FRANK O’BRIEN
Other
The 2008 economic downturn was not kind to Vancouver Island. From the Capital Region to Campbell River and the Pacific Rim, promising real estate and resort developments were scaled back and some were stopped cold. Examples range from the luxury Parkside Resort & Spa in Victoria, which fell into receivership shortly after being named the top resort destination in B.C., to the Jack Nicklaus-designed Wynd-and-sea golf resort at Ucluelot, bankrupt, partially finished and now listed for a third of the price it was accessed at two years ago.
In Campbell River, the closure of a cruise-ship terminal followed the shut down of the Elks Fall pulp mill. In Nanaimo, a major convention hotel was abandoned and the city is now offering the downtown site for $1.
Yet a visit to Vancouver Island this summer shows that the economy and the confidence appear to be coming back.
At Campbell River, the Quinsam coal mine has expanded, adding much-needed new jobs; Victoria has seen resurgence in redevelopment and the Nanaimo real estate market is drawing savvy institutional investors. And, perhaps most indicative of the change, bold spec builders are back in action.
In the Comox Valley, residential developments have completed or are building approximately $10 million worth of homes, all on speculation.
Comox Valley
The boldest project is Harwood Beach Estates five minutes south of Comox, where ultra-luxury detached houses are being built on 26 acres of waterfront by developer Lyons & Noble, with Red Gun Marketing. Of the 14 houses planned for the stunning oceanfront site, two sites have been sold and three houses have been built on speculation. Waterfront lot prices start at $459,000 – there are five of the quarter-acre lots left. The three-bedroom-and-den houses are for sale in the $1 million range. The site also includes a portion of the fish-bearing Little River and extensive green space.
While building $3 million worth of houses on spec appears nervy in a market where the average house sells for $350,000, local realtor Scott Fraser of Royal Lepage says it could be a smart investment.
“These are luxury houses right on walk-on waterfront and they will find buyers,” Fraser said. He noted that, with the new Harbour Air seaplane flights from Comox to downtown Vancouver, Harwood Beach can be reached from the Lower Mainland in about 15 minutes. The development is next to the BC Ferry terminal that links the Valley with the mainland at Powell River. Considering what $1 million will buy in Vancouver, Harwood Beach looks like a bargain, Fraser pointed out.
There is also confidence east of Comox where Vancouver-based Trilogy Group has launched the 716-acre Cayet mixed-use project along the Island Highway. The award-winning new Vancouver Island Visitor Centre is now the only building on the site, but plans call for a large shopping centre, big-box stores, hotels and hundreds of new homes to be built over the next decade or so. Trilogy is now looking for land buyers as it prepares the infrastructure. Local realtors suspect Cayet will be first – and for a long time – a residential project, since new big-box retail has already arrived elsewhere.
Nanaimo-based Rob Borden, a veteran commercial agent with Century 21-Harbour Realty Ltd., noted that Wal-Mart, Costco and Canadian Tire already have big-box stores in Comox and the new regional hospital is to be built near the existing Island University.
Further south is the Qualicum Landing development, a waterfront community of 62 cottage-like houses by Palladian Developments Inc. that has seen steady sales right through the downturn. The unique strata project is built on a former campsite, with walk-on beach access to 450 feet of shoreline. There is also a community swimming pool and clubhouse. All but 11 of the cottages have been sold and the remaining cottages are being completed on spec, says marketing manager Anna Difiore.
Basic completed cottages started at $399,000. Most buyers – aging boomers from Alberta, the Lower Mainland and Vancouver Island – are buying for vacation homes, but some are living there year-round. DiFore said typical buyers add upgrades that bring the price closer to the $500,000 range. The three larger cottages closest to the waterfront would likely resell in the $1.2 million range.
Resales have held up better than the surrounding market, with about a 5 per cent decrease from two years ago. One downbeat: the monthly Qualicum strata fees of $320 per cottage. This seems high, but it does cover maintenance of all common areas and even eaves cleaning. “This is a lock-and-leave-it development,” DiFiore said.
