Pressure Ploy or 'marketing'?
I started off the year telling you about James Schouw, Chairman of James Schouw and Associates. Schouw specializes in ultra high-end custom developments.
Schouw is keen to promote the old supply and demand argument about Vancouver. To wit: people are constantly moving here, no one is leaving, scare land results in a property shortage... ergo buy now or be priced out forever.
Central to the argument is the wealthy Asian component. They have money, it's nice here and they can afford it even if we can't... end result: real estate is going up, up, up.
Lest you think that last dynamic is self developing, you might find this of interest.
XinhuaNews is a Chinese news organization.
Recently, infamous local realtor Bob Rennie hooked up with XinhuaNews to do a little local promoting. The result was this little gem in it's english online site.
Rennie is keen to leverage the wealthy Asian angle and work the exposure of the Olympics to ensure the Asian influx to Vancouver intensifies.
As part of his campaign, Rennie seeks to separate Vancouver from other Olympic cities and tells XinhuaNews in an exclusive interview that:
- "When people watch the Winter Olympics, I don't think they say 'I want to buy a house in Turin' or 'I want to work from Lillehammer'." (referring to the Italy and Norway cities, respectively, that hosted the Games in 2006 and 1994). "But they do for Vancouver. This is one of the most amazing cities on the planet to work from."
Rennie strives to assure Asians that now is the time to buy. He discounts an Olympic hangover and moves to a full court press to convince them that there is a shortage of rental housing in the City.
- "Vancouver is going to face a shortfall of apartment units following its hosting of next month's Winter Olympics Games... If there was ever going to be an Olympic overhang we took care of it in 2008-2009 by canceling buildings. We are now coming into a shortfall where banks are very conservative, Canadian banking practices are always very conservative, and developers are just coming off the sidelines."
Rennie hastens to predict that by the first quarter of 2011 the shortfall in apartment units will be noticeable in downtown Vancouver as there were very few major sites left to develop. Also, with a lot of "money on the sidelines" earning low interest, coupled with a low supply of available properties, extreme pressure will be put on the real estate market.
Vancouver is then portrayed as a virtual licence to print money.
- "The unique thing about Vancouver is nobody builds rental towers (anymore). For the offshore investor properties are easy to rent out as there is no rental stock."
So there you have it. If Vancouver is being too unaffordable for it's current residents to afford, what does the ambitious realtor do?
He finds customers in other parts of the world who will keep these values rising.
As Rennie says,
- "With the amount of money being made in China, and with the acceptance of China to Vancouver, we have to be in the top two places on the planet for China to look at, to move money to. We see it happening right now, it's happening a lot. It used to just happen in the luxury market, now it's happening in all the market."
Rennie even plays the 'buy now' card with the Asians as he tells them:
- "That's the danger of the Olympics. As the world sees [the Games on TV], they go from 'I want to spend two weeks in Vancouver', to ' spending two to five months in Vancouver', to 'I want to send my children to school here'."
So there you go, China.
Buy real estate in Vancouver now... or be priced out forever (what the hell, it worked on most of us who actually lived here, why not the Asians).
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