, representing 25% of BC’s total GDP. According to the BC Real
Estate Association, housing demand for 2015 is expected to produce the
highest level of unit sales since 2007. The non-residential construction
sector is also strong, as 3.2 million square feet of office space in Metro
Vancouver is expected to become available in 2015-2016.
In this issue, CPABC Industry Update profiles the real estate industry’s
contributions to the BC economy, how the commercial real estate industry
is undergoing a digital disruption, the impact of foreign buyers on the
residential real estate market, and a Q&A with members working in the
real estate industry.
Also included in this issue is a list of professional development courses
being offered this fall. Those members working in real estate and
development won’t want to miss our ASPE accounting seminars for the
real estate and construction industry.
We hope you enjoy this edition of Industry Update, and we look forward
to your feedback.
16
20
2010
The Chartered Professional Accountants of British Columbia was formed through the amalgamation
of ICABC, CGA-BC, and CMABC. CPABC was officially established when the CPA Act came into
effect on June 24, 2015.
AboutCPABC Industry Update is the organization’s
online magazine for members working in industry. Published quarterly, Industry Update is distributed
to over 36,000 members, candidates, and students in British Columbia. Opinions expressed
are not necessarily endorsed by CPABC. Copyright CPABC Industry Update 2015.
Contact usVisit us online at bccpa.ca, or email
[email protected]. Editorial inquiries can be sent to Tiana Mah at [email protected].
4 Industry Snapshot: Real Estate
14 PD Opportunities
23 Connect with CPABC Online
in every issue
Click to return to In this Issue (page 3)
Look for this icon throughout Industry Update
8
| I N D U S T RY U P DAT E page 4
BUILDING PERMITS BY THE NUMBERS
HOUSING DEMAND3
Commercial Real Estate Outlook
HOUSING MARKET UPDATE2
Average Home Prices
Residential Real Estate Outlook
Real Estate Industry in BC
Source: BC Stats, residential & non-residential building permits, July 8, 2015
Finance, Insurance, Real Estate & Leasing Industry:
25% of BC’s total GDP.1 $48 billion investment in residential real estate in BC by consumers in 2014.Source: BCREA
Economic Spin-OffAverage BC residential housing transaction generated $64,500 in related expenditures in 2011. Source: BCREA
Industry employed
153,500 British Columbians in 2013.1
$884 Average weekly earnings of British Columbiansin the real estate and rental and leasing industry.Source: Statistics Canada, CANSIM Table 281-0083, May 2015
Residential Construction
Victoria
Drivers of housing demand:
Housing demand for 2015
is expected to produce
the highest level of
unit sales since 2007.
BC Multiple Listing Service
(MLS) residential sales
are forecast to rise 12%
to 94,300 units in 2015.
Industrial
Commercial
Institutional & Government
+30.4%
+3.7%
+8.8%
-1.6%-5 0 5 10 15 20 25 30 35
Value of building permits issued in British Columbia rose 22% in the first five months of 2015 compared to 2014.(unadjusted, Jan-May 2015 versus same period in 2014)
Nine of BC’s 11 real estate
board areas are forecast to
experience increased housing
demand in 2015.
• Vancouver & Fraser Valley
are forecasted to lead the
province with a 16% to 17%
increase in residential sales.
Kamloops
Okanagan Mainline
Kootenay
BC Northern
Greater Vancouver
Fraser Valley
Investment in Non-Residential Building Construction in BC (Q2 2015):
The non-residential construction sector
is strong in BC, as work continues on
3.2 million sq. ft. of office space in
Metro Vancouver. This space is
expected to become available
throughout 2015-2016.
low mortgage interest rates
economic growth
$318,020
$409,162
$296,011
$262,384
$922,326
$572,888
$536,553
Investment is up 0.3%Spending is up: +4.5% +1.0%
institutional buildings
industrial sector
1 WorkBC industry profile: finance, insurance, real estate and leasing, workbc.ca 2 BCREA Housing Market Update (July 2015) 3 BCREA Housing Forecast, second quarter – June 2015
Indicator Vancouver Calgary Toronto
Vacancy downtown 7.2% 10.7% 2.7%
Vacancy suburbs 11.5% 10.4% 9.1%
Net rent downtown $27.31 $28.00 $28.55
Net rent suburbs $19.21 $23.00 $14.88
Source: Colliers Q1 2015 Office Market Outlook report
Office Market Outlook by Canada’s Major Markets (Q1 2015)
Source: BCREA Housing Market Udpate, July 2015
Source: BC Stats, non-residential building investments, July 28, 2015
Permits Issued by Sector
consumer confidence
SUMMER 2015 | page 5
BUILDING PERMITS BY THE NUMBERS
HOUSING DEMAND3
Commercial Real Estate Outlook
HOUSING MARKET UPDATE2
Average Home Prices
Residential Real Estate Outlook
Real Estate Industry in BC
Source: BC Stats, residential & non-residential building permits, July 8, 2015
Finance, Insurance, Real Estate & Leasing Industry:
25% of BC’s total GDP.1 $48 billion investment in residential real estate in BC by consumers in 2014.Source: BCREA
Economic Spin-OffAverage BC residential housing transaction generated $64,500 in related expenditures in 2011. Source: BCREA
Industry employed
153,500 British Columbians in 2013.1
$884 Average weekly earnings of British Columbiansin the real estate and rental and leasing industry.Source: Statistics Canada, CANSIM Table 281-0083, May 2015
Residential Construction
Victoria
Drivers of housing demand:
Housing demand for 2015
is expected to produce
the highest level of
unit sales since 2007.
BC Multiple Listing Service
(MLS) residential sales
are forecast to rise 12%
to 94,300 units in 2015.
Industrial
Commercial
Institutional & Government
+30.4%
+3.7%
+8.8%
-1.6%-5 0 5 10 15 20 25 30 35
Value of building permits issued in British Columbia rose 22% in the first five months of 2015 compared to 2014.(unadjusted, Jan-May 2015 versus same period in 2014)
Nine of BC’s 11 real estate
board areas are forecast to
experience increased housing
demand in 2015.
• Vancouver & Fraser Valley
are forecasted to lead the
province with a 16% to 17%
increase in residential sales.