The Comox Valley is also seeing an impressive nascent wine industry. The small Beaufort Vineyards and Estate Winery, which began production just four years ago, captured gold awards for the best wines in Canada at last year’s All Canadian Wine Championships. The Blue Moon Winery, also in the Valley, has captured national awards for its fruit wines.
Just north of Comox, a new development is also taking shape at Saratoga Beach Developments, where a 75-acre parcel is being carved into 143 building lots.
Meanwhile, the overall residential market is slowly improving or holding steady in most mid-Island markets, according to the Vancouver Island Real Estate Board.
Comparing May 2012 with May 2011, the average sale prices across the board’s six zones saw Campbell River increase 6 per cent (to $306,908) and the Comox Valley dip 1 per cent to $361,537. Nanaimo’s average sales price was down 8 per cent to $349,554 from the May 2011 price of $379,410, while Parksville / Qualicum recorded a 1 per cent decline (to $414,944), Port Alberni/West Coast dropped 13 per cent to $202,256 and the Cowichan Valley increased 8 per cent (to $358,475).
Southern action
Nanaimo continues to offer a hotel building site next to the convention centre for $1 after an original deal collapsed four years ago. “The city has an open-door policy on that site,” Borden said, adding that large players like Alberta’s First Capital REIT and Northern Property REIT have made it harder for smaller commercial buyers to compete in the multi-family or retail sector. One opportunity could be in the demand for strata office and retail space connected to the medical community, he said.
South of Nanaimo, a number of new and redevelopment real estate projects are going ahead this year.
After decades in limbo, limited development has been approved for a portion of the long-awaited Bamberton land project in the Cowichan Valley.
“People have been trying to rezone the property for 20-plus years now,” said Ross Tennant, development manager of Bamberton Properties.
Bamberton Properties bought the 1,100-acre site in 2005 and had plans for 3,200 homes, but the Cowichan Valley Regional District ruled the region needs jobs and industry rather than more homes. Bamberton Properties then scaled back its plans and applied instead to rezone about 300 acres for light-industrial use. Approved plans call for approximately 380,000 square feet of commercial and industrial space.
Capital Region
In Victoria’s Colwood area, the former Silkwinds condo project – shut down five years ago – is coming back to life after a buyer recently stepped forward. According to Ken Cloak of Colliers International’s Victoria office, the new owner plans to finish a townhouse project on the 1.3-acre site.
Also for sale in Colwood is the failed 24.1-acre, waterfront Aquattro condo project, listed for $17.5 million through Colliers for Ernst and Young, the court-appointed receiver.
Developer Peter Daniel had planned a $350 million development on the site. A total of 585 townhouses and condominiums was to be built. So far, 88 units in a three-storey building have been completed, as well as a one-storey townhome, which are not included in the sale offer. The rest of the site is being marketed.
Meanwhile, League Financial Partners has $1 billion worth of faith in Colwood. The Victoria-based developer launched its mixed-use Capital City Centre project this year on 14 acres on what has been known as Colwood Corners. Plans include 12 residential towers, four office towers, residential buildings, office space and a public plaza. It is expected to take more than a decade to build out.
Right in Victoria, the derelict 121-year-old Janion Hotel, a Store Street structure left vacant for more than three decades, has been sold to a Reliance Properties of Vancouver for $2.49 million.
Reliance also bought the nearby Northern Junk property at the foot of Johnson Street two years ago. Reliance is planning to convert the Janion site into condos and retail.
Home buyers are also showing confidence in the still-slow Greater Victoria real estate market, evidenced by a spike of 71 residential sales in May over the previous month, to 659.
The average price for single-family houses sold in Greater Victoria in May was $622,387, down from $628,500 a year earlier. Average condo prices, at 312,000, were down from $328,300 in May of 2011, reports the Victoria Real Estate Board.
from Western Investor July 2012