Since it was put in place on August 2nd, Metro Vancouver’s new foreign-buyer tax has received mixed reactions — the BC government has been hit with a class-action lawsuit because of it, but it’s also been praised for reducing foreign buyer activity in the area.
Part of the discussion has centred on the impact it could have on other housing markets. Some have speculated that it could drive foreign buyers to other nearby cities, including Calgary and Seattle, while others have discussed the possibility that it will prompt Toronto to introduce a similar tax. Now, RE/MAX has suggested that it could increase foreign investment in commercial real estate in Metro Vancouver.
In its latest Commercial Investor Report, released September 28th, RE/MAX explains that Metro Vancouver’s commercial real estate market is already very active. In the first six months of 2016, commercial real estate sales in the Lower Mainland, a region that includes Metro Vancouver, were valued at $7.135 billion, a 94 per cent increase from the previous year. According to Elton Ash, regional executive vice president of RE/MAX of Western Canada, most of those sales were to local investors. However, the landscape could change now that the new tax has arrived.
“Over the next several months, we may start to see more interest from foreign investors. As a result of the recent foreign buyer tax on residential properties, buyers who are interested in investing in Greater Vancouver may start to shift their focus to commercial properties,” he explains in a press release accompanying the report.
But while Metro Vancouver’s commercial real estate market may be poised to get hotter, the stats are a little tamer in Western Canada’s other major cities. Though demand continued to outpace supply in Winnipeg during the first six months of 2016, the downturn in the commodities sector dampened buying activity in Saskatoon and Regina. Low oil prices in particular hurt Calgary and Edmonton, which respectively saw commercial real estate sales declines of 12 and 8 per cent year-over-year.
Moving forward, RE/MAX expects more of the same in those cities, with a full recovery coming to Alberta once oil prices improve.