BTAworks Foreign Investment in Vancouver Real Estate SFU Woodwards Presentation

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BTAworks slideshow on the topic of Foreign Investment in Vancouver Real Estate presented at SFU Woodwards on March 20, 2013

BTAworks slideshow on the topic of Foreign Investment in Vancouver Real Estate presented at SFU Woodwards on March 20, 2013

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  • 1. Foreign Investment in Vancouver’sReal Estate MarketSFU Woodwards Andrew Yan March 2013
  • 2. Lions Gate Bridge A.R. Guinness-Foreign Investment in British PacificVancouver Real Estate: Properties,1937A Historical Case Study• $95 million (in 2012 dollars)• Investment from a large multinational conglomerate• Opened up a massive portion of Metro Vancouver for very high-end exclusive residential development Image Source: Wikipedia
  • 3. What is “Foreign Investment”?
  • 4. BTAworkswww.btaworks.com
  • 5. Data Sources 1. BC Assessment – Ownership data BC Assessment 2. Home Owner Grant – Confirms BC Assessment Data Home Owner BC Hydro Grant 3. BC Hydro – Provides a measure of “empty condos” 4. Qualitative Review – Confirms the rental rates and Qualitative Strata Minutes liveability issues of condo buildings and Regulations Review 5. Existing CMHC, Stats Can, and CoV Data and Research Any data was consolidated and anonoymized to respect confidentiality and privacyExisting Canada Mortgage Housing Corporation, Statistics Canada, and City of Vancouver Data and Research
  • 6. Defining Downtown Vancouver West End Downtown Strathcona Kitsilano Fairview Mount Pleasant Data Source: Local Areas, City of Vancouver Open Data Catalogue
  • 7. Study Building Locations Data Source: Local Areas, City of Vancouver Open Data Catalogue
  • 8. A Foundational Research Assumption • If a property assessment address was matched where the assessment was received, then a unit is commonly understood as Investor owner occupied Owner Owned Occupied • If an assessment address did not 51% 49% match where the assessment was received, then a unit is investor owned n=2,387 Data Source: 2008 BC Assessment
  • 9. Finding “Foreign” – Method 1a – Where Assessment Tickets are Sent100.0% Canada, 93.8%90.0%80.0%70.0%60.0%50.0%40.0%30.0%20.0%10.0% China, Japan, Hong Kong, United USA, 3.8% Rest of the World, 0.6% 0.3% 0.2% Kingdom, 0.2% 1.1% 0.0% % n=2,386 Data Source: 2008 BC Assessment, BTAworks Empty Condo Study Sample Re-analysis
  • 10. Finding “Foreign” – Method 1b – Where Investor Owned Assessmentsare sent in the Metro Vancouver Region and Beyond Investor Owned Mailing Address West Vancouver North 6% Vancouver 6% 25% Go Outside Burnaby Metro 6% Vancouver 42% Vancouver Surrey 3% 1% of IOAs 1% of IOAs n=1,205 Data Source: 2008 BC Assessment, BTAworks Empty Condo Study Sample Re-analysis
  • 11. Finding “Foreign” – Method 2 - Ownership Types Owner Occupied Investor Owned - Individual Investor Owned - Management Firm Investor Owned - Firm/Strata 6% 2% 49% 43% n=2,386 Data Source: 2008 BC Assessment, , BTAworks Empty Condo Study Sample Re-analysis
  • 12. Is the Issue Foreign Investment in Vancouver Real Estate? orInvestment in Vancouver Real Estate?
  • 13. How Many Units were Investor Owned vs. Owner Occupied? Investor Owned Owner Occupied 52-61% 39-48% Data Differences between BC Assessment and Home Owners Grant n=2,186 Data Source: 2008 BC Assessment and BC Home Owners Grant Database
  • 14. Key Findings from BC Assessment Investor Owner Owned Occupied 51% 49% n=2,387 Data Source: 2008 BC Assessment
  • 15. An Affirmation - 2009 Percentage of Investor Owned vs. Owner Occupied Units by Sub Area100% 90% 18% 19% 27% 23% 35% 80% 40% 48% 70% 60% 50% 40% 82% 81% 73% 77% 65% 30% 60% 52% 20% 10% 0% Downtown West End Fairview/Kits West Side East Side Mt. Pleasant/NE Vancouver Total Owner Occupied Investor Owned n=66,112 Data Source: Reconstructed from CitySpaces Consulting with Urban Futures Inc, Vancouver Condominium Rental Study, 2009