Kamloops
Okanagan Mainline
Kootenay
BC Northern
Greater Vancouver
Fraser Valley
Investment in Non-Residential Building Construction in BC (Q2 2015):
The non-residential construction sector
is strong in BC, as work continues on
3.2 million sq. ft. of office space in
Metro Vancouver. This space is
expected to become available
throughout 2015-2016.
low mortgage interest rates
economic growth
$318,020
$409,162
$296,011
$262,384
$922,326
$572,888
$536,553
Investment is up 0.3%Spending is up: +4.5% +1.0%
institutional buildings
industrial sector
1 WorkBC industry profile: finance, insurance, real estate and leasing, workbc.ca 2 BCREA Housing Market Update (July 2015) 3 BCREA Housing Forecast, second quarter – June 2015
Indicator Vancouver Calgary Toronto
Vacancy downtown 7.2% 10.7% 2.7%
Vacancy suburbs 11.5% 10.4% 9.1%
Net rent downtown $27.31 $28.00 $28.55
Net rent suburbs $19.21 $23.00 $14.88
Source: Colliers Q1 2015 Office Market Outlook report
Office Market Outlook by Canada’s Major Markets (Q1 2015)
Source: BCREA Housing Market Udpate, July 2015
Source: BC Stats, non-residential building investments, July 28, 2015
Permits Issued by Sector
consumer confidence
| I N D U S T RY U P DAT E page 6
What is a small home? Less than 500 sq. ft. for one or two people, 750 sq. ft. for a household of three or more.
Examples of small homes: micro-apartment, laneway home, or tiny house on wheels
People interested in buying or renting micro-apartments have housing budgets of $900-$1000/month.
17,893 housing units of
300-500 sq. ft. in BC as of 2014.
A 2012 City of Vancouver survey of laneway home owners found that 68% chose a small home because it’s a detached dwelling. 57% live in a small home due to affordability.
Increase in one-person households – 27.6% of all Canadian households.
Visual comparison of average new home sizes around the globe (2009 data). Average new Canadian home size is 181 sq. m. (1948 sq. ft.).
Hong Kong 45United Kingdom 76
Japan 95France 112
Canada 181
China 60Sweden 83
Germany 105Denmark 137
Australia 214
Russia 57Italy 81
Spain 97Greece 126
United States 201
Source: Shrink that Footprint (using sources CommSec, RBA, UN, US Census). Note: data for 2009 builds.
*China figures urban only.
Source: PwC Emerging Trends in Real Estate Report 2015
HOW BIG IS A HOUSE?
Average new home size around the globe in m2
6 Best practices and lessons learned with small market units, The Real Estate Institute of BC
EMERGING TRENDSIN REAL ESTATE
2015
RISE OF THE SMALL HOME6
Driven by work and lifestyle choices, people are flooding into city centres and adapting to less space.
Beyond the cubicle
OFFICE SPACEIn a bid to attract and retain the best talent, employers are seeking workspaces outfitted with the newest technology and the most attractive amenities.
Mixing it up
RETAILAs people return to the city, mixed-use properties are becoming increasingly common.
Seeing the gold in the grey
SHIFTING DEMOGRAPHICSCanada’s aging population means seniors’ housing will offer attractive opportunities in the future.
The West Coast goes global
BC REAL ESTATE
Foreign investment keeps Vancouver housing prices high, with capital inflows of US$697 million pouring into the city in the last 12 months.
The new normal
URBANIZATION
A 2013 report by Sotheby’s International Realty Canada found that foreign buyers account for about 40% of demand for Vancouver’s luxury single-family homes. Vancouver is increasingly seen as “hedge city”, a place where the super-wealthy can invest in local real estate as a hedge against risk.
FOREIGN INVESTMENT IN BC
SUMMER 2015 | page 7
Urban Development in Vancouver: The Rise of Vancouverism
Consistently voted as one of the
world’s most livable cities, the
success of Vancouver, as a city, is
often attributed to Vancouverism and
the city’s value-based development
process. Vancouverism is an urban
planning and architectural style
c h a r a c t e r i z e d b y m i x e d - u s e
developments and the preservation
of views and green spaces.
T h e c i t y ’s 2 7 v i e w c o r r i d o r s ,
maintaining views of the North Shore
mountains, the downtown skyline, and
surrounding waters, has contributed
to Vancouver ’s spectacular skyline
while promoting density in the
downtown area. In “How Vancouver
Invented Itself”, an article for the Urban
Land Institute, writer Patrick Kiger says
the key to Vancouver’s success has
been its “deliberative, values-driven
evolutionary process, in which local
government planners, developers, and
the citizenry have labored over the
past few decades to form a consensus
vision of what their city should be
like—and then come up with creative
solutions for achieving it.”
A lasting legacy of Vancouverites’
involvement, and protest against
development, is marked by the lack
of freeways surrounding or bisecting
the city. Kiger writes about how
Vancouver escaped a fate of freeways
in the late 1960s and early 1970s
when “municipal officials of the time—
who, like their counterparts elsewhere,
feared urban stagnation and decay—
proposed a massive urban renewal
project that would have obliterated
histor ic neighborhoods such as
Chinatown and Gastown to build
elevated throughways.”
K i g e r f u r t h e r r e c o u n t s h o w
Vancouverites rebelled and had the
politicians behind the proposed
development turned out of office.
“That rebellion—driven by a youthful,
idealistic Vancouver counterculture that
would later spawn the environmental
organization Greenpeace—created a
new mandate. Vancouver, founded in
the late 1880s as a port and railroad
center for the region’s timber and
mineral wealth, was still a Victorian-style
urban village, and residents wanted it to
remain that way, instead of morphing
hastily into a typically car-centric
modern metropolis.”
Today, Vancouver still has the layout
of an old streetcar city. Kiger quotes
former city councillor and urban
planner Gordon Price about the city’s
layout: “It still works in the pattern that
was laid out in that era. People get
around by walking and cycling and
taking public transit—enough so that
the car doesn’t dominate the way it
does in Calgary or Phoenix.”
With the goal of maintaining an urban-
village lifestyle, city officials focused
increasingly on how to add density.
