Friday, February 25, 2011

THE SOVEREIGN - Chinese Money fuels the launch of Burnaby's first skyscaper

Where were you on June 20, 2010? That was day NEWS 1130 flashed the announcement that the ambitious RIVER GREEN development in Richmond had SOLD OUT in a single weekend. Imagine the scale of that accomplishment - pulling in $145 MILLION DOLLARS and breaking a Richmond, B.C. sales record, in a weekend. I remember driving out to the site, after the hoopla had died, and walking across the abandoned parking lot of the Olympic Speed Skating Oval. It looked like lunch-break on the sound stage of a dystopian Science Fiction movie. The Oval is still a sad 'white elephant', but for a few years (I give it 30 max) the glass giant will graze contentedly among some of the wealthiest people in Canada.

A TVNews clip on YOU TUBE. The June 2010 video reports that the RIVER GREEN project in Richmond achieved a monster Sales Record. The clip has had only 1,902 hits in eight months. Surprising, as the Internet is now the primary source of Real Estate news and information in our region. The reference to "ASIAN HOT MONEY" is kind of amusing. FINTRAC knows it as Chinese "Black Money" and certainly RIVER GREEN attracted plenty of it.
THE SOVEREIGN - a post mortem
Metrotown's first skyscraper project took in $98 million, setting a single-day sales record for Burnaby
I was, and still remain, impressed with how the staff at Bosa Properties handled the sale of the SOVEREIGN Tower on February 19th. This is not a paid endorsement. Yes, I ate the free food at the first night Realtor Preview, but I was there as a prospective purchaser. (In the end, I passed on buying a condo at 4509 Kingsway, but that decision is another matter.) In fairness to the helpful comments submitted by readers of this Blog, I think we need to bring some perspective to the issue of how tall buildings are touted in our part of the world.
I began following SOVEREIGN two months before the Sale event, and BOSA staff were always frank in answering my queries. If you reread my second article on SOVEREIGN, in which I raised the issue of the "infamous" marketing of The Crystal Mall one decade ago, you will see that I was broaching the possibility that local Buyers would get the shaft, as they often do, when BIG offshore money buys condos in bulk. When super-scale projects are hustled offshore it is not merely that first-time Buyers get frozen out, but rather that the "lucky" winners, those often ill-informed, pay far too much. I was selling real estate when the residential and retail units at The Crystal were being flogged to the gullible. As a result of how the developer marketed CRYSTAL components, many Buyers were burned and the Mall remained a stagnant embarrassment during its first few years of operation. The only interesting thing that went on at the Crystal residences were the comings and goings of fugitive Chinese billionaire Lai Changxing.
Daryl Simpson, a senior staffer at BOSA PROPERTIES, steps out into the steady Burnaby rain to help erect a tent. BOSA did it's best to stay ahead of a very fluid situation, as the excitement for THE SOVEREIGN project spread over Vancouver.
Many of the readers of this Blog were potential Buyers at the SOVEREIGN event. Two of them were eyewitness to events and submitted helpful comments. The lineups did cause a few to lose their cool, and there were a few bristling encounters with sales staff. The fact that BOSA staff were overwhelmed by the rush of Buyers, is obvious - after installing a prefab Sales Centre on site, the demand became so great that they brought in a tent and heaters to handle the crowd on February 19. Sales Manager Jean Openshaw told me... "we didn't have any idea to expect this kind of response when we started marketing Sovereign. ...We had not even considered that the tower would sell out until we saw the response on our first preview night." I believe her.
More to the point - I detect no bulk sales of units at SOVEREIGN. If there were "insider" sales, they were minor in scale. Too often in Greater Vancouver this is not the case. I can think of several projects where hopeful Buyers never had a chance. Instances in which hard working realtors stood in line, waiting patiently with their pre-registered clients, only to learn that everything was gone. It can get worse when, not long after, large blocks of units are put on the market as ASSIGNS, and many of those assigns are controlled by Sales Persons employed by the project developer.
The reason why so many were willing to line up for so long at SOVEREIGN is obvious. If local market conditions persist, apartment units at 4509 Kingsway will 'flip' at a handsome profit in 2014. The Buyers I met and mixed with are almost exclusively young and well educated Chinese, who are looking for opportunities to make money. A few will opt to take up residence in THE SOVEREIGN, but not many. In fact, when a Strata Council is organized for the building in 2014, it will be nearly impossible to achieve an Owner's quorum at monthly meetings.
I do care that all residents of Burnaby benefit from several large scale projects which are coming to fruition after years of co-operative planning with City Hall. They will change the skyline and boost the mix of goods and services available in Metrotown. It's equally important that newly arrived Chinese Buyers are well informed before they invest in our city, and that some hold their investments for a few years beyond completion of each tower. We have achieved 'proof of concept', that a true residential skyscraper is not only feasible in Metrotown, but that investors are demanding more of them. The Intracorp Management Team, which is bringing a 46 floor METROPLACE Tower to market, is just as forthcoming as BOSA staff, and I will share their comments in my next Blog.
An artist's rendering of the grand residential entrance to the 45 floor SOVEREIGN Tower, soon to begin construction at 4509 Kingsway, Burnaby. Delivery of entry keys to the individual apartment Buyers is expected early in 2014.
And finally, a Bosa Blast from Past... nobody I know can afford to buy dirt in Burnaby in 2011. This is what Bosa offered premium building lots for back in 1979 !!!

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