Olympic Village Sold!

The city just took one big step towards getting out of their Olympic Village obligations with smaller losses.

Dozens of market rental units have been sold in one bulk sale to an investors group at an average of $350k a piece.

“This is our first multifamily rental investment,” said Malcolm Leitch, chief operating officer for investment management at Bentall. Mr. Leitch is listed as the only director of the limited company that was formed in July by Bentall to take ownership of the property, BK Prime False Creek Residences Holdings Ltd. “This is in our view one of the top rental projects in the city. And we’re very happy with [the price].”

That sale of the 119 units will reduce the City of Vancouver’s leftover debt from the Olympic Village financial mess by $41.5-million in one swoop and get it out of at least one part of its landlord business in the development.

The city still owns the 252 social-housing units in the 1,100-unit project.

We’ve seen some pessimism about the losses faced by taxpayers on this project, so it’s nice to see that number reduced by $41.5 million.

So where does that leave us now for those keeping score?  The city isn’t saying, but here’s an estimate:

It’s estimated by those close to the project that the city will lose between $240-million and $290-million in total – including the $170-million that was anticipated for the land, which it will never get.

There are still 90 unsold condos on the market and 26 more being rented.

Read the full article in the Globe and Mail.

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Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

Wow,
Another 125 rental units in the OV. And all sold way below market value.
There are bound to be some very upset investors/owners who bought during the pre Olympic hype.

YVR
Guest
YVR
2 years 8 months ago
If I recall the city turned a bunch of units into rental units back in 2011 because they couldn’t sell them at the time (for the asking price). Now they sell them after turning them into rentals for $350K each. The big problem here is had they lowered the price back in 2011 they could have easily sold them for significantly more than the average price of $350K each. In addition to getting more money they would not have had these units bleeding money for the past few years. Just another buggled part of the project which adds to the… Read more »
Loon
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Loon
2 years 8 months ago
Randy Randerson
Guest
Randy Randerson
2 years 8 months ago

I wonder how much rent they would charge for those rental units. Using the rule of Price/Rent ratio lower than 15, monthly rent for one of these units would have to be higher than $1944 a month in order to make sense investment-wise.

Seems like the rent will still be a little bit higher than the surrounding areas and downtown.

southseacompany
Member
southseacompany
2 years 8 months ago

Canadian real estate news in Hong Kong’s South China Morning Post;

“Canadian home prices up, frustrating Hongkongers waiting to buy
HK buyers hoping for a correction before diving into the Canadian market may just have to wait”

http://www.scmp.com/comment/insight-opinion/article/1297937/canadian-home-prices-frustrating-hongkongers-waiting-buy

Who knew there were bears in HK waiting for Canadian prices to tank before jumping in.

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

Administrator,
Could we have a Cantonese version of VCI for our fellow bears in Hong Kong?
United we stand.

BWilson
Guest
BWilson
2 years 8 months ago

I’m guessing these are the units: http://villagerentals.ca/plans.html

Interesting data points for all the “investor” landlords out there.

Bentall who itself isn’t even an experienced rental unit investor probably paid ~$500/sq ft for these units, outbidding more experienced institutional investors. There are some really dumb investors in the Vancouver market even on this kind of scale ($10-50 million rental buildings), they’re always local. No one outside of Vancouver would invest at these low cap rates. Experienced, smart real estate investors in Vancouver look elsewhere, even Toronto where cap rates are much more reasonable.

taylor192
Member
2 years 8 months ago

@#4 Randy

The units are mostly 1 bdrm and will rent for much less than $1944/mn. IG has to be banking on appreciation as even at $350K/each the numbers don’t add up to a good ROI.

southseacompany
Member
southseacompany
2 years 8 months ago

Today’s National Post:

“‘A tale of two markets’: Condominium prices falling while low-rise homes continue to soar”

http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

“In the Greater Toronto Area, provincial government policy, which encouraged intensification, has helped foster the condo market. But it’s not just a Toronto issue — Vancouver’s condo market has had the same strength over the past five years.

The Real Estate Board of Greater Vancouver says single family detached home prices are up 16.8% over the last five years while apartment prices have risen just 0.2% during the same period.”

taylor192
Member
2 years 8 months ago

@#2 YVR

I would be skeptical of REITs. People have been dumping huge amounts of capital into them which they use to buy more property driving up the price of commercial RE. No different than Canadians bidding up residential RE, just on a bigger scale with other people’s money.

