Condo owners in Metrotown shouldn’t rush to sell despite high property assessments and a recent mass rezoning of the neighbourhood.
That’s the advice of Tony Gioventu, the executive director of the Condominium Home Owners Association of B.C., who said a number of association members from Metrotown have been approached by developers.
“There is economic pressure in the sense that, if you’re an attractive piece of property with an attractive location, with a higher density bump, somebody’s going to come along and at some point offer you some money you can’t refuse,” he told the NOW.
Gioventu said stratas need to “stick together” and sell as a whole, rather than individually. He said owners are likely to get at least 50 per cent more for the value of their property if they sell as a collective. (In B.C., strata corporations can terminate or “wind up” with an 80 per cent vote of all owners. The threshold was previously 100 per cent.)
“Individually, they’re going to get picked off one at a time for whatever people are willing to sell for,” he said.
Gioventu noted it’s important for stratas to find an exclusive commercial broker, as well as good legal counsel.
“The broker can’t be representing developers or other parties. If the agreement is not exclusive, go to someone else. That’s happening a lot. It’s happening much more frequently than anybody realizes,” said Gioventu.
“You need to make sure your broker’s agreement and your agreements for sale with your developer are very well reviewed by your legal representative who is experienced with dealing with this,” he added. “I’ve come across a few lawyers who are dabbling in this, and they’re not doing a great job. Find someone who has been doing liquidations and who knows the ins and outs of this process.”
There’s no rush either, he said.
“Sure, market values and property conditions will change, but when we have a high-density area, you’re going to have premium property. Take your time.”
Last July, Burnaby city council passed the controversial Metrotown Downtown Plan.
The plan – an update to the 1977 version – aims to create Burnaby’s first-ever downtown and has changed the land-use framework to allow for more density.
Housing critics have argued replacing lowrise walk-ups with towers will displace thousands of people who can’t afford to rent in the new buildings.
The city has maintained it’s planning for future growth and that many of the lowrises are nearing their end of life.
Rick McGowan, a strong opponent of the downtown plan, owns two condos in Metrotown.
He uses one as his primary residence and rents the other one.
Right after the plan was adopted, McGowan said every owner in his rental building got mail from developer CBRE, urging them to talk to the strata about selling.
“Prior to that, you got things from Realtors saying they’ll sell your property really quickly. So many Realtors are even interested in the property themselves that they’ll tell you, ‘Oh, I’ll buy your property if it doesn’t sell,’” said McGowan.
The Burnaby resident is fearful many Metrotown owners are unaware of their property’s value and how the downtown plan has changed things.
“Every time I bring it up to someone, they’re either not aware of it or they don’t fully comprehend what they’re entitled to,” he said.
According to Gioventu, one of the key questions condo owners need to ask themselves before voting to wind up is whether it’s enough money – enough money to relocate in the area or move elsewhere.
“That’s one of the questions that people in strata communities are not asking because they’re getting all these sale pitches,” he said.
When asked about how many stratas have sold in Metrotown in the last few years, Gioventu couldn’t say.
He said the association has that information on file but it’s only used for internal purposes.
He said there’s been “a little bit of a plateau” in Metrotown.
“There certainly will be more that will sell, but really what it comes down to is – what is the right amount of money for a community to consider (the sale)? There have been a lot who have said, ‘No, the money’s not good enough. The terms aren’t good enough. We’re not interested right now.’”
The more “insidious side” of strata real estate, noted Gioventu, is when a developer comes in, buys the majority of the units and starts pushing for a sale.
This is where the courts come in. After passing a resolution to terminate, a strata corporation must apply to the B.C. Supreme Court for an order confirming termination.
“(The) court process is absolutely essential to make sure maximum value for the benefit of this community to vote on it has actually been reached,” he said.
The year 2017 was a record-breaking one for construction in Burnaby. The city handed out $1.05 billion worth of building permits, an increase from the $819 million in 2016. The second-best year was in 2015, at $879 million.
Of the 1,649 permits, 54 per cent went toward multi-family construction, followed by single-family construction and commercial construction.
According to the Goodman Report, 18 apartment buildings were sold last year in Burnaby (a total of $397 million). Most of them were in Metrotown, with 16 of them going to developers of condo highrises. The average price of a unit in 2017 was $551,000, a 66 per cent increase compared to $332,000 in 2016.