Kiger outlines how in the 1970s, “then–
planning chief Ray Spaxman favored the
sort of urban development he had seen
in his native England, and developers
packed the city ’s West End with
apartment buildings. Vancouverites
were willing to accept mixed-use
neighborhoods with population
densities that might have been resisted
elsewhere—in part, because the city
also offered amenities such as 1,000-
acre (405 ha)Stanley Park.”
But will Vancouver be able to maintain
its urban-village roots in the future?
Kiger concludes that in a “digital
technology–driven culture in which
people increasingly focus on their
devices rather than on their neighbors, it
is unclear whether Vancouver residents
will continue to accept regulations and
limits intended to benefit the common
good. Government efforts to build
inner-city bike paths and bring some
outlying lower-density neighborhoods
in line with the city’s high-density
model have met with uncharacteristic
resistance and protests.”
For an in-depth look at Vancouverism,
read: “How Vancouver Invented Itself”
by Patrick J. Kiger for Urban Land
magazine published by the Urban
Land Institute.
Respect for context: A new neighbourhood must fit
seamlessly into its surroundings—with a network and pattern that
interconnects with the larger community, locates homes near to
employment areas, matches density to public transit opportunities, and
minimizes conflicts that might occur between different land uses.
Complete & resilient: There needs to be broad variety
and a mix of uses that work together—including an inter-mixed
diversity and affordability of housing types for a varied
population of different ages and lifestyles, with
residential areas supported by services and
amenities (including parks and commercial,
educational and institutional services) to
foster a more complete, resilient, and healthy
neighbourhood.
Compact & walkable: An efficient
use of land requires a sustainable density, with
services and amenities close—based on a pedestrian-
friendly system that fosters interaction. A walkable community
is often a healthy community.
Interconnected networks: A fine-grained, modified grid
pattern of “complete streets” (supplemented by pedestrian connections
and multi-use trails) provides a more balanced model that supports
walking, cycling, and transit; disperses traffic; and offers convenient and
continuous access.
Designing New NeighbourhoodsWhy These Seven Design Principles Are Key to Successful Neighbourhoods
W hen city planners begin to design a neighbourhood, whether starting from
scratch on a greenfield site or adapting an existing neighbourhood for the
future, they strive to build a better community. They want to create a place
that people value—not only from a real estate perspective, but also because it creates
quality of life for existing and future residents.
By John Steil
| I N D U S T RY U P DAT E page 8
Designing New Neighbourhoods
In harmony with nature: It is critical to maintain and protect
valuable natural features with open spaces, parks, boulevards, and corridors
to create an integrated, looped, and connected system—connecting the
community with nature, fostering biodiversity, and providing recreation. Just
think about how comfortable it is to walk in older neighbourhoods with their
large overhanging tree canopies.
Green infrastructure: Infrastructure should be designed using
principles of low impact development and best management practices—
including the incorporation of stormwater facilities as part of the open space
system. This approach will lead to infrastructure that can be sustainably operated
over the long term. This keeps taxes down as well.
A sense of place: Neighbourhoods need a unique and
exceptional community character, in both built form and
public realms, that residents will cherish. This requires an
emphasis on street orientation and placemaking,
a high quality of urban design of public
spaces, a focus on a vibrant “village
heart” with mixed uses, a dispersed
pattern of open spaces, and a
diversity of character. Maintaining
heritage character in a redeveloping
neighbourhood helps develop a sense
of place. Even public art!
Adherence to these principles should lead to a more
livable and sustainable community.
Why These Seven Design Principles Are Key to Successful Neighbourhoods
A Principal with Stantec in Vancouver, John Steil is an urban and regional planner with over 39 years of experience. His comprehensive approach and ability to marry community, planning, environmental, development, and engineering concerns instils confidence in his clients. John is a Fellow and Past-President of the Canadian Institute of Planners.
Times have changed. For reasons as diverse as climate change and the fiscal issues that
often come with urban infrastructure, most people accept that we can’t continue to
replicate the suburban sprawl that we used to build. We need different ways of doing
things. Using a set of guiding principles, planners are exploring new approaches and
updating familiar practices.
SUMMER 2015 | page 9
| I N D U S T RY U P DAT E page 10
Catalyst for Growth?
Digital disruption can, in fact,
be a dynamic catalyst to transform
operating businesses and advance
productivity in Canada.
Real estate can also itself become a catalyst
for change, influencing organizations to invest
in business infrastructure, redesign spaces, and
transform their business models to become more
competitive within the global marketplace.
Digital Disruption in Commercial Real Estate
What Are the Implications for Real Estate?Those that occupy real estate—
whether off ice, retai l , industr ial,
i n s t i t u t i o n a l , o r r e s i d e n t i a l —
have the opportunity to use a real
estate event such as a lease expiry,
property acquisition, refinancing, or
redevelopment to drive change within
their organization.
At the same t ime, rea l es ta te
owners, investors, developers, and
managers need to take notice and
adapt business models and delivery
systems to embrace this change. Real
Deloitte Canada Insights Report
SUMMER 2015 | page 11
estate issues ranging from building
construction, sustainabil i ty, s ite
selection, accessibility to infrastructure
and amenities, branding, property
management, and an array of other
issues specific to each real estate asset
class need to be considered.
The challenge facing the real estate
industry is the fact that buildings are
fixed and difficult to quickly or cost-
effectively change in order to embrace
technological advancements. A Harvard
Business Review article noted that “the
more difficult the barrier, or the more
barriers a disrupter faces, the more likely
it is that customers will remain with
incumbents.”1 The problem with this
decision is that these companies will
face tremendous global competition,
c o s t d i s a d v a n t a g e s a n d, m o s t
importantly, productivity challenges.
The real estate industry has traditionally
lagged behind other sectors, largely
due to the nature of our buildings and
infrastructure. Properties that are held
by individuals, investors, or owners
remain unchanged for decades, with
leases that extend from five to 20
years. As a result, with insufficient
capital funds for improvements, some
real estate market participants aren’t
prepared for, and have been slow to
react to, technological transformation.