Take your money and run. Once free money stops flowing REITs will be in just as much trouble if not more than RE.

B!B!B!
Guest
B!B!B!
2 years 8 months ago

LOL!

“In the Greater Vancouver Area, areas made of lowlands sediment such as Richmond and Delta, are most susceptible to landslides”

http://www.scq.ubc.ca/the-big-one-understanding-why-the-big-earthquake-is-predicted-for-vancouver/

a landslide in a place that is completely flat. something that can only be explained with bear logic.

Oh, and vc.info admin, thanks for IP banning me. did you also ban VHB? i haven’t seen him around.

well, if the market goes down, i’m sure hey’ll start posting again. just in time to take credit for it 🙂

lazyrenter
Guest
lazyrenter
2 years 8 months ago

@#2 BBB

Holy selective quotation Batman, finish the sentence… “landslides and liquefaction.” Look up Christchurch in case you don’t know what that means. Every single Richmond property totalled, would be my guess.

crabman
Member
crabman
2 years 8 months ago

B!B!B! seems to be as clueless about geology as he is about RE investing.

Randy Randerson
Guest
Randy Randerson
2 years 8 months ago

@#8

WTF, it’s mostly 1 bedroom apartments? They don’t even rent for more than $1300 a month, so how are they suppose to have a good ROI in this situation. It’s like “Look, I got a bargain, I only paid $350,000 a unit from $500,000! But it’ll likely drop to $250,000 in the future.”

crabman
Member
crabman
2 years 8 months ago

$500/ft for Olympic Village actually seems reasonable. If going rents are $2.5/ft, that would put the price-to-rent ratio at 16.6.

OTOH, condos are currently going for an average of $850/ft, putting the P/R ratio at a ridiculous 28.3.

http://www.6717000.com/123w1st/listings/

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

A severe earthquake will cause the dykes in Richmond and South Delta to rupture resulting in catastrophic flooding.
YVR will be out of action for a long time, which will seriously hamper rescue efforts.
That’s why some experts are saying that we should stop expanding YVR and instead start expanding Abbotsford International.

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

India’s Rupee hits all time low!
I think that this will affect RE in Surrey as investors will liquidate in order to keep their businesses in India afloat.

Bo Xilai
Guest
Bo Xilai
2 years 8 months ago

A Chinese insurance executive who allegedly took 500 million yuan ($US82 million) from her company and fled the country has been escorted back from Fiji by police.

http://www.radioaustralia.net.au/international/2013-08-21/runaway-chinese-insurance-executive-chen-yi-escorted-home-from-fiji/1179072

Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.

Son of Ponzi
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Son of Ponzi
2 years 8 months ago

# 18
of course she was headed for Vancouver.
Where else can you launder 82 million without any questions asked?

Burnabonian
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Burnabonian
2 years 8 months ago
http://www.cbc.ca/news/business/story/2013/08/21/pol-finance-flaherty-economists-summer-policy-retreat.html “Finance Minister Jim Flaherty said today he is satisfied with the measures his government has already taken to calm the housing market and has “no plans” to intervene any further.” Read: no more “engineering a soft landing” or whatever the bull(shitters) cling to. Flaherty’s gonna let ’em burn. Maybe he became a VCI reader. […] “Flaherty said he’s “not a big fan of so-called fiscal easing or whatever it’s called.” “We’re moving toward a balanced budget, I think that’s the best protection for Canadians,” he said. He said he anticipates the issue of quantitative easing will come up at… Read more »
VanRant
Member
VanRant
2 years 8 months ago

@ Bo Xilai

Suitcase full of money going in the opposite direction – back to China!

http://www.cbc.ca/news/canada/british-columbia/story/2013/08/12/bc-blessing-scam-immigration-hearing.html

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

@ Madashell
Of course, once the money has been laundered it is being “repatriated”.
What a joke!

Chabar
Member
Chabar
2 years 8 months ago

@Madashell

Vancouver police say suspects in the so-called blessing scam convinced Chinese seniors that they would need to have a large sum of money and jewelry blessed by a spiritual doctor to ward off the bad luck.

They would be better off if they invested in a new hospice instead of bringing stupidity to the next level.

