What came first, the need for investors or the lack of supply? To many, the question of the Vancouver purchase problem is similar to the old chicken or egg riddle. There are those who strongly believe that local governments and homeowners have hindered the progress of new construction over the years, jeopardizing service delivery and raising prices. And then there are those who believe that many new homes brought to the internet are aimed at investors who want to maximize profits, turning houses into a game of real life domination.
Over the past few years, high-income investors, also known as institutional investors, have moved to Lower Mainland to directly benefit from one of the world’s most lucrative real estate markets. The Vancouver Real Estate Forum, which will be held this year on April 12 at the Vancouver Convention Center, includes a team discussion about the growing trend of institutional investors collaborating with local developers. And experts from investment companies will talk about other panels that cover everything from government policies and the need for rental housing to the affordability problem.
“They go along with the talent of local developers who are able to access opportunities and facilities – pension funds are happy to participate directly with guys like us,” said Brent Sawchyn, principal and chief executive officer of development company PC Urban Properties, and the Forum. panel artist. The company of Mr. Central Sawchyn has partnered with many such companies in projects in recent years.
He estimates that, worldwide, there are about a dozen pension fund markets to inject their money and Vancouver is a drawing. They are looking for markets where population and business opportunities are growing. For developers, such investor relationships have become more attractive due to the high costs involved in development.
“If you have 10 billion dollars that you want to put into a market in certain Canadian markets – let’s say apartments that have a lot of families – you need to cast your net wide enough to meet that need, to put that in perspective. amount of money, ”said Mr. Sawchyn.
“Pension funds and ‘adjacent pension funds’ are all interested in participating in the creation of houses so that, at the end of the day, they can attract continued investment – so that they can buy or own existing flats. we too, where we can build a brand new clean building without a brand new box, with very little maintenance and repairs and bring an attractive profit to them. ”
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Some real estate agents have accused the institutional investor of raising prices because they are consuming old stock and demanding a healthy return. Mr. Sawchyn and others argued that they were working for the opposite purpose, because rental houses would be too dangerous to be built. However, for big-money investors, flats are “highly sought after and valued,” he says.
“Without investing in institutions, let’s say, in new apartment buildings, we would not bring stock.
“Some argue,‘ this is a new building, rental houses are expensive, they are not affordable. ’But if we have 75,000 to 100,000 people moving here every year to Lower Mainland, we need to build houses. And unless pension funds play a role in housing, we will no longer have stock. Rents will continue to rise. ”
But it is also true that the biggest investor is in the Vancouver market obviously because growth is an expectation. Some argue that anything that interferes, such as a government ban on rent, or the height of buildings, or expensive development finances, or public relations that suspends projects for years, for example, prevents the delivery of goods. For some, poor housing control is the most effective way to meet future demand.
Professor of finance at Simon Fraser University, Andrey Pavlov, argues that institutional investors are often better homeowners than mother and pop homeowners, and laws and taxes designed to cool the market only add to their financial burden, making housing less expensive. We should not just build for the present – we should build for the future, ”said Mr. Pavlov.
“We have delayed population growth in Lower Mainland due to housing restrictions,” he said. “There is another problem that you probably need to invest that has nothing to do with population growth. In my opinion, we should provide enough housing even for this, and it can be done, but there is a very serious argument to be made there. However, in the rental market it is very clear. ”
The rate of rental accommodation, he says, should be at least 3 percent to provide people with adequate housing.
Patrick Condon, University of B.C. Urban development specialist and author of Sick City: Disease: Disease, Race, Inequality and Urban Land, says the housing crisis stems from the sale of land, which is no longer based on their housing value, but on their value as a global property category. . To solve the housing problem, he says, you have to control the price of urban land.
“Houses are no longer respected for their performance. It is now being introduced as assets, like gold, Bitcoin or stocks and bonds, ”he said in an e-mail. “We have moved from a more labor-intensive economy to more dependent on investment, as investors move forward. It is very complex, because most of us participate in and benefit from it, through our RRSPs and our pension fund contributions, let alone for children born to benefit from a small $ 4-million benefit from their Dunbar home. ”
Engineer David Fullbrook says he is not sure if a lot of new items will lower prices.
“I look at the paradigm and it has a lot of conflicting powers.”
There are many challenges in the world available, and the cost of land is high. He says it means there are very few big players with deep pockets who can play.
“Often, the problem of buying a home is the real deal, which we have never seen as real. “We do not allow that to happen in health care and we do not allow it to happen in the home – and now that death has been thrown it will be very difficult to release that, I can guess,” he said.
Mr. Fullbrook, who has been in the industry for 30 years and spent most of his career in the U.S., has partnered with investors and built much commercial development in B.C. and Alberta, which includes accommodations for many families.
“When dot.com fell in 2000, that kind of money made a lot of money and that money started going into the market. I speak all over the world. … When the money started to flow, it did not stop and it started to speed up. So what you have now … is really institutional money that is at the forefront of home development.
“I think the biggest collapse was apparently the Liberal government’s disregard for housing and the amount politically created by this Chinese investment sector, this foreign investment that really protected Vancouver from other global climate change. North America.
“I always regard Vancouver investors as the recipients of speculation. They are buying property and may pay more. They do not really know what the descent looks like. So there has always been money to be made, and the province is always trying to use the system to further or encourage money to behave in a certain way – and to drink too much.
“Since the Exhibition, there have been 30 years of unprecedented demand for B.C. wealth also does not seem to be affected by normal market changes that can make people less aware, especially speculative businesses that do not really add value to the process, in my opinion. ”
Mr. Fullbrook is finding growing rent money worrying and worrying about the future of her children. He said he had recently bought a 128-story concrete tower, 20 floors for $ 650 which you could build on foot, excluding land, profits and interest rates. Ways buyer looks at about $ 500,000 per 500-square-foot condo. That is 10 times more than the average salary, compared to the time we started and the home may be three times more than the average salary. That creates a “vicious circle of rich and poor,” says Mr. Fullbrook.
And investors, on demand, are driven by profits.
“We had an agreement that we were very interested in, and there was a group of investors who were interested in the project, and investing, and what they wanted us to do was something I could not do. I would not look down on a prosperous society, and in a good place, to make a quick harvest.
“That’s exactly what they were driven by: ‘we want to make that money in three years and take it out and put it back in.’
“I do not judge you,” he adds. “I just see it as the most important thing in the market, that there is a different quality for investors.”
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