Demand for luxury Vancouver condos outstrips available supply, says Canadian developer

Vancouver’s luxury condo market will continue to spiral higher despite a 15 per cent tax for foreign buyers and tightened capital controls in China, according to a Canadian real estate developer.

The city with the most expensive housing market in Canada is still a draw for Hong Kong and mainland Chinese homebuyers seeking a long-term investment destination, said Ian Gillespie, the founder of luxury residential property developer Westbank Projects.

“We have so little product to sell that it just means instead of having three times as many buyers, now we have two times as many buyers as sellers,” Gillespie told the South China Morning Post.

Vancouver’s property market has been cooling since the provincial government imposed a 15 per cent tax on overseas buyers in August to help cool the market.

The number of residential units sold in February was down 41.9 per cent from a record number a year ago and a 7.7 per cent below the 10-year average, according to the Real Estate Board o f Greater Vancouver.

A benchmark price index went down 2.8 per cent over the past six months, although it edged up 1.2 per cent compared to January.

But Gillespie said most of the sales drop were in single-family houses rather than apartments.

Westbank’s new residential tower, designed by prominent Japanese architect Kengo Kuma, will house more than 180 condos as well as an art gallery, a Japanese-style garden and a Michelin-starred restaurant.

The building is scheduled to be completed in 2021.

“The buyers who have come to us tend to be more well-travelled, with higher education level probably and have a higher appreciation for fine arts,” Gillespie said.

In addition to the foreign buyer’s tax, tightened capital controls in China are also believed to have ricocheted through the property market in Vancouver.

During the Lunar New Year holiday, Vancouver saw 119 sales of detached homes in the city, 87 per cent down from the holiday period last year, according to real estate blog Better Dwelling. This year’s sales result was 78 per cent below the average 563 detached homes sold during the five previous Lunar New Year holidays, according to Better Dwelling.

Meanwhile, condo sales were also under pressure. A total of 283 units sold during the holiday period, reflecting a drop of 72 per cent from 1,021 units sold in 2016, according to Better Dwelling.

Although multiple factors appear to be behind the market cooling, Gillespie said demand from Chinese buyers remains in excess of the number of units he has for sale.

Westbank Projects has sales teams in Beijing, Shanghai, Shenzhen and Chengdu. Gillespie will head to the Chinese capital later this month to help market the company’s new residential project.

“But I do think it [capital controls] has probably held Vancouver back. Prices would have been even higher,” Gillespie said. “I think that may be a good thing. I wouldn’t want to see Vancouver’s prices run away and get to Hong Kong’s levels.”

This year the Lunar New Year’s day was unusually early, falling between January 27 and February 2, compared to last year when the holiday fell on February 7 to 13.