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.

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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.

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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 !!!

SOVEREIGN Tower - BOSA has a tiger by the tail, but deserves praise for imposing rules to avoid an ugly feeding frenzy

What a difference just one week and ten kilometers can make in the high-stakes world of condo marketing in Greater Vancouver! Down at Vancouver's False Creek, veteran salesman Bob Rennie is struggling to help the City of Vancouver recoup some cash from the ashes of the ill-starred Olympic Village project. (more below) The trick is to raise price levels, because even with a promised 30% price break on some units, there is still substantial risk. The Millennium Water project will be a political football and lawyer bait for years to come. In contrast to Rennie's agony witness BOSA's euphoria!

In Burnaby Metrotown, the good folks at BOSA Properties are scrambling to get into shark cages, lest they be eaten in the feeding frenzy beginning at their tower site at 4509 Kingsway.

We were alerted just a week ago that BOSA would have tents, heating and and porta-potties on site by 9 a.m. Friday, a full 25 hours before the Sales Centre was scheduled to open - i.e. Saturday at 10a.m. Suddenly matters threatened to get out of hand. Late on Tuesday night, after the final SOVEREIGN preview concluded, over 125 Buyers refused to go home. BOSA staff must be praised for being fast on their feet and putting together a solution. The details are in a Realtor Advisory which went out just after 11 A.M. today:

Bravo ! These measures will certainly deal with queue-jumpers, but it remains to be seen how staff will calm the agitated majority who will take a number but have no chance at all of securing an apartment. My suggestion is that BOSA give each disappointed client a hearty handshake and remind them that Intracorp's METROPLACE will begin marketing in about six weeks time. In addition there are several other mid-size towers coming to the Metrotown corridor. A Chinese language forum I consulted today reported that one less than generous Chinese realtor was offering placeholders $1,000 for three days of work. That is three 24 hour days! Now he can keep his cash in his pocket.

A knot of prospective Buyers wait to enter the SOVEREIGN Tower sales centre on Kingsway. That was before noon on Feb. 10. The final Preview concluded last night (Feb. 15), and more than a 125 Buyers refused to go home. They elected to camp out over night and BOSA staff had to scramble to bring in tents, heating and toilets to keep them comfortable.

I should mention the offer of 1.9% Financing, which has figured prominently in BOSA marketing for SOVEREIGN Tower. For me at least, it was a very attractive proposition, especially in light of the Bank of Canada's firm decision to drive up the rates, over the next three years. Well, in brief, BOSA is offering 1.9 % on the first 80 units sold - and guarantee the rate for 36 months. If you have your own lender, the Buyer could opt for 5% on their purchase deposit. My sense of the situation is that the clientele, almost exclusively Mainland Chinese, are in no need of a break on financing. Pardon my enthusiasm, but that is the glory of this landmark project. The SOVEREIGN tower is a magnet for wealthy Chinese, and will pull in a container load of foreign dollars. Enough to fill the pay-packets of the local building trades and later create jobs in the hotel and the retail stores. The down-side of course is that SOVEREIGN is contributing to raising the ceiling on condo prices in Burnaby, although at 4509 Kingsway "market value" may settle out a tad lower in 2014, when short-term investors begin flipping units.

BOB RENNIE BLOWS A FUSE
If you missed the Vancouver SUN report on the Olympic Village pre-sale, which was conducted in secret over the weekend, you owe it to yourself to have a look. It's not often that pros like Rennie blow a fuse when talking to the press, but then it's also a rare day when condo Sellers force Buyers to sign confidentiality agreements. Mr. Rennie is now on the warpath because one of his confidential Buyer's, whom he termed "some A-hole", violated the agreement before the ink was dry. I don't know how long the Vancouver SUN will keep the article available online, (it's already buried by today's news) so I copied it to file. Jeff Lee's story, Olympic Village condos to go to market - again is worth your time.

CLOVERDALE, where antiques are out, condos in

Yes, Burnaby Metrotown is red hot, but property developers are beavering away in all eight corners of the GVRD. Maybe you read in the SUN recently that the famous Cloverdale Antiques Mall was forced to shut down. Customers were still thronging its many shops, but most of the stalls were run by retirees who could not swallow higher rents. The owner of the property was bent on jacking up rates - allegedly the increase was a near doubling, and the lease holder found himself in an untenable position. I must admit that I do most of my own antique and collectibles shopping in Bellingham, but still, Cloverdale has been a weekend mecca for so many families that it's sad to see an institution disappear.
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A pair of brothers enjoy one of the kiddie rides at the Cloverdale Agricultural Fair. It was August of 1966. These boys are now men in their fifties. Perhaps they are "property millionaires" by now, if they had the foresight to invest in the Canadian Dream of home ownership. If they have not fared as well as others, they may resent the reality of rising costs and surging property values in our region.

