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Investment in Alberta not all it appears to be

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Investment activity in Alberta looks promising, but a closer look at the numbers tells a different story.

An analysis by Altus Group of activity through the third quarter of 2018 revealed the provincial capital bore witness to $3.1 billion of investment, which is a 38% increase over the same quarter in 2017 and a whopping 86% spike over the first three quarters of 2016.

Breaking down those numbers, the industrial sector’s investment by the end of Q3 was $638.7 million, and retail investment reached $609.8m, however, the $180.9m invested in the third quarter alone decreased 3% from Q3 2017. The office market’s contributions to overall investment through the third quarter cannot be overstated: Of the $517.4m invested through the first three quarters, $456.4m was invested in the third quarter alone.

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The apartment sector in Edmonton increased 35% through Q3 2017 compared to the same period last year.

In Calgary, there was $2.55b invested through Q3 2018, which is an 11% improvement over the same period in 2017, but the industrial sector was down 6% from last year, albeit possibly because of a supply dearth. Year-over-year, retail transactions have been up 26% through the first three quarters of 2018, however, the office market has declined 2%.

Calgary’s apartment sector declined 33%, reaching only $112.8m year-to-date investment.

Ben Tatterton, Altus Group’s manager of data solutions, says that both cities appear to have buoyant investment markets, but that a lot of their weaknesses are being masked by a few disproportionate transactions.

“What we’re seeing is, overall and year-to-year, the rise in commercial investment activity is up and that’s paying to mind that we have a struggling asset class, that being office space,” said Tatterton. “In the office sector, there are several large transactions made by institutional investors, namely in Calgary being the IBM Corporate Park. There were big flashes of purchases by more of the larger players and they boosted the office total maybe higher than what they would be absent of those transactions. One to three large office deals are inflating the numbers.”

The weak office sector in Calgary, specifically, is largely tied to the province’s struggling oil and gas sector, which is expected to continue into 2019.

“Nationally, we don’t anticipate many economic shocks, but regionally we do,” said TransUnion’s Matt Fabian, director of research and industry analysis. “If oil prices continue to go down, we could be back closer to where we were in 2014 to 2015 when we had oil shocks in that region.”

However, the weakened state of the province’s economy, and by extension its office sector, might explain why investment in office space is relatively strong.

“I think it presents an opportunity,” said Tatterton. “We’re seeing some strategic buys by people who are looking away from the present and a few years into the future. They may realize it has a lot of upside in the future and that they can get it at a lower value than what they’d normally be paying in a boom time market.”

 

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Victoria real estate agent disciplined for false advertising, encouraging cash deal to avoid taxes

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A Victoria real estate agent is facing $9,000 in fines and a 60-day licence suspension after breaking several professional rules during the sale of her father’s half-million-dollar property, according to a decision by the Real Estate Council of B.C. 

Whitney Garside’s missteps — outlined this week in a disciplinary decision posted on the council’s website — included falsely advertising the property as being almost twice its actual size and advising the buyer they could avoid the property transfer tax if they paid cash directly to the seller.

The property on Burnett Road in Victoria was being sold in 2016 by the real estate agent’s father. That relationship was disclosed and isn’t among the reasons she has been disciplined.

According to the disciplinary consent order, Garside told the buyer — whose name is redacted — that by paying $42,000 cash on the side, the value of the property could be reduced to avoid paying the property transfer tax.

That cash arrangement was not shared with Garside’s brokerage, Re/Max Camosun, a failure that contravened the Real Estate Services Act.

The council also ruled that she “failed to act honestly and with reasonable care and skill” when she advised the buyer the property transfer tax could be avoided by paying cash directly to the seller. 

The council’s discipline committee also found that Garside committed professional misconduct when she failed to recommend the seller and buyer seek independent legal advice, specifically regarding the property transfer tax and the cash agreement.

Another issue the council considered professional misconduct involved the size of the property in question.

The council ruled that Garside published false and misleading advertising and failed to act with reasonable care and skill when the property was advertised as 8,712 square feet, when in fact a portion of the lot belonged to the Ministry of Transportation, and the actual size was just 4,711 square feet.

The discipline committee ordered Garside’s licence be suspended for 60 days, which will be completed Jan. 3, 2021.

She has also been ordered to complete real estate ethics and remedial classes at her own expense.

Garside was also fined $7,500 as a disciplinary penalty and $1,500 in enforcement expenses.

She agreed to waive her right to appeal the council’s discipline committee’s decision in September.

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Frisco apartment community sells to Canadian investor

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A Canada-based investor has purchased a Frisco apartment community as part of a larger Texas deal.

The 330-unit Satori Frisco apartments opened last year on Research Road in Frisco.

BSR Real Estate Investment Trust bought the four-story rental community that was built by Atlanta-based Davis Development.

Satori Frisco was more than 90% leased at the time of sale. The property includes a two-story fitness center, a car care center, a dog park and a resort-style swimming pool.

The Frisco property sold along with Houston’s Vale luxury apartments in a deal valued at $129 million.

“BSR recently exited the smaller Beaumont and Longview, Texas, markets and also sold noncore properties in other markets,” John Bailey, BSR’s chief executive officer, said in a statement. “We are now using our strong liquidity position to invest in Vale and Satori Frisco, modern communities in core growth markets with the amenities our residents desire.”

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House prices on Prince Edward Island continue steady climb

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Residential real estate prices on Prince Edward Island continue to climb at a rate higher than the national average, according to the latest report from a national organization. 

The Canadian Real Estate Association released monthly figures for November 2020 on Tuesday.

They show that the average price for a resale home on P.E.I. is about 21 per cent higher than it was a year earlier. 

Only Quebec had a bigger year-over-year increase, at about 23 per cent. Overall across Canada, prices were up 13.8 per cent year over year in the ninth month of the COVID-19 pandemic.

“For the fifth straight month, year-over-year sales activity was up in almost all Canadian housing markets compared to the same month in 2019,” the report noted.

“Meanwhile, an ongoing shortage of supply of homes available for purchase across most of Ontario, Quebec and the Maritime provinces means sellers there hold the upper hand in sales negotiations.”

That lack of houses coming onto the market compared to the demand means that in those provinces, there is “increased competition among buyers for listings and … fertile ground for price gains.”

There have been anecdotal reports for months that Prince Edward Island’s low rate of COVID-19 infection and looser rules around social activities have been encouraging people to buy homes on the Island. 

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