Legal pot spurs demand for commercial real estate, especially in Alberta where it's 'absolute insanity' - Canadanewsmedia
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Legal pot spurs demand for commercial real estate, especially in Alberta where it's 'absolute insanity'

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TORONTO — Canada’s impending legalization of marijuana is spurring demand for commercial real estate, particularly for retail shops in Alberta, where the government is selecting private operators to conduct over-the-counter sales, industry players said Tuesday.

Real estate consultancy JLL said its phone has been “ringing off the hook” as cannabis companies look to secure space to cultivate the plant and seek retail space to sell the final product.

Commercial real estate prices haven’t “seen a major bump yet,” but that is expected to change after legalization, research manager Gaurav Mathur said during a panel discussion at an industry conference in Toronto.

“It’s on an asset-by-asset basis, not prevalent throughout the industry just yet,” he said at the Land & Development conference on Tuesday.

Mathur also expects “offshoots” of the domestic cannabis industry, such as supply and accessories shops, to drive demand for commercial real estate going forward.

Canada is preparing for the legalization of cannabis for recreational use later this year, but has left it to the provincial or territorial governments to decide how to distribute the drug. Provinces such as Ontario, Quebec, Nova Scotia and Prince Edward Island have tasked their provincial liquor boards to handle retail sales of marijuana.

But other provinces such as Saskatchewan and Newfoundland and Labrador have said the private sector will handle retail sales.

Alberta, however, is an attractive province for cannabis retail as the Alberta Liquor and Gaming Commission has not put a cap on the number of licenses that will be issued, but stipulates that no one person or entity can hold more than 15 per cent. The province expects to issue roughly 250 licenses to private operators in the first year.

Saskatchewan, for comparison, only plans to issue 51 retail cannabis permits in 32 communities, and qualified applicants will be put into a random selection process, similar to a lottery. Newfoundland and Labrador says its most recent round of applications for potential cannabis retailers was for up to 41 licenses.

Canopy Growth’s vice president of stakeholder and government relations Jeff Ryan told the panel that the company recently shifted focus towards retail as it aims to set up shops in provinces such as Alberta, Newfoundland and Labrador and Saskatchewan.

Ryan said in an interview after the discussion that the licensed producer has encountered stiff competition for retail space in urban centres in Alberta.

The competition for retail space in Alberta is “absolute insanity,” said Mark Goliger, the chief executive officer of National Access Cannabis Corp. which has signed an agreement with coffee chain Second Cup to convert some of its coffee shops into weed dispensaries.

In addition to NAC’s existing network of medical clinics and pharmacies, the company is aiming to open recreational cannabis dispensaries in provinces where legal under its newly launched Meta Cannabis Supply Co. brand.

Alberta’s cannabis retail licensing system has big players and mom and pop shops alike vying for prime spots and submitting applications, he said.

“Everybody is trying to get retail locations, and that of course is driving up the price and driving up the terms,” he said in an interview.

He said NAC has encountered bidding wars, with other parties “spiking the market with overly aggressive terms” such as double the asking price per square foot and very aggressive termination clauses.

“They’re just going in there and throwing lots of money and being aggressive with landlords, and it’s creating an out of balance scenario,” Goliger added.

However, some landlords are still hesitant about leasing to cannabis companies amid lingering stigma.

The law firm handling work on leases for Ontario’s pot retail shops has seen pushback from landlords.

“That’s in Ontario where we’re having a government laid-out store,” said Lisa Borsook, executive partner of law firm WeirFoulds LLP.

“And yet it’s been my experience that landlords, nonetheless, have qualms about having cannabis in their centres.”

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The best time to carry out your real estate search

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Although the real estate market is busy throughout the year, it’s important to decide when you’re going to search for, sell, or rent out a property. You’ll save time, energy, and in some cases, even money!

 

You’re looking for a home

If you’re looking to buy, it seems that winter is surprisingly the ideal time to purchase your new home: There are fewer potential buyers on the market, so you hold all the cards to negotiate prices.

Keep in mind that property owners usually work during the day, so they will likely post a real estate ad in the evening after getting home from work. On the other hand, real estate agencies are mainly open during the day, so they are likely to post an ad at any time.

A few words of advice for your search: Note that the available housing in the Grand Duchy is being snatched up faster and faster! Finding a home isn’t easy: Focus on your search for 2 or 3 consecutive weeks by making yourself as available as possible to answer the phone or go to an appointment so that you beat everyone else to the punch. You should also consider setting up email alerts so you will be notified as soon as a new real estate ad is posted!