The demolition of Cloverdale Mall (a separate location from the Antiques Mall) began on January 8, 2011. The building was a "leaker" in every sense, and looked its age. After SAFEWAY pulled out a few years ago all the other tenants fled, one by one. Cloverdale residents are now served by Surrey mega-malls. When this tired out property is finally cleared, construction begins on Cloverdale West Village, a wood frame complex with above retail condos. The term "Mall" is now so frequently shunned, it seems at risk of becoming another "antique". What is this mania for labeling every cluster of shops and homes a "village"? Will it end? [The Cloverdale Reporter has a story on the fate of the derelict mall: SLIDE SHOW]

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SOVEREIGN TOWER - Metrotown, Burnaby - Bosa unveils its landmark project at Realtor Event - February 8, 2011

We had the pleasure of attending the unveiling of Bosa Properties landmark project tonight in Metrotown. The SOVEREIGN, soon to be constructed at 4509 Kingsway, can be expected to dominate the Burnaby skyline and offer a prestigious residence for those looking for an alternative to Vancouver's over-regulated downtown core. The first true skyscraper in Burnaby, the SOVEREIGN will mate an ultramodern hotel (167 rooms) to 25 floors of premium condos. Bosa Sales Manager, Jean Openshaw is to be congratulated for hosting an highly effective event. The Realtors I spoke with on the floor are convinced that the residential portion of the tower will sell out in a single day. Bosa is to be further congratulated for the open and fair manner in which this project is being marketed. There will be a total of three "opens," (no pre-selling) and no Offers will be accepted until February 19th. In addition, only one apartment will be sold per client. Offers will be received on a first-come, first-served basis, and security will be on hand to ensure that aggressive Buyers do not rush the door.

The first Realtor-Open for SOVEREIGN, 4509 Kingsway, was held on February 8. These door crashers are evidence of the heightened interest in this landmark project.

Ms. Jean Openshaw is the Sales Manager for the SOVEREIGN tower, at 4509 Kingsway. She has been very open and helpful, assisting in my preparation of two other articles on SOVEREIGN for the Runagates Club blog. I do thank her for that kindness.

The scale model for the SOVEREIGN tower seemed to draw even more interest than the display suites. At 511.4 feet it will be Burnaby's first true skyscraper. I was told that Bosa plans to begin excavation in three months time.

I had the pleasure of chatting with Daryll Simpson, one of the dozen Sales staff Bosa had on hand this evening. Mr. Simpson filled me in on a subject which has been of concern. Could Bosa find a hotel chain of sufficient credibility to match this prestigious project? It could...in New York. Bosa Properties is getting into the hotel business! The Burnaby-based developer will maintain ownership of the new hotel, and is already busy designing its 167 rooms. The name of the chain will be announced in two weeks time. The franchise agreement and further details are yet go under the pen. Mr. Simpson says that Burnaby residents will be pleasantly surprised when they learn which brand-name is coming to town.

Another of my concerns was how the developer and City of Burnaby planners would handle the incredibly high volume of traffic in and out of the SOVEREIGN tower. Simpson had the answer, which is confirmed by my photographs of the scale model, at ground level. All traffic flow around the building will be clockwise - all right turns. Vehicle access to Hotel parking and Retail parking will be confined to a single ramp on Willingdon Avenue.

In keeping with the landmark status of the SOVEREIGN, the tower designer- Chris Dikeakos Architects Inc, have conceived a very dramatic residential entrance coming off of Hazel Street. (corrected) The very wide and open ramp shows up well in these photos of the scale model.

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The SOVEREIGN of Metrotown - getting dressed for his debut

The promised floor plans for the SOVEREIGN tower are not yet in, but the website has a nifty widget that allows us to admire the view from four different elevations. BOSA is promising a February 2011 launch but as of yesterday there is no activity on site - although a sales centre will appear soon. I admire the design of the building but having recently watched the superb documentary film IN THE SHADOW OF THE MOON, my mind keeps juxtaposing the SOVEREIGN tower with the famous gantry and support deck which launched the Saturn V rockets for the Apollo moon landings.

The views from each unit on the upper floors of the SOVEREIGN tower will defy superlatives. Shown here is the line of sight toward downtown Vancouver and the north mountain wall.

In the absence of hard information on the SOVEREIGN tower, speculation is rife among Realtors. Chinese New Year is fast approaching and billions of freshly landed dollars are up for grabs, but don't discount the legion of locals who are desperate to sink their savings into something solid. The only SOVEREIGN secret anyone cares about is how steep the prices will be for individual units. They will sell at any price, but the risk is that Buyers saddled with extortionate prices, will be denied any viable resale potential.

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Directly across the street from the tower property is the infamous "Crystal Mall". Why infamous? For a number of reasons including the fact that it's "THE CRYSTAL", not a mall but a marketplace. I well recall the intense speculative interest in the project in the late 1990s. All manner of promises were made - there would be retail anchors and a multi-screen cinema, etc. Never happened! (The major components did open in 2000 but many people averted their eyes as they drove by, for the longest time. It was painful.)

We had lined up a number of buyers for retail and residential units in THE CRYSTAL but whole blocks were sold out (unethically in my opinion) by insiders to pre-assembled buyers from Asia. The "Sold For" prices at the time were ludicrously high because the project was never exposed to the Marketplace. For several years the hapless suckers twisted and squirmed trying to unload bad investments. The complex itself looked sick for the longest time, but fortunately the Goddess of Property sometimes shines on the least of us. Those who didn't dump an impulse purchase, in time saw prices exceed what they had paid for a unit. Today the Crystal thrives and is a happy place to shop or eat.

I have the highest hopes for THE SOVEREIGN, but again everything depends on how the marketing campaign is conducted. Burnaby Metrotown doesn't need another fiasco like THE CRYSTAL. Buyers are being told that a "famous" hotel chain is going into the building and that "retail giants" will take the floors on the ground level. Unfortunately the residential component will be 100% SOLD OUT before any announcements are made for the lower portions of the project. We just have to trust that all will turn out to everyone's satisfaction.