Digital Disruption Affects All Real Estate Asset ClassesDigital innovation will affect all real
estate asset classes as space users
and advanced technologies continue
to transform workplaces, shopping
centres, distribution centres, and
homes. Mobi le employees and
consumers will transform how they
work, shop, and live. Robotics and
advanced manufacturing technologies
question the viability and efficiency of
factories across North America. The
need to rethink traditional factory
infrastructure, recognize decreased
reliance on labour from emerging
markets, and identify potential re-
shoring of workers signal changes
in job creation, design, and overall
operating models.
Traditional Office Morphs into the Workplace of the FutureIn real estate, the office sector is being
impacted through the integration
of technology, mobile devices, and
infrastructure that empower workers
to work virtually anywhere.
Traditional work environments have
typically been places where workers
go to complete their tasks within the
9-5, Monday-to-Friday timeframe. They
connect with their co-workers, access
their files, and meet with customers.
According to many industry analysts,
the office was the original social
network.
With market globalization creating an
increasingly competitive environment,
cost cutting is becoming a key focus
for many organizations. Since an
organization’s people and real estate
are its largest resources – as well
as its largest combined expense –
they remain a natural focus for cost
cutting. However, heavy-handedness
in this area often causes employee
disengagement, a lack of collaboration
and a decline in productivity and
innovation, balanced against the
benefits of an ever-shrinking square
footage cost per employee. The
average space per employee is a target
for many organizations and is shrinking
from the 200-250 sf/FTE range to 100-
150 sf/FTE for efficiently planned
offices across North America.
Concurrent with globalization, the
introduction of technology allows
employees to work anywhere, at any
time. Organizations recognize that
employees need more technology
and flexibility, which dovetails with
the need to decrease costs associated
with real estate. While alternative work
arrangements allow for just that, it is
clear that such a significant change
to the workplace model must be
part of an overall strategy that takes
both efficiency and effectiveness into
account.
Modern office work is inherently
a social endeavour that requires
interaction between people. The ability
to choose how and where to work
is fundamental to having engaged
and productive employees, but so is
having a space for them to connect
and collaborate. Technology creates a
more diverse, geographically dispersed
organization that is more mobile and
virtual, but, as social animals, the
more distributed we become, the
more connectedness is needed. The
physical work environment provides
that connection point.
Transforming Workplace Environments Enhances Collaboration and Drives ProductivityWorkplaces play an important role:
they are the physical manifestation of
an organization’s brand, culture and
principles, and, when well-designed,
help to achieve employee retention
and recruiting objectives.
The best examples of this are the
campuses created by the high tech
industry. Google is viewed by most as 1 Surviving Disruption. Harvard Business
Review, 2012.
| I N D U S T RY U P DAT E page 12
Digital disruption... (cont’d) real estate industry cannot
be underestimated.
Over the past 15 years,
o n l i n e r e t a i l i n g h a s
transformed the operating
m o d e l s o f t r a d i t i o n a l
brick-and-mortar retailers.
This has resulted in the
disappearance of some
venerable retai lers, the
amalgamation of others,
and the need for others
to look for other ways
to survive the disruption.
R e t a i l c o n t i n u e s t o
b e a te c h n o l o gi c a l h o t b e d o f
entrepreneurship and innovation in
both the storefront locations as well
as in the back office environment.
Consumers are increasingly taking
a non- l inear path to purchase,
combining both traditional store
and Internet channels. This approach
a desirable place to work, not only for
the type of work it offers employees,
but also because of its office spaces.
Organizations that find an optimal mix
between traditional and innovative
workspaces will have a competitive
advantage. They will be using their
workspace more effectively and
efficiently, increasing productivity, and
employee engagement, and creating a
stronger brand that ultimately results
in more satisfied customers.
Omnichannel: Transforming the Retail LandscapeEven here, the effect of digital
disruption is felt. Consumers are driving
change in the retail industry due to
the amount of information they now
can access, thanks to technology.
The power is shifting from retailers to
consumers, and the implications for the
defines the omnichannel environment
and has implications for retailers’ real
estate strategies in terms of store
locations, footprint, warehousing,
logistics, and fulfilment.
Consumers are doing their research
and homework well before stepping
foot into a physical location. This
ability to be armed with competitive
intelligence means buyers are better
able to negotiate, demanding cheaper
products and better service, and
retailers have no choice but to respond.
Technology has Significantly Decreased the Cost of Entry for Online Retailers Compared to New Brick–and-Mortar CompetitorsOnline retailers can reach far more
global customers than any retail
location, no matter how many physical
outlets the latter may have. Online
sales are predicted to grow steadily to
US$370 billion in 2017, up from $231
billion in 20122. No longer does the real
estate mantra of “location, location,
location” matter; a website’s server can
be located anywhere without affecting
the site’s ability to reach all target
markets.
Employees work anywhere, anytime
Changing the space means more connected place
Workplace is a business enabler to collaborate and drive productivity
Consumers can shop anywhere, anytime
Store networks are at the beginning of a major shift
Empowered consumer driving new business models
North America becomes increasingly competitive
Not everything is moving offshore, some re-shoring
High tech and advanced manufacturing poised for a rebound
The big picture for commercial real estate: More change than any time since the Industrial Revolution
OFFICE
RETAIL
INDUSTRY
SUMMER 2015 | page 13
Accordingly, retail sector square
footage has decreased due to
changing retail buying patterns, the
efficiency of omnichannel distribution,
and the changing behaviour of
millennials. All these factors result in
reduced store traffic in the US3, and
Canadian retailers need to take note
and recognize that the physical store,
although as important as ever, today
plays a different role today in the eyes
of the consumer.
As in the office sector, real estate is a
significant driver of cost, accounting
for anywhere from 5%-20% of sales
depending on the type of retail. The
shift to online shopping and maturing
retail markets has meant more focus
on profitability and sales over growth.
The ability for retailers to decrease the
capital-intensive cost of real estate
means those funds can be redeployed
elsewhere, such as in developing
new channels to reach customers,
improving logistics, and developing
warehousing and fulfilment strategies.
Retai l proper ty owners need to
continue evolving their “shopping
experience” through the addition of
food, entertainment, and a wide array
of retail offerings.
Technology needs to extend to more
than just the storefront; the back office
needs to be able to capture customer
preferences and tap into data analytics
to support and help drive sales.
