Vancouver eyes 'micro-suites' as Chinese buy up mansions
As mainland Chinese snap up Vancouver's mansions and apartment prices soar, one developer is now selling tiny 300 sq ft flats
Vancouver's property scene, fuelled by Chinese migration and investment, has long been famous for the luxury homes that fetch eight-figure sums and help make it Canada's most expensive real-estate market.
Now a developer is launching the smallest apartments for sale in the country, 297 sq ft "micro-suites" in the satellite city of Surrey. The tiny flats have variously been hailed as a solution to Vancouver's affordability crisis - or a symptom of an unreasonably high market.
Such minuscule homes seem incongruous in a huge country where homes average about 2,000 square feet. But with a C$2 million (HK$15 million) benchmark price for a detached home in the core Westside district of Vancouver, many first-home buyers struggle to get a toehold in a city whose real estate is rated the second-least affordable in the world, behind Hong Kong. That's according to Demographia’s* study of 378 cities around the world in nine major markets
Charan Sethi, president of the Tien Sher Group of Companies, said the response to the tiny flats in his Balance development had been overwhelming, and not just from the very low end of the purchasing pool. The apartments went on sale off-plan on Saturday, priced at C$109,900.
"When we started marketing this, I thought we'd be looking at those earning C$15 to C$22 an hour," Sethi said. "But to my surprise we've had investors, young people, parents looking to buy for their children who are students, a whole variety of people."
Sethi said the apartments were the cheapest new homes for sale in greater Vancouver. Construction is scheduled to begin soon, with completion expected by summer 2014. Sethi said 27 of the 56 units in the Balance project had sold since Saturday; 60 per cent of the flats in Balance are micro-suites.
He said that despite their minute proportions, the apartments were very liveable. They feature a pull-down Murphy bed, a full kitchen and bathroom and a washer/dryer.
"Absolutely, 300 square feet is enough. We have proven it with our show suite, which has everything … [But] it's also a lifestyle issue and a choice," he said. "It's a matter of high prices [elsewhere]. We are catering to people who don't mind a small space but they want a convenient location."
Sethi said that only one person who viewed the show flat had been critical of the project and its implications. "I don't see any negative [societal impact of such small flats]," Sethi said. "Most people probably ... can't imagine living in 300 square feet, but once they see our demo suite, they think 'whoa, this is nice'."
Not everyone is so sure. Dr David Ley, a geographer at the University of British Columbia, said 300 sq ft apartments were among a range of "compromises" dictated by high prices.
Ley said Chinese migration was "undoubtedly" a driving force at the top end of the market in premier districts. But this also had a trickle-down effect. "Anecdotally, [those who sell in Vancouver West] are moving into suburban areas, Langley, Burnaby, Tsawwassen, Ladner. So there are effects in those markets too," he said.
Ley said he was surprised there had been no "political pushback" against the effect that various Canadian immigration schemes had had on Vancouver's property market.
For instance, under the popular investor-class scheme, visas are granted to foreign millionaires prepared to loan C$800,000 to a provincial Canadian government interest-free for five years.
Such schemes have attracted 36,892 rich immigrants to British Columbia over the past eight years, of whom 66 per cent were mainland Chinese. With Hongkongers and Taiwanese included, the proportion from China rose to 81 per cent. Nearly all of these millionaire households have settled in greater Vancouver. The investor visa scheme is so popular that the government last year froze new applications to deal with a backlog.
"I'm surprised that [political pushback] has not occurred," Ley said. "The degree of hardship this [property market] has involved is very substantial. This has had a very negative impact on a lot of people's lives. You've got these 300 sq ft apartments. That is an unfortunate compromise that is a result of this."
But Ley said that changing any legislation regarding property rights or foreign ownership "could be very controversial".
[*Update: This story has been updated to include a link to the latest Demographia study and to describe its scope]