 

You’re a property owner

Keep in mind, a real estate ad that’s been online for too long does not inspire confidence. Instead, it will make users suspicious, surely wondering about your home’s hidden flaws.

People generally like to schedule their move for over summer vacation because it’s more practical. As an owner, therefore, it is in your best interest to start advertising your property for sale or rent in the spring, particularly during the month of May. You’ll then have a greater chance of getting a better price since the demand is higher.

For owners looking to rent out their property, keep in mind that the type of property is important. Of course, properties of a more modest size, from studios to two-bedroom units, are more likely to be sought out by students and are therefore dependent on the school schedule: Searches will take place from June to September, taking procrastinators into account. For apartments and houses with more than two bedrooms, your property will be sought out during the spring. However, more and more students in the Grand Duchy are seeking housing with roommates, thus requiring larger homes, so your property will potentially be dependent on the school schedule as well if you are accepting this type of lease.

Nevertheless, don’t forget that you have no control over falling in real estate love, so it can happen at any time, whether it’s the ideal time or not!

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CRA finds nearly $600 million in unpaid taxes in BC and Ontario real estate sector

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VANCOUVER—The Canada Revenue Agency has found nearly $600 million in unpaid taxes in Ontario and British Columbia’s real estate sector over the past three years. It has levied $47 million in penalties for the same period.

In B.C. alone, $169 million in unpaid taxes were related to real estate transactions and income tax, the agency found. In Ontario, whose population is three times greater than B.C.’s, that number was $423 million.

A condo building is seen under construction surrounded by houses as condo towers are seen in the distance in Vancouver, B.C., on Friday March 30, 2018.  (DARRYL DYCK / The Canadian Press File)

“I am delighted,” said Richard Kurland, a Vancouver immigration lawyer who for years has lobbied for more scrutiny of real estate transactions, as well as several immigration programs that were directed toward wealthy investors.

“It’s a reasonable representation,” he said of the amount of unpaid taxes, “but I don’t think it tells the whole picture at all.”

The federal agency began examining real estate transactions more closely starting in 2015, and says there continue to be “compliance risks” in real estate transactions in the heated Vancouver and Toronto markets.

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In British Columbia, CRA auditors found that 54 per cent of the unpaid taxes came from not paying GST, while 45 per cent was from income tax.

In Ontario, 90 per cent of the unpaid taxes were related to homebuyers not paying the GST, which is required on all newly built homes in Canada, as well as GST on other real estate transactions.

In a statement, CRA staff said a number of factors increase the risk of tax evasion in the country’s two hottest real estate markets, including a questionable source of funds to buy properties, property flipping, unreported GST, unreported capital gains and unreported worldwide income.

Read more:

CRA conducts simultaneous Panama Papers raids in the GTA, Calgary and Vancouver

British Columbia to require anonymous land owners to reveal their true identities

A mismatch between reported income and lifestyle (such as owning a multimillion-dollar home) can trigger a closer look from CRA auditors to discover whether income is not being reported or being earned illegally.

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Kurland said he believes a new tax information-sharing agreement that will come into effect in September between Canada and 60 other countries will reveal more tax evasion. That’s because even though residents of Canada (who may or may not be citizens) must report their worldwide income to the CRA, the system was not well enforced, resulting in something of an “honour system,” he said.

“It’s what I call the show-me game,” Kurland said of the new agreement between countries. “You show me what this person declared to you … as global income and property, and we will show you what this person declared to us as global income and property holdings.

“It puts people who have not exactly been open with their property transactions in a quandary.”

While in Vancouver much of the scrutiny has been on the impact that buyers from Mainland China may have on the market, Kurland emphasized: “It is not a one-stop China shop at all. This issue cuts across all jurisdictions internationally.” China is one of the 60 countries included in the new agreement.

The information-sharing agreement is part of an effort led by the Organisation for Economic Co-operation and Development to tackle global tax evasion, including secretive offshore banking.

In its February budget, the B.C. government announced it would require land owners to reveal their identity in the province’s land registry, instead of shielding property ownership behind numbered companies.

“Lack of transparency in the land registry means it is not clear who owns nearly half of Vancouver’s more expensive properties. This is wrong,” the provincial budget document stated. “The concealment of beneficial ownership can be part of international webs used to facilitate tax evasion, money laundering, corruption and other criminal activities.”

It added, “Having a registry means we’ll know who owns what.”

With files from Marco Chown Oved and Robert Cribb

Jen St. Denis is a Vancouver-based reporter covering affordability and city hall. Follow her on Twitter: @jenstden

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Real estate market is totally different than stock market now, says Robert Shiller

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  1. Real estate market is totally different than stock market now, says Robert Shiller  CNBC
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