Understanding big data will be a key
driver of long-term retailer prosperity.
From a Real Estate Perspective, the Retail Industry is Undergoing a Profound ChangePhysical stores remain core to creating
an innovat ive and long-last ing
shopping experience, but they are no
longer the sole touch point for a retail
brand. Instead, stores are positioned
as part of the omnichannel customer
engagement model, combining
physical inventory, online access, and
an environment that is customized to
enhance the customer experience.
Much of the real estate portfolio for
retailers will not be expanding, but
undergoing redevelopment as existing
spaces are transformed to provide that
unique store ambience.
Omnichannel, Supply Chain, and Manufacturing Trends are Transforming Industrial Real EstateOnce more, digitization is disrupting
an industry that isn’t always associated
with being on the leading edge of
technology. Digital disruption in the
retail sector has a corresponding
impac t in manufac tur ing. The
increase in online sales has meant
that warehousing and distribution
markets have grown, with many
large retailers investing in highly
sophisticated technical fulfilment
centres. The shrinking footprint of
retail stores has moved the inventory
into warehouses where it can be
shipped directly to customers. As the
cost per square foot of warehousing
space is cheaper than retail space,
retailers are realizing cost savings. The
omnichannel model, technology, and
process improvements are where most
of these savings are being reinvested.
Manufacturing is Experiencing the “Third Industrial Revolution”The other side of the industr ial
market is manufacturing, which is
also changing due to technology
again impacting the “where and
how.” The Economist has noted that
manufacturing is undergoing a third
industrial revolution as it moves into
the digital age.4 Mass production
has moved into mass customization
thanks to advances in software, new
materials, more dexterous robotics,
3D printing, and the delivery of web-
based services.
From Disruption to InnovationAs digital disruptions continue, the
corresponding fallout will inevitably
change real estate. The key to
surviving and thriving in this new
order is to adapt to these disruptors
while maintaining a core vision and
developing a flexible approach that
can withstand future volatility and
drive growth. Real estate should
do more to create value and drive
operational excellence and growth.
Now it can.
To read the full version of this article,
visit deloitte.ca and search for insight
reports in the real estate industry.
2 US Online Retail Forecast, 2012 To 2017. Forrester, 2013. 3 Stores Confront New World of Reduced Shopper Traffic. The Wall Street Journal, 2014. 4 The Third Industrial Revolution. The Economist, 2012.
| I N D U S T RY U P DAT E page 14
Professional Development Opportunities for Members in Industry
ACCOUNTING
ASPE: Real Estate IndustryThis seminar will explore the ASPE standards that are
applicable to the real estate industry, and make a link to
REALpac in a practical manner. It will discuss accounting
issues encountered by builders, developers, and landlords
that have direct or indirect ownership of the real estate. It
will also cover the disclosure requirements of ASPE and other
issues specific to the real estate industry.
October 26, 2015 | Vancouver November 16, 2015 | Victoria January 28, 2015 | Vancouver
ASPE: Construction IndustryThis course will explore the ASPE standards that are
applicable to the construction industry in a practical manner.
It will also cover the disclosure requirements of ASPE and
other issues specific to construction contracts.
November 3, 2015 | Vancouver
IFRS: Revenue Recognition Standards (IFRS 15)The objectives of this course are to provide participants with
an understanding of the new five-step revenue recognition
framework under the new standard, including how to
determine when, and the amount of revenue, to recognize.
October 28, 2015 | Vancouver February 11, 2016 | Vancouver
CONTROLLERSHIP & MANAGEMENT ACCOUNTING
Essential Topics for ControllersThis seminar will deal with seven topic areas that you will be
expected to be proficient at, or at least have knowledge of, as
your career progresses: conducting employment interviews;
strategic planning basics; negotiating skills; performance
evaluations; managing versus leading; communication skills;
and termination of employees.
November 3, 2015 | Vancouver
Missed registering for our popular Executive Programs earlier this year? Register now for these fall sessions before spaces fill up.
The CFO as NavigatorThis program is designed to provide you with a highly
applied and interactive experience, and to make you a
complete CFO.
October 7-10, 2015 | Beach Club Resort, Parksville (Early bird deadline August 21)
The Controller’s Management ProgramThis program is designed to provide you with the theory,
best practices, tools, and skills to take your leadership to
the next level.
October 14-17, 2015 | Westin Whistler, Whistler (Early bird deadline August 21)
The Controller’s Operational Skills ProgramThis program is designed to enhance your role on the
management team by sharpening your skills in risk
management and controls, ethical leadership, planning,
budgeting and forecasting, performance measurement
approaches, and financial reporting.
October 18-21, 2015 | Westin Whistler, Whistler (Early bird deadline August 21)
The CFO’s Operational Skills ProgramThis program delivers the core CFO competencies that
organizations expect and demand. Get up to speed on
corporate governance and risk management and the latest
tools and applications.
November 15-18, 2015 | Westin Whistler, Whistler (Early bird deadline September 15)
The CFO’s Leadership ProgramThis is an intensive and interactive program that blends best
practices, case studies, group discussions, and role-play to
allow participants to advance their leadership skills to being
a strategic partner.
November 18-21, 2015 | Westin Whistler, Whistler (Early bird deadline September 18)
A SELECTION OF FALL SEMINARS We have many more titles available this fall — for a full listing, please visit the CPABC PD website at pd.bccpa.ca.
SUMMER 2015 | page 15
Professional Development Opportunities for Members in Industry
Financial Statement AnalysisRegardless of career choice, professional accountants will be
involved in the review and analysis of financial statements.
This is a skill that might deteriorate over time. By actually
reviewing financial statements throughout the day, this
seminar will strengthen your financial statement analysis
capabilities.
November 4, 2015 | Vancouver
FINANCE/TECHNOLOGY
Modelling Business Cash Flows in ExcelThis half-day, hands-on workshop will explore how to build
a robust monthly cash flow forecast model in Excel using
modelling best practices. By the end of this workshop,
participants will be able to model business cash flows on
a weekly/monthly basis; structure a cash flow model so
that it is easy to follow and update; and appreciate the
importance of clearly identifying and documenting cash
flow assumptions.
