Vancouver Commercial Real Estate Seen as Lure After Housing TaxBy
Foreign investors being driven away from residential property
Office, retail, industrial deals double to $5.4 billion
Wealthy foreign investors are likely to shift their money to the commercial side of Vancouver’s real estate market to avoid a housing tax, just as deals for office, retail and industrial properties reach an all-time high, brokerage Re/Max Holdings Inc. said.
Commercial real estate transactions in the city climbed to C$7.14 billion ($5.41 billion) in the first half of 2016, almost double the year-earlier tally, and nearly triple the deals in the same period of 2014, Re/Max said in a report Wednesday.
Foreign buyers may take a greater interest in office buildings, warehouses and other commercial properties after the province of British Columbia imposed a 15 percent land-transfer tax on non-Canadian investors in the Vancouver residential market. Since that move, almost two months ago, home sales and price growth have cooled, particularly for luxury real estate.
“As a result of the recent foreign-buyer tax on residential properties, buyers who are interested in investing in greater Vancouver may start to shift their focus to commercial properties,” Elton Ash, the brokerage’s Western Canada regional executive vice president, said in a statement.
At the same time, the city is the most at risk of a housing bubble, according to a report this week by UBS Group AG. Vancouver jumped from fourth place last year, replacing London in the No. 1 spot, driven by a boom in foreign investment and loose monetary policy, according to the report.
— With assistance by Erik Hertzberg