Best place on meth
Guest
Best place on meth
2 years 8 months ago

“Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.”

Guess where she’s headed now?

Firing squad. 🙂

Son of Ponzi
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Son of Ponzi
2 years 8 months ago
Unplugged
Guest
Unplugged
2 years 8 months ago

How accountable are the residents of this city? Sure there is some serious blame to pass around here to governments, politicians etc.. but have we blamed ourselves individually for any of our own personal circumstances whatever they might be?

See here: http://mayer320.wordpress.com/2013/08/21/being-accountable/

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

@ unplugged.
Completely agree with you.
It’s time for the money laundering offshore RE speculators to take responsibility and admit that they are the causes of the high RE prices in Vancouver.

VMD
Member
2 years 8 months ago

Guys, unlike previous rate hikes
RBC increased its 5 year Posted Rates in addition to special discounted rates.

If I’m not mistaken, that is The Qualifying rate that all applicants (whether variable or fixed mortgages) need to qualify at.

http://www.newswire.ca/en/story/1213475/rbc-royal-bank-changes-residential-mortgage-rates

bubbly
Member
bubbly
2 years 8 months ago

So the city gave away prime land for free. Then it gave free money to the developer, who had trouble finishing the job. (I am sure there was enough energy and money for manager bonuses, though). Now, the taxpayers have to clean up the 290+ million dollar mess.
And nobody goes to jail. Beautiful…

NJ Expel Llc Member
Guest
NJ Expel Llc Member
2 years 8 months ago

Mario Puzo in The Godfather put it this way: “We are all honorable men here, we do not have to give each other assurances as if we were lawyers.”

Beuller
Guest
Beuller
2 years 8 months ago

@ Bo Xilai

Suitcase full of money going in the opposite direction – back to China!

http://www.cbc.ca/news/canada/british-columbia/story/2013/08/12/bc-blessing-scam-immigration-hearing.html

Lovely, lovely people. From this to wealthy Asian seniors pulling up in new Mercedes to hop in the food bank line to wealthy Asian kids getting free hand outs intended for underprivileged kids. And we continue to open our arms to them… wow.

space889
Member
space889
2 years 8 months ago

So why can’t the city take back the land and lease it to the strata corporation if they didn’t receive payment for the land??

Poll
Guest
Poll
2 years 8 months ago

Vote up if you would NOT move to Richmond in the future.

Vote down if you would.

Anonymous1
Guest
Anonymous1
2 years 8 months ago
Son Of Ponzi: India immediately last week put a limit on how much money could leave per person last week. Was $200,000, now $75,000. The limit was originally raised to 200K a few years ago. Then every Taminder, Dickinder, and Harinder started selling assets backhome and buying homes in Surrey/North Delta. Hopefully that slows down. Also, companies could buy 4 times their book value of assets overseas. Now 1x. BTW, no businesses in North India Punjab (where most Surrey Residents are from)…its all a big Land Ponzi scheme there. Farmland there going for $100,000 an acre…population growth uncontrollable.
Aggregator
Guest
Aggregator
2 years 8 months ago

@Anonymous1

What’s going to happen when there’s a mortgage meltdown in India? http://www.tubechop.com/watch/1421656

Nix
Guest
Nix
2 years 8 months ago

Interesting developments for the US mortgage lenders. A sign if things to come?

http://www.cnbc.com/id/100979154

patriotz
Member
2 years 8 months ago
“$500/ft for Olympic Village actually seems reasonable. If going rents are $2.5/ft, that would put the price-to-rent ratio at 16.6.” That isn’t reasonable at all. What’s reasonable for apartments (and what REIT’s want) is a cap rate (i.e. net rental yield) of 8%, which means a price-to-rent of about 10. And from the article: “It doesn’t leap out that this price is too low,” said Tsur Somerville, director for the UBC Centre for Urban Economics and Real Estate. Well I certainly have to agree with Tsur on that one. “And, as an economist, I would say there’s no reason on… Read more »
patriotz
Member
2 years 8 months ago

“So why can’t the city take back the land and lease it to the strata corporation if they didn’t receive payment for the land??”

Because the land had already been sold to the stratas.

patriotz
Member
2 years 8 months ago

“So the city gave away prime land for free. ”

The reason the city ended up giving the land away is that it made a deal to sell it to an incompetent developer for well over the market price, which the developer ended up unable to pay.