October 21, 2015 | Surrey October 28, 2015 | Vancouver October 28, 2015 | Kelowna November 4, 2015 | Victoria November 19, 2015 | Prince George
Modelling Business ValuationThis one-day, hands-on workshop will enable participants
to confidently build an equity valuation model in Excel.
Participants will learn how to forecast corporate financial
statements, and undertake a discounted cash flow free cash
flow valuation. The session will be of particular benefit to
members who are interested in business valuation and how
best practice valuation models are built in Excel.
November 5, 2015 | Vancouver March 4, 2016 | Kelowna
COMMUNICATION
Speeches of LeadershipLeadership is about helping others change. “Speeches of
Leadership” is about using oral communication skills to bring
about that change. This seminar will be of interest to those
who lead others formally, or those who perceive a need to
move others to act or to respond to change. This is a day
filled with self-exploration exercises and oral communication
activities related to helping others change.
November 16, 2015 | Vancouver
We Have to Talk – Having the Difficult Performance ConversationsConduct a Google search, and you will find dozens of books
on the topic of crucial, fierce, important conversations. One
common theme emerges from this literature – the fear of
difficult conversations is often more stressful than the actual
conversation. This seminar will place difficult conversations
at the core of successful work relationships.
November 13, 2015 | Vancouver
TAXATION
GST/HST and PST UpdateThe objective of this seminar is to provide a brief review of
important recent legislative changes, important court cases,
and government pronouncements that attendees may
have missed, as well as a brief review of ongoing common
reporting and audit issues.
October 14, 2015 | Kamloops October 15, 2015 | Kelowna October 21, 2015 | Victoria October 23, 2015 | Abbotsford October 26, 2015 | Parksville November 2, 2015 | Nanaimo November 5, 2015 | Surrey December 7, 2015 | Vancouver January 27, 2016 | Vancouver
Highlights from the CPABC Professional Development Program for Fall 2015
A SELECTION OF FALL SEMINARS We have many more titles available this fall — for a full listing, please visit the CPABC PD website at pd.bccpa.ca.
Building BC
| I N D U S T RY U P DAT E page 16
Members share their perspectives on BC’s real estate industry
Industry Update spoke with members working in real
estate and development to gain their insights into
the industry, its future outlook, and areas of growth.
Recently, we spoke with Lynn Cook, CPA, CGA, chief
financial officer, US at Colliers International, and Cynthia
Lim, CPA, CGA, partner and chief financial officer of PCI
Developments Corporation.
Industry Update: Can you give a brief overview of your organization and your role within it?
Lim: PCI Developments Corporation is a Vancouver-based
merchant real estate developer and investor. We specialize
in urban transit-oriented, mixed-use developments and
value-added repositioning of existing buildings. Our
projects are often completed in close collaboration with
anchor commercial tenants with project costs ranging
from $10 million to $400 million. At PCI, I am a partner
and chief financial officer and my responsibilities include
overseeing operations, human resources, budgeting, and
financing.
Cook: Colliers is a global leader in commercial real estate
services, with more than 16,000 professionals operating
out of 67 countries. Colliers delivers a full range of services
to real estate occupiers, owners, and investors worldwide,
including global corporate solutions, brokerage, property
and asset management, hotel investment sales, valuation,
consulting and appraisal services, mortgage banking,
and research. As chief financial officer of the US business,
I’m a member of the executive leadership team for our
largest region. I am involved in strategic planning and
accountable for the financial performance of the business.
A large part of my role is mergers and acquisitions as we
continue to rapidly grow our business.
SUMMER 2015 | page 17
Industry Update: The real estate and development industry has been a key driver of the BC economy for many years. Do you see this continuing?
Lim: Yes – Metro Vancouver has been one of the strongest
real estate markets globally over the last 10 or 15 years,
and despite ongoing caution, there aren’t signs of this
trend changing. Immigration and investment of foreign
capital seeking security in BC’s stable market are the most
obvious factors, but the resilience and growth of our office
market is also notable, particularly for technology and
other knowledge-based companies.
Industry Update: The commercial real estate market in BC has seen huge growth in the last couple of years with many new office and retail spaces opening in 2015-2016 — such as Telus Gardens and Pacific Centre/Nordstrom — and the growth we’ve seen in Surrey. How do we attract head offices to BC to fill these new spaces?Cook: Recent office development in Metro Vancouver
has been led by increased demand for downtown space
by various industries, especially technology and digital
media companies. We expect demand to continue to
grow, especially with the lower Canadian dollar generating
increased relocation activity from American cities, such as
San Francisco or Seattle.
Industry Update: For any business to grow, certain key success factors must be present. What factors are crucial for the continued growth of BC’s real estate and development industry?
Lim: Population growth, job creation, livable communities,
and a skilled and educated workforce are key growth
factors for the real estate industry. While BC has many of
these elements, the high cost of living, particularly the
affordability of real estate, and increasing competition for
skilled workers are potential impediments to continued
growth.
Cook: The health of the underlying economy, and in
particular population growth, drives expansion in business
and the retail industry. Commercial real estate is driven
by demand from businesses needing office space and
new retailers moving into our market. The fundamentals
are solid for future growth, as BC has good infrastructure
and global accessibility because of our ports, proximity to
the US border, and an international airport, along with a
growing population of young, highly educated workers.
Industry Update: What trends are you seeing within the real estate industry?
Lim: Proximity to rapid transit is very important with
increasing demand by residents, office workers, and
retailers alike to be in mixed-use developments on transit
corridors, such as our Marine Gateway development
at Cambie Street and Marine Drive in Vancouver.
There is growing recognition of the benefits of such
large-scale, mixed-use developments on transit routes
with a complementary mix of office, residential, and retail
allowing convenience, sustainability, and security.
More women are not only pursuing careers in the real
estate industry, but also achieving executive roles. There
are many organizations mentoring women entering the
industry and preparing women for leadership roles, in
particular CREW Vancouver (Commercial Real Estate for
Women). Real estate is a great business and I strongly
encourage anyone interested in real estate to start
networking to see if it may be a fit for them.
