The multi-millionaire row in Vancouver on Alberni Street is picking up steam after a lull in the luxury West End market in recent years.
Since 2018, the West End apartment market has slowed, especially on the luxury and ultra-luxury side. But as the world slowly returns to normal, and immigration and tourism with it, the inner-city luxury market is poised to return to business, said developer Kevin Cheung, chief executive officer of Landa Global Properties.
The company has invested heavily in Vancouver’s Alberni Street electricity corridor with three projects, including a pair of 43 and 48-storey passive house towers at 1468 Alberni St. An entire city block of apartments and office buildings will give way to the heritage-style towers designed by Robert AM Stern. Architects from New York, with Vancouver MCM Partnership. His 1650 Alberni Tower, in collaboration with Asia Standard Americas, is being designed by SOM, the architects behind the One World Trade Center in New York.
When interviewed a year ago, Mr. Cheung said developers who had to launch projects put them on hold. He described the mood as one in which developers waited cautiously, wondering who would have the courage to launch first. This year, the mood is a little different, which is why he is one of the first to launch presales for his 1818 Alberni project, which was on hold for a while.
“In effect, with the return of immigration and tourism and people coming to the center, we wanted to market our project,” said Mr Cheung. “We are confident in the market, but it is not yet a proven market. We are not fully recovering where everything is coming back and there are a lot of product launches. We’re not there yet. But we have so much in the pipeline in the Alberni corridor, so we need to get started.”
Mr Cheung said other developers who have not launched their marketing efforts yet are in a waiting pattern, waiting for buyers to return. Bosa Properties’ tower from 1515, designed by German architect Ole Scheeren and part of a global trend for ‘jenga’-style high-rise buildings, was launched last fall. It came just after the launch of Jim Pattison Developments’ 2 Burrard Place.
As for other luxury projects in the West End, Mr Cheung says, “they have not launched yet, but I know they are in the planning stage. During our market meetings [marketer] Bob Rennie presented some figures of all projects that can start in the coming year. There are a lot of players in the same boat waiting to go.”
Two weeks ago, Mr. Cheung with previews for 1818, a 21-storey 54-unit boutique tower designed by Rafii Architects. It is one of the shorter buildings as it is near Stanley Park, and it caters to the kind of buyer who appreciates an exclusive view and a Rolls-Royce car service. The price is $2,300 to $2,400 per square foot, and last week, Mr. Cheung had already sold about 18 units in the building. Those prices are conservative compared to pre-pandemic, he said.
Initially, he planned to build two units per floor, but due to the pandemic downturn, he reconfigured the floorboards with two smaller two-bedroom and one three-bedroom units occupying half a floor. To his surprise, the three-bedroom sold the fastest, with starting prices of $3.8 million. The two bedrooms start at $1.8 million.
“For a downtown project, 2000 square meters, half a floor slab, is very rare,” he explains. “I don’t think you’ll get this offer again on Alberni Street, except in penthouses. It’s very unique to have a stack of large three bedrooms overlooking the water.”
Alberni Street has had upscale shops for years, but housing-wise it is now a newly emerging multi-millionaire row. It becomes the show pony for elaborate architecture and equally decadent lifestyles. Mr Cheung says the transformation was largely a result of the city’s West End Community Plan, which covers the area of the downtown peninsula between West Georgia, Burrard, Stanley Park and English Bay. Andy Yan, director of Simon Fraser University’s City Program, said the median West End household income is just $51,000.
“I think in the West End Community Plan they put all the highest densities on Alberni Street and some sections that don’t have social housing requirements. The city labeled the street as a very luxurious street,” said Mr Cheung.
“You’ve probably heard of comparisons to Rodeo Drive, where Alberni starts out with luxury brand stores and a small segment of residential properties and ends with Stanley Park, so it’s a very limited supply. With the heights and actually with the building policy, we had to show leadership in design and sustainability, and it led to all these ‘starchitects’. That’s how it came about.”
As for the buyers, Mr Cheung said he knew nothing about the demographics but believed they were end users and not investors.
However, the upturn in the luxury market has also coincided with an increase in immigration and tourism, suggesting that foreign wealth is driving the market.
Condo marketer George Wong, director of Magnum Projects, said the downtown market slowed in 2018 and continued to stagnate for the next several years, with a bit of a rebound in the fall of 2020. By 2021, developers began launching projects that had been waiting on the sidelines. The luxury market is not quite where it was, but it is expected to gain momentum.
Mr. Wong launched Three Harbor Green over a decade ago, and the penthouse then sold for $11 million now stands for $49 million. However, the market for that type of home is extremely niche.
“That’s for the super, super, super rich… there are very few people on this planet who can afford that, and those kinds of people are people who don’t even live here full time. It’s a second home.”
Last summer, he released 2 Burrards for $1,900 per square foot, and that project did “extremely well,” says Mr. wong. There are degrees of luxury in the West End, he says.
“The luxury condo would be in the $2 to $5 million price range, and high luxury would be in the $5 to $12 million price range. I’d say the luxury price range under $5 million has done quite well, but it’s not back to where it was in 2017. The luxury market has yet to find its way back, as we miss the super-rich. And COVID had held back much of international travel. But once that opens up again… Canada is so sought after for living purposes and for educational purposes for children, just for security purposes.
Few residents can afford such products, he says.
“Even our high-luxury market product is cheap [for international buyers]†
To lure investors to 2 Burrard, they lowered the prices and made the suites smaller.
“There was a lot of concern about how people would react to the center, so at Burrard 2 we had 239 homes and we wanted to make sure we had a good business card for the budget and appetite of investors.
“Investors had stayed away from the center for a while. So we were very aware and really worried about it, and we weren’t sure if they were going to come back. … We wanted to be more conservative to test the market, so we also made the suites smaller to attract the investor.”
As a result, more than 65 percent of the project was sold to investors.
“That’s quite healthy. We were very happy with how it turned out.”
Once China comes out of lockdown and those buyers return, the inner-city market should pick up even more, he said. Buyers from all over the world buy in Vancouver, but China is the main global buyer: wealthy buyers with available capital.
And foreign wealth is driving the super-high-end towers entering downtown, Mr. wong. That has been the phenomenon for about 15 years. Even though Chinese cities are in lockdown, those buyers are still finding a way to buy property in Vancouver. And for those very wealthy buyers, many of the homes are secondary properties, not primary residences, he says.
“A lot of people from China can’t travel, but once that eases, we’re going to see a big influx.
“People are finding ways to send money here. Living in China hasn’t always been an example of liveability, has it? And Vancouver is very attractive.
“Some take their money out and buy without coming here.”
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