Vancouver Sun

Stakeholde­rs unfazed by foreign buyers

Deals make sense: Investors from overseas ‘more likely to overpay’

- EVAN DUGGAN evan@evanduggan.com Twitter: @evanbdugga­n

Vancouver real estate brokers and developers are downplayin­g concerns over the purchase of Lower Mainland commercial properties by foreigners.

The reaction by local stakeholde­rs comes following a news report in April that the owner of a Vancouver commercial asset had requested the local listing agency seek out only foreign buyers.

The April 22 report by Global News made public a sale arranged by CBRE Group of an undisclose­d $30-million commercial property in Vancouver to a foreign buyer.

“We are pleased to announce that our team closed on a $30million property portfolio while on tour,” CBRE said in an email published by Global. “The owners had stipulated to not expose the portfolio to the local Canadian market; as such, we arranged an internatio­nal marketing campaign and brought the portfolio on the road show. The sale exceeded market expectatio­ns closing $5 million above market price.”

The news comes amid an intensifyi­ng debate in Metro Vancouver over the sale of residentia­l and commercial assets to foreign buyers while housing prices and the overall cost of living here surge to unpreceden­ted levels.

When contacted for details and comment on the sale last week, Norm Taylor, CBRE’s executive vice-president and managing director in Vancouver, declined to identify the property.

“To address your questions, it is not common,” Taylor told The Sun in an email. “And buyer and seller motivation­s must always remain confidenti­al to every deal we complete.”

Other local commercial real estate brokers and developers contacted downplayed concerns over foreign purchases of commercial assets, saying anecdotal evidence suggests most commercial deals remain domestic.

“If you look at some of the bigger deals that have been done over the last year, it’s domestic guys who have got them,” said Bob Levine, a principal at Avison Young in Vancouver, in an interview.

He said the CBRE deal seemed to fly under the radar of the local real estate community until the news release.

Hani Lammam, the executive vice-president of Cressey Developmen­t Group, said his company takes no offence from a situation in which a seller decides to sell only to foreigners.

“I would interpret it as them wanting to achieve a price that is above market, so they would be looking for a less knowledgea­ble buyer that is more likely to overpay,” he said, adding that his firm — which heads up many residentia­l and mixed-use developmen­ts in Vancouver — does not pay much attention to its competitor­s’ marketing strategies.

“If we are pursuing a developmen­t property, we always expect foreign competitio­n,” he said. “However, the foreign buyers tend to be unsophisti­cated. They typically don’t have a full grasp of the municipal rezoning process or market nuances.”

When foreign developers overpay, he said, “the result is the property would sit idle waiting for values to rise sufficient­ly to justify redevelopm­ent.”

There are no regulation­s that restrict foreign ownership of private land in B.C.

Lammam said there’s no need for that to change. “As long as the (purchasing) funds are legitimate, we don’t believe in government interferen­ce in the free market,” he said. “The government should only act to prevent ill-gotten funds from confusing the market (because) they tend to be careless investors.”

Dan Scarrow, managing director of the Canadian Real Estate Investment Centre in Shanghai for Vancouver-based Macdonald Real Estate Group, said their aim is to build a link directly between China and the B.C. market.

In an email to The Sun, Scarrow said it’s common for sellers to request that their properties be marketed discreetly.

He noted, however, that the “vast majority” of properties are still bought and sold within Canada by domestic buyers.

Avison Young’s Levine notes foreign investors have always been buying in Vancouver.

“When I first got into the businesses, it was the British that were investing heavily in commercial real estate in Vancouver,” he said. “The Hong Kong Chinese were investing in the ’70s and ’80s. The Germans are here. The Austrians are here. The Japanese came in the ’90s. This is just the latest wave, but I guess it’s more noticeable (now) because our housing prices are so high.”

 ?? LES BAZSO/PNG FILES ?? Local property brokers and developers says they aren’t worried about a recent $30-million sale of a property where the seller asked its agent, CBRE Group, to seek a foreign buyer.
LES BAZSO/PNG FILES Local property brokers and developers says they aren’t worried about a recent $30-million sale of a property where the seller asked its agent, CBRE Group, to seek a foreign buyer.
 ?? JENELLE SCHNEIDER/PNG ?? Hani Lammam, executive vice-president of Cressey Developmen­t Group, says there is no need to restrict the sale of private property in B.C. ‘as long as the (purchasing) funds are legitimate.’
JENELLE SCHNEIDER/PNG Hani Lammam, executive vice-president of Cressey Developmen­t Group, says there is no need to restrict the sale of private property in B.C. ‘as long as the (purchasing) funds are legitimate.’

Newspapers in English

Newspapers from Canada