It was simple greed, just like every other RE player who gets burned.

And remember folks, the voters of Vancouver had a chance to kill this beforehand.

Burnabonian
Guest
Burnabonian
2 years 8 months ago

@25 RBC hikes mortgage rates

BAM!!

EXAMPLE 1

GVRD “benchmark” (r) home price = $920,500
20% downpayment = $184,100
other debt = null
amortization = 30 years

April rate (2.79%) = $3,015.63 monthly
Today’s rate (3.89%) = $3,456.03 monthly

EXAMPLE 2

Income = $100,000
Downpayment = $184,100
Other debt = null

Maximum affordable house according to RBC:

April rate (2.79%) = $607,208
Today’s rate (3.89%) = $564,585

fixie guy
Guest
fixie guy
2 years 8 months ago

@Burnabonian : “As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere,” said Flaherty.

Canada engaged in the equivalent to QE for a decade, except in our case the liquidity was laundered directly through mortgages. Flaherty the used car salesman.

jesse
Member
2 years 8 months ago
“It was simple greed, just like every other RE player who gets burned” I doubt the City was aware the risks they were taking. They engaged a hedge fund to put up the financing; the thing stunk from the beginning but the City — councillors from both major parties, and staff — thought they knew better. I’d add incompetence to the list as well. I agree with you, culpability goes deeper than City Hall. Citizens voted to host the Olympics with scores of warnings from past Olympic venues on the propensity for cost overruns and scandal: Sydney, Salt Lake City,… Read more »
Best place on meth
Guest
Best place on meth
2 years 8 months ago

I voted no in the referendum and then boycotted the Olympics.

It’s too bad the 60% who voted yes can’t be made to pay for this.

Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

The OV, the Canada Line and the OWAL were all rushed through to be ready way before the deadline.
We had to show the World how efficient and competent we are.
This short term thinking willl soon become obvious, first with the Canada Line which will have to upgraded at substantial costs.
I think it will be about 2 or 3 years until the first condos in the OV will start to leak.
And it will become obvious pretty soon that the City of Richmond gambled and lost on the White Elephant that is the Richmond OWAL

Burnabonian
Guest
Burnabonian
2 years 8 months ago
GVRD median family income in the GVRD = $55,000 If that family (somehow) saved up a $100,000 downpayment, affordability would be as follows according to RBC: April (@2.79%) = $318,228 August (@3.89%) = $296,386 BAM! This is of course a median family with a credit card balance of 0.00, both cars paid off, no line of credit, and no other liabilities who have somehow managed to save up two years’ gross salary for a house downpayment. (Or get it from the relo’s.) Har har. I might as well use the easter bunny as an example. My guess would be that… Read more »
It's simple
Guest
It's simple
2 years 8 months ago

BURNABONION YOUR DA MAN

crabman
Member
crabman
2 years 8 months ago

@patriotz – Vancouver condos have never had a P/R ratio of 10 – the current ratio is 27. Anyone that waits for 10 will be renting the rest of their lives, IMO.

franko
Member
franko
2 years 8 months ago

Cool stuff Burnababy.

Some projected affordability when rates hit 5 and 6% would really put things in perspective.

Looking forward to another big sales day. The sooner those pre-approvals are fed through the shredder, the sooner we’ll get to the edge of the cliff.

silver
Guest
silver
2 years 8 months ago
A Chinese woman in Richmond is accusing McDonald’s of discrimination because staff could not understand her English and mistakenly gave her a coffee instead of a hot chocolate. The woman is claiming a “second language right” (interesting idea, I don’t think a right to retail/restaurant service in Mandarin is in the Charter of Rights). If McDonald’s starts requiring employees to speak Mandarin then it will just mean more impoverishment of white people because of Chinese. Already so many jobs in Vancouver area require Mandarin skills. Quote from CBC: “She said, ‘You don’t know English,’ and then she returned my order.… Read more »
Son of Ponzi
Guest
Son of Ponzi
2 years 8 months ago

@crab man
I owned a condo in the Residences (Seymour & Hastings) which I bought in 2001.
26th floor, fully furnished for 125k.
Rented it out for 1,400 a month.
Those were the days my friend.
Before it all got crazy.

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