Cook: One trend we’re seeing in Vancouver is the increase
in mixed-use developments replacing lower-density,
single-purpose buildings along major corridors near major
transit hubs. The development of Cambie Street along the
Canada Line is a prime example. The rise of mixed-use
development is directly connected to the “live-work-play”
community direction outlined in the Metro Vancouver
2040 Regional Growth Strategy.
| I N D U S T RY U P DAT E page 18
Connecting with CPABC: A Q&A with John Kump, CPA, CA, chief administration officer of the Ledcor Group of Companies
CPABC Career Connect Employer Profile
SUMMER 2015 | page 19
One of North America’s most diversified construction and services companies,
The Ledcor Group of Companies has 10 lines of service: building,
communications, environmental, forestry, infrastructure, mining, oil and
gas, power, properties, and transportation. Founded in 1947, and headquartered
in Vancouver, the company has about 6,000 employees across 20 offices.
As a diversified construction company,
Ledcor bui lds projects throughout
North America and specializes in project
and construction management, pre-
construction services, design-build, general
contracting, and public-private partnership
(P3) delivery models for their clients. Most
recently, the company has grown its
transportation division with investments
in its marine operations and an expanded
fleet; they also have one of Canada’s largest
fleets of compressed natural gas vehicles.
Ledcor has been recognized as one of BC’s
Top 55 Employers for the past five years,
and is a 2014 recipient of Canada’s Top 10
Most Admired Corporate Cultures award.
Industry Update spoke to John Kump,
CPA, CA, to find out what it’s like to work
at the company, and why CPAs have an
edge over other hires. At Ledcor, Kump
is the chief administration officer and has
held various roles with the company over
the past 14 years. Kump provides support
to Ledcor’s human resources, information
services, and finance and accounting
groups across the company. He also
oversees Ledcor’s investments in public-
private partnerships.
Industry Update: What makes Ledcor a unique place to work?Kump: Our culture is what stands out. We talk about our
True Blue culture where family, community, teamwork, and
a personal commitment to safety drive our success.
The company has grown significantly, but we continue to
foster an entrepreneurial spirit by encouraging our people
to look at new opportunities, be innovative in solving
challenges, and bring value to our clients.
Industry Update: What qualities are common among your most successful employees?Kump: They strive for success, are committed to our values,
are comfortable in a fast-paced organization, and deal well
with change. They’re team players who take pride in our
collective accomplishments.
Industry Update: Ledcor has a number of CPAs in the organization. What sets CPAs, and CPA candidates, apart from other hires?Kump: CPAs typically have broad experience. This makes
them well suited for dealing with the change and new
challenges we see at Ledcor. That broad experience also
allows them to take on new opportunities that arise in our
business units.
CPABC Career Connect recognizes leading companies that provide an effective working and training environment for our designated members, students, and candidates and affirm the value of CPA-trained accountants and finance professionals within their organization. To learn more about the program, visit www.bccpa.ca/careers/career-connect-employers.
| I N D U S T RY U P DAT E page 20
Market Implications of Foreign BuyersBy Cameron Muir and Brendon Ogmundson
Who’s
Drivi
ng th
e Mark
et?
Housing affordability has long been
a thorn in the side of the Metro
Vancouver story. Indeed, the
rapid acceleration in home prices that
occurred during the 2002-2008 period
still has many people gobsmacked.
Recent news stories have focused
on the foreign buyer segment of
the market, concluding that foreign
investors are unduly inflating home
values and driving potential domestic
buyers out of the housing market,
especially those looking to purchase
their first home.
However, data and analyses from a
number of sources suggest that foreign
investment is insufficient on its own to
impact a market as large and diverse
as Metro Vancouver, save for a small
segment of luxury homes. In addition,
significant upward pressure on single-
detached home values is largely driven
by land scarcity and densification
policies in the metro region. These
efforts have achieved relative stability
in the values of apartments and
townhouses that now comprise two-
thirds of the housing stock.
The British Columbia Real Estate
Association (BCREA) finds that while
no hard data exists on the number of
foreign buyers in the Metro Vancouver
housing market, the available data
and analysis on the housing stock and
flow of residential transactions in the
region suggest that foreign ownership
of housing is considerably less than
five per cent of the housing stock and
not more than five per cent of sales
activity.
The proportion of vacant dwellings,
as well as the proportion occupied by
foreign and/or temporary residents in
the Vancouver Census Metropolitan
Area (CMA) during the 2011 Census,
did not diverge significantly from other
large Canadian or provincial urban
centres.
Domestic investors are three to four
times more active in the region’s
h o u s i n g m a r k e t t h a n f o r e i g n
SUMMER 2015 | page 21
investors, adding much-needed rental
accommodation supply. In addition,
adjusting for inflation and wage
growth, apartment condominiums
have become more affordable over the
past five years. Further, relatively stable
prices have provided little incentive for
short-term speculative activity in the
apartment market segment.
The single-detached home stock has
declined in both absolute and relative
terms in the Vancouver CMA. This
increasing scarcity has led to significant
price appreciation as consumers
compete for the available stock.
Regional residential densification
efforts have led to relative price
stability in multi-family housing over
the past five years, as home builders
have kept pace with demand. Multi-
family housing now comprises two-
thirds of the Metro Vancouver housing
stock and approximately 80 per cent of
new home construction activity.
The average home price in the region
is an inadequate yardstick for housing
affordability. Nearly 70 per cent of all
MLS® residential transactions in Metro
Vancouver during 2014 were below
the average price of $738,000, with 32
per cent of homes sold below $400,000
and 82 per cent below $1 million.
The Changing Housing StockMetro Vancouver is Canada’s third-
largest census metropolitan area and
is home to over 2.4 million people
distr ibuted across approximately
950,000 households. Its geography
is constrained on all sides by natural
and lega l impediments to the
supply of developable land. The vast
suburban sprawl associated with
many North American cities wasn’t
able to fully take root in Vancouver
as the relative scarcity of land forced
housing stakeholders to look up rather
than farther afield. Densification in
Metro Vancouver has largely been
a success, with the supply of multi-
family housing more or less matching
demand. Increasing residential density
has also enabled the production of
more compact communities with
better transit and smaller ecological
footprints.
The flip-side to Vancouver’s density
story is that single-detached homes
are becoming scarce, both in absolute
and in relative terms. Between the 1991
and 2011 census periods, the total
stock of single-detached homes in the
Vancouver CMA actually declined by
over 1,000 units.