  • 16. Key Findings from Home Owner Grant Database • To qualify for a Home Owner Grant, the unit must be an owner’s principal residence • the homeowner must be a Receiving Canadian citizen or landed HOG 39% immigrant Not Receiving HOG • HOWEVER, units must be 61% valued at less than $1.164m in 2008 n=2,186 Data Source: 2008 City of Vancouver Home Owners Grant Database
  • 17. A Comparison Between BC Assessment and Home Owner GrantDatabases – Why the Difference? 2008 BC Assessment Home Owner Grant Database Investor Owned 52% n=2,186 ? 10% Data Source: 2008 BC Assessment and Homeowners’ Grant Database
  • 18. Does Size Matter? • Smaller units are often cited as a means to facilitate for first time home ownership • For units under 425 square feet > 110 units over 4 buildings > Median Assessed Value of $261,000 Investor Owned Owner > Built between 1995 to 2006 62% Occupied > All were studios 38% n=110 Data Source: 2008 BC Assessment
  • 19. Finding “Foreign” – Method 3 – Empty Condos • Upon consultation with BC Hydro, an empty unit that uses less than 75 Kw/h a month > the amount of electricity that an average new refrigerator uses to maintain itself in one month > An average unit used 400 Kw/h a month • HOWEVER, there are a number of possible reasons towards why a unit used less than 75 Kw/h > Moving > In-between owners or tenants (Churn) > Seasonal occupants > Investment Holdings > Based upon BC Hydro monthly accounts from Jan 2006 to Dec 2007
  • 20. Empty Condo in Downtown Vancouver Estimates 75 kw/h 100 kw/h 150 kw/h (BC Hydro Suggested Threshold) 8.5% of units 17% of units 5.5% of units were possibly were possibly were possibly empty empty empty 8 to 9 percent of Downtown condo units June 2004 estimate by the City of Vancouver 1,100 Kw/h a year(~90 kw/h per month) threshold Data Source: BC Hydro (Fortis)
  • 21. New Census 2011 Based Research
  • 22. What is a Non-Resident Private Regular Dwelling Unit? Dwellings Collective Private Unoccupied Occupied Occupied (not published Regular data) Marginal Occupied solely Occupied solely Occupied solelyOccupied by by foreign Occupied by by foreign by foreign Occupied by Usual residents and/or usual residents and/or Unoccupied residents and/or by temporarily usual residents Residents resident by temporarily by temporarily present persons present persons present persons Data Source: Dwelling Universe, Statistics Canada, 2011 Census of Population Census Dictionary
  • 23. Largest 25 Canadian Cities by Percentage of Non-Resident Occupied Regular Dwelling Units9.0% 8.6% 7.7% 6.9% 6.8% 6.8% 6.6% 5.5% 5.4% 5.0% 5.0% 5.0% 5.1% - Average 4.6% 4.5% 4.3% 4.3% 4.2% 4.2% 4.1% 3.6% 3.5% 3.3% 3.2% 2.9% 2.5% Data Source: Statistics Canada, 2011 Census of Population
  • 24. Geography of Non-Resident Occupancy Dwellings – City of VancouverNon-Resident Occupancy is defined as aregular private dwelling unit that is either"unoccupied" or "occupied solely by foreignresidents and/or temporary present residents"on the Census reference day - May 10, 2011 Data Source: Statistics Canada, 2011 Census of Population
  • 25. Geography of Non-Resident Occupancy Dwellings – Downtown Vancouver Core Context Reported Oct 2010 CMHC Total Vacancy Rate for Downtown Vancouver 1.3% Non-Resident Occupancy is defined as a regular private dwelling unit that is either "unoccupied" or "occupied solely by foreign residents and/or temporary present residents" on the Census reference day - May 10, 2011 Data Source: Statistics Canada, 2011 Census of Population
  • 26. Estimating the Amount of “Empty Condos” using a 2011 Census Methodology Context Reported Oct 2010 CMHC Total Vacancy Rate for Downtown Vancouver 1.3% Non-Resident Occupancy is defined as a regular private dwelling unit that is either "unoccupied" or "occupied solely by foreign 14.9% residents and/or temporary present residents" on the Census reference day - May 10, 2011 or 5,710 units Data Source: Statistics Canada, 2011 Census of Population
  • 27. Map Source: Vancouver Economic Commission, September 2011,The Vancouver Economic Action Strategy: An Economic Development Plan for the City