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Vancouver Island north of Victoria is emerging from a five-year real estate downturn with fresh optimism and a fresh round of new real estate developments, including an audacious bid from Chinese investors.
Northwest of B.C.’s capital city, Vancouver developer Michael Thornton believes he has hit the “sweet spot” for recreational buyers with his Silver Spray waterfront development at Sooke Point near Victoria – but it has taken 17 years to do it.
“This place has everything,” Thornton said, noting it’s less than an hour’s drive from downtown Victoria, the airport and the BC Ferries terminal.
The development, now taking shape, features 95 oceanfront or oceanview cottages, priced from $300,000. Due to a special setback allowance because of the solid rock base, some oceanfront cottages are within 16 feet of the water. “It is like you can step from the deck into the ocean.”
Situated on a point of land jutting into the Pacific, the cottages are arranged to capture much different experiences, ranging from big surf and sunsets to sheltered hot spots to mountain and ocean views with immediate access to neighbouring Wilderness Park, boasting miles of hiking trails.
Thornton, with investors, bought the 172-acre site in 1996 from local owners for just under $4 million. Originally the plan was for a high-end resort with a hotel, golf course, marina and 274 luxury homes, but the 2008 financial crisis – and public protests – put an end to that.
“Investments just dried up,” he said.
Over the years and through controversy that split the East Sooke region, the development has evolved into its current form.
Thornton has spent $1.6 million for a pump station to service higher-elevation lots, built a reservoir and ran a water line costing more than $4 million across Sooke Harbour and along more than 12 miles of road. Now the entire development boasts 127 lots – 50 of which have been sold for $14.5 million to help finance the project, though only a handful have single-family homes built on them. There is a 115-berth marina being excavated while the remaining single-family lots remain on the market.
At the heart of it all sits Possession Point and its 2,850 feet of oceanfront.
Eco-tourism
“This is where we always envisioned the destination resort, something with eco-tourism and a world-class flavour,” Thornton said. “This is where Victoria meets the wild west coast.”
While zoning allows for both full-time residency and rentals in the cottages, he’s hoping most buyers will see the cottages as seasonal retreats.
“We’re hoping most owners, when they are not in use, will put them under rental management,” said Thornton, who has held talks with a number of hotel-management companies to consider the possibility.
The fully finished and furnished cottages will range in size from 600 square feet to 850 square feet per floor. There are bungalows as well as two- and three-level options. Prices will start at $300,000, though most are likely to be in the high $300,000s and beyond.
Construction crews are completing a fully furnished show cottage, with sales to begin in July and August.
Thornton feels both relief that it’s actually happening and some disbelief that it’s taken nearly 20 years to do.
“I never went to land-development school,” he said with a laugh. “I thought, ‘How difficult could it be when you have a beautiful piece of property?’ But there are no regrets. It’s been a wonderful experience.”
Sooke Mayor Wendal Milne said his council has endorsed Thornton’s most recent plans: “I think he’s changed focus a bit and now he’s looking at a different type of market. It’s a beautiful piece of property and the concept he’s into now I think is a good one.”
Nanaimo
The Nanaimo real estate market started to perk up this year – and it’s neither just the 12 per cent uptick in May housing sales that’s causing a stir, nor retailers’ expectations of the start of cruise season.
The key reason behind the excitement is a bid from a Chinese investment firm to build a luxury hotel on a long-vacant site next to Nanaimo’s downtown convention centre. The city has been trying to convince a developer to build there for a decade, once offering the land for $1 to any eligible buyers.
But, in June, representatives from the Chinese group pitched an audacious plan to city council.
Under the proposal, the investors would build a $50 million, 200-suite hotel with a rooftop restaurant on the city-owned vacant site.
Nanaimo Economic Development Corp. (NEDC) CEO Sasha Angus said that the NEDC has been working with the travel company for the past four months on the plan.
Vancouver-based lawyer Perry Ehrlich presented the bid to council on behalf of SSS International Travel Co. Ltd., which is a B.C. subsidiary of Suzhou Youth Travel Services Co. Ltd.
Suzhou Youth Travel Services is ranked 13th in the top 100 Chinese travel-service companies. It’s also ranked first in the same category in Jiangsu province, where it’s headquartered. According to Ehrlich, the company posted $175 million in gross revenue in 2012 and moves 41,000 tourists from China across the world each day. He said the travel firm now wants to add Nanaimo as a destination on its routes.
A contingent of businesspeople was in the audience during Ehrlich’s presentation, including Junhao Chen and Xiaoan Dong of SSS International.
The company has also set aside $9 million as a deposit in a show of good faith to ensure the funds are available. This includes purchasing the land at an appraised value of $565,000 and leasing up to 200 parking spaces from the conference centre.
“You want to know that this is not a pipe dream. It’s not,” said Ehrlich, adding that not only does his client want to promote the Vancouver Island Conference Centre, but has expressed interest in partnering with the city to run the facility.
Nanaimo Mayor John Ruttan says the new proposal goes a long way to address concerns about how much a potential hotel project would cost city ratepayers, since the developers are not requesting an operating subsidy.
Ruttan said the company, one of the largest youth tourism operators in China, could fill the new facility with its own customers from overseas.
City councillors appeared receptive to the presentation, and Angus said he was optimistic about getting a deal done. He said there will be ongoing discussions with city staff, and expects a draft purchase and sale agreement will be brought forward for consideration.
Bilingual commercial real estate agent Sandy Liu of Coast Realty Group in Nanaimo is not at all surprised with the proposal for a new hotel from Chinese investors.
“I have been dealing with a lot more Asian buyers recently,” said Yiu, adding that “there is a lot of tourist dollars from China coming onto the Island.”
In fact, investment interest in lodging properties is so strong, Liu recently listed a 35-unit Nanaimo motel and restaurant that she owns herself.
“I think Chinese people are just starting to discover Nanaimo and the Island,” she said.
Housing sales
Meanwhile, there are also hopeful signs in the housing market, according to the Vancouver Island Real Estate Board.
Real estate selling prices rose 2 per cent year-over-year, compared with the same month last year, based on 122 units sold last month. That itself was a 12 per cent jump in sales over the 109 properties sold last May.
The news may be promising for Nanaimo, the largest urban area in the region, and for the region as a whole, but the outlook isn’t the same across the entire Island north of the capital region.
The average home sold for slightly more than $357,000 in Nanaimo in May – a $24,000 improvement over April and $7,000 more than a year ago.
Nanaimo and Port Alberni were alone in that department. Every other market in the region saw average selling prices decline.
They fell 6 per cent in Parksville to $405,000, and 2 per cent in the Comox Valley.
But the number of sales increased in every market except the Cowichan Valley and Comox Valley, where sales fell 16 and 1 per cent, respectively.
“This is the second month, seasonally adjusted, that we see a rising trend in consumer demand,” said Cameron Muir, BC Real Estate Association chief economist. “I think we’re about to embark on another upswing.”
from Western Investor July 2013