More significant is the fact that the
share of single-detached homes
declined from 50 per cent of the
housing stock in 1991 to barely a
third in 2011. Single-detached homes
are now a lot less common in Metro
Vancouver and are fast becoming a
luxury segment of the housing market.
Indeed, fully 80 per cent of new
construction activity in the Vancouver
CMA is typically devoted to multi-
family housing. Media reports have
tended to focus on single-detached
homes in the City of Vancouver.
However, that market segment only
comprises 15 per cent of single-
detached homes in Metro Vancouver
and just 5 per cent of the total housing
stock.
Affordability and Housing Stock Dynamics The dwindling supply of single-
detached homes relative to multi-
family types has led to significant
upward pressure on pricing. Over the
past five years, the MLS® Benchmark
price for a single detached home
climbed 32 per cent to $1.1 million
in the Real Estate Board of Greater
Vancouver (REBGV ) area. However,
apartment condominiums nudged
ahead less than 7 per cent over the
same period, largely the result of
adequate new supply. Since wages
have grown at a faster rate and
mortgage interest rates are lower
today than five years ago, apartment
condominiums are more affordable
today than in 2010.
A common practice to measure
affordability is in relation to the
average home price in the region.
This has proven to be an inadequate
measure in Metro Vancouver as the
housing stock is increasingly diverse. A
more realistic measure would be how
many households can afford lower-
priced homes.
The average MLS® residential price
in Metro Vancouver was $738,000 in
2014. However, nearly 70 per cent
of the homes sold were below this
threshold. Using the average price as a
first-time buyer yardstick implies that a
significant number of first-time home
buyers should be able to purchase
a home priced in the top third of all
home values. Typically, around 30
per cent of home buyers in Metro
Vancouver are purchasing their first
home. It is no coincidence that 32 per
cent of homes sold in the Metro region
were priced below $400,000 in 2014.
Assessing Foreign Ownership While no hard number on foreign
buyers in the Metro Vancouver
housing market exists, there are
data and analyses available. After
surveying the relevant data both
locally and internationally, we found
| I N D U S T RY U P DAT E page 22
that estimates of foreign ownership
tend to cluster around 5 per cent. We
have been unable to find any outliers
of data to suggest the impact is more
pronounced.
Canadian Data In the Metro Vancouver context,
data relevant to measuring foreign
investment does exist from the 2011
Canadian Census, the Canada Mortgage
and Housing Corporation (CMHC),
Urban Futures and REBGV. While none of
these measures are perfectly designed,
they were independently produced
and converge around a similar central
tendency in regard to foreign ownership
in the Vancouver housing market.
The classification of a foreign-owned
versus a vacant unit is somewhat
fluid in Census data. Statistics Canada
recommends grouping together the
share of private dwellings that were
either unoccupied or occupied by
foreign or temporary residents on
Census day.
Census data tells us the proportion
of housing occupied by foreign/
t e m p o r a r y re s i d e n t s i n M e t ro
Vancouver was 0.78 per cent in 2011.
This is below the 1.40 per cent average
of the largest Canadian urban centres
and less than the provincial proportion
of 1.01 per cent. In addition, the share
of unoccupied dwellings in Metro
Vancouver was 5.35 per cent compared
to an average of 6.45 per cent across
the same urban centres.
The 2011 Census data is fur ther
supported by data from CMHC’s
rental market survey in which CMHC
asked property managers to provide
i n fo r m a t i o n o n c o n d o m i n i u m
apartment units owned by non-
Canadian residents. As of the end of
2014, the share of foreign ownership
in the Vancouver CMA condo market
was estimated at 2.3 per cent. This
compares to 2.4 per cent for Toronto,
1.1 per cent for Victoria and 1.5 per
cent for Montreal.
In addition, private sector groups
have attempted to measure the
share of foreign ownership in the
market. In 2010, consultants at Urban
Futures, using BC Assessment data,
analyzed the mailing addresses of tax
assessment notices and found just
0.4 per cent of tax notices were sent
outside of Canada.
An informal monthly poll conducted
by REBGV of about 200 REALTORS®
shows that home sales to foreign
investors have gradually trended
higher, from 2.6 per cent of residential
transactions in 2009 to 3.6 per cent
this year, and have averaged 3.2 per
cent over that period. For perspective,
local/domestic investors averaged
12 per cent of transactions over the
same period. The general lack of capital
appreciation in the apartment market
has led to a slight downward trend in
the share of transactions by domestic
investors, with speculative activity
likely near decade lows. According
to CMHC, about 50,000 apartment
condominiums were actively in the
rental stock in 2014.
International Data While Canada does not formally track
foreign ownership in the residential
real estate markets on a monthly or
annual basis, other jurisdictions do.
In the United States, international
buyers are surveyed by the National
Association of REALTORS® (NAR) and
Australia directly measures foreign
investment via its Foreign Investment
Review Board.
The foreign investment trends in these
two jurisdictions can be informative
for BC, given their similar proximity to
Asian markets. According to a 2014
NAR survey, international buyers
contributed to 7 per cent of total US
home sales. Of that total, Chinese
buyers accounted for 24 per cent of
international sales, and about 5 per
cent of total California home sales,
which were mostly split between San
Francisco and Los Angeles.
In Australia, official data shows that
for the past decade, approvals for
foreign investment in the residential
sector have remained between 5
and 10 per cent of dollar volume and
roughly half of that number for total
unit sales. Perhaps most importantly,
according to research conducted by
the Reserve Bank of Australia, rather
than competing with f i rst- t ime
home buyers, foreign investment
is concentrated in higher-priced
market segments. Moreover, foreign
investment largely occurs in the high-
density areas of major cities such as
Sydney and Melbourne, and is not
for short-term speculative purposes.
They also note that foreign investment
creates a supply response that
stimulates new home construction,
generates employment, increases
economic output and provides a larger
tax base.
Cameron Muir is the chief economist for the BC Real Estate Association.
Brendon Ogmundson is an economist with the BC Real Estate Association.
This abridged report is published with the permission of the BC Real Estate Association.
Who’s Driving the Market... (cont’d)
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