Green building codes could be boon for business in Commercial Real Estate - Canadanewsmedia
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Green building codes could be boon for business in Commercial Real Estate

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Greener building codes in Vancouver and other municipalities are forcing suppliers, designers and builders to evolve.

 

A new report says the materials and equipment to construct green buildings made essential by stricter building codes could deliver billions of dollars to the Metro Vancouver economy, while creating 1,170 new jobs in the province.

The Vancouver Economic Commission (VEC)’s Green Building Market Forecast says that B.C.’s Energy Step Code (ESC) could generate $3.3 billion over the next 14 years.

The ESC is a voluntary provincial standard launched in April 2017 that uses tiered criteria to improve on base-level building codes to build more energy-efficient buildings.

Vancouver, through its own similar Zero Emissions Buildings Plan, aims to have all new buildings producing zero emissions before 2030. B.C. plans to reduce carbon emissions by 40 percent by 2030 (based on 2007 levels), and the ESC is expected to guide all new buildings across the province to be net-zero energy ready by 2032.

The ESC could create 925 manufacturing jobs throughout B.C., and about 770 installation jobs in Metro Vancouver, according to the forecast, which was written by Juvarya Veltkamp, VEC’s manager of green economy initiatives.

She said greener building codes in Vancouver and other municipalities are forcing suppliers, designers and builders to evolve. There are now 41 local governments around B.C. either consulting with or using the ESC in policies, programs or bylaws, according to the step code website.

“The point of this report was to help manufacturers, suppliers (and) anyone looking at investing in this area to know how demand is going to change in terms of value or in terms of number of units of specific products,” she told Postmedia. “(The report shows) the key turning points where you better be ready for change.”

The report also serves as a warning to manufacturers of products that won’t meet tougher sustainability standards. “You’d better look at making more high-performance products.”

The study took place over eight months and included an advisory committee comprised of representatives from dozens of organizations and companies including B.C. Housing, B.C. Hydro, the Pembina Institute and several construction firms and suppliers.

The report provides regional data and demand estimates for various products such as high-performance windows, lighting, heat pumps and renewable energy systems.

“Nobody had that (data) before,” Veltkamp said.

“We know we’re going to need over 15,000 residential heat pump units between now and 2032,” she said, providing one example. “That kind of really hard data is one insight.”

She said they also analyzed the supply chain. Windows, for instance, are already being supplied by a mature, local market of about 100 makers, she said.

But high-end mechanical systems usually have to be imported. “There is nothing wrong with importing necessarily, but we’re not going to get the best prices if we’re just importing in small quantities.”

The VEC report said window products alone would account for about $1.8 billion by 2032.

Michael Bousfield served on the advisory committee. He is the technical director of Langley-based Cascadia Windows and Doors.

For about 11 years, they have made energy-preserving fibre glass-framed windows and doors.

He said the company launched focused on the energy-efficient market for various types of construction, including high-rises and institutional buildings.

Bousfield said demand for their products started to accelerate about five years ago, but mostly from centres in the U.S. Pacific Northwest.

“There were building energy regulations put into place that drove the need for more energy-efficient products,” he said. “Typically, because windows were the lowest performing products on buildings, having a more energy-efficient product gives you more design flexibility such as having more glass (without hurting) the building performance as much.”

The step code has sparked a similar demand surge locally. “Regulations in B.C. have now, not only caught up, but in my personal estimate have actually passed the other regions in terms of their quality and their stringency,” he said.

Companies making and selling low-performance products will not be relevant within five years, he predicted.

“That is for our overall good,” he said. “Buildings can now be more energy conserving. It is only right they ought to be and regulated to be.”

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Blackstone raises $20.5 billion for largest ever real estate fund

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U.S. private equity firm Blackstone Group Inc said on Wednesday it has raised the largest ever real estate fund, amassing $20.5 billion to be invested in property assets around the world.

Large buyout firms such as Blackstone have been attracting a lot of capital from investors seeking higher returns not available in public markets.

The capital ready to be deployed has swollen to over $2 trillion, according to data provider Prequin, driving up asset prices and deal making activity.

Blackstone said in a statement the fund, named Blackstone Real Estate Partners IX (BREP IX), has already made its first investment: the purchase of U.S. industrial warehouse properties from Singapore-based logistics provider GLP for $18.7 billion.

The deal, in which BREP IX co-invested with other Blackstone funds, was announced in June and is expected to close in coming weeks, the company said.

Blackstone is the world’s largest alternative asset manager and one of the biggest property investors, with $154 billion in real estate assets under management. (Reporting by Chibuike Oguh; Editing by Sandra Maler)

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Real estate lessons to live by Pattie Lovett-Reid

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Real estate lessons

Disclaimer: I’m not a real estate expert but I am a real estate junkie.

I’ve often thought about the many ways there are to make money – and there are many. Throughout the years, we have created side hustles, worked hard at our jobs, built an investment portfolio and we have bought and sold a lot of real estate.

We love real estate, and over the past 25 years, we have bought and sold six principle residents and six recreational properties. The majority of our housing transactions made money, and we broke even on a couple. There have also been lessons learned along the way.

Here are a few.

1. Listen to the experts. They are qualified in their field so believe them when they say location sells. Try not to be the most expensive house on the street and don’t let your emotions drive your buying or selling decisions.

2. Don’t fall in love with your assets, or in this case, your home. Sometimes you need to make tough decisions financially and that may mean selling the family home. Your assets will never love you back but your family will.

3. When selling, don’t be greedy. If your home isn’t selling, it is priced too high. Listen to what prospective buyers are silently telling you as they move on and check out the next listing.

4. Get your home ready to sell as soon as you move in. Life has a funny way of throwing you a curve ball when you least expect it. Curb appeal matters but the inside likely matters more. This is where you live. Keep it neutral and up to date. Look at your home as a prospective buyer would.  Small changes can yield big financial results.

5. Avoid concentration risk. Don’t put all your money in the real estate basket.

6. Take the time to save up the down payment. Consider all-in and all-out costs such as insurance, appraisals, real estate, moving, land transfer costs and the dreaded unknown repairs. There will always be something that requires your financial attention.

7. Don’t buy beyond your means. I’ve been there and it isn’t fun. No one wants to be 100 per cent house poor. You aren’t expected to be flush with cash when you are new homeowner but you also don’t want to live life worrying about the next mortgage payment each month.

8. Buy low and sell high. Even if you love real estate you are always scouting out new opportunities, this investment mantra still must hold true.

9. Focus on your stage of life. Do you really want to be building your dream home for your family as your children head off to university or are beginning to build their own lives under their own roof? Just because you want your family there doesn’t mean they will be. Buy for reality not dreams.

10. Put in offers earlier in the week. You are more likely to have less competition and more likely to get a deal if you do. Everyone is out   looking on the weekends. Don’t follow the herd mentality.

11. Take advantage of the capital gains exemption on your principle residence. This is one of the best tax-savings opportunities to create wealth I know.

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B.C. Real Estate Association forecasts lower mortgage rates in 2019

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The cost of borrowing for a home is predicted to get a little cheaper this year.

That’s according to the latest mortgage rate forecast from the B.C. Real Estate Association.

“The average contract rate for 5-year mortgages has declined about 30 basis points from its peak in 2018, reaching 3.44 per cent in March,” the BCREA states in a two-page report. “Unfortunately, this still means a stress test rate of 5.44 per cent, even for the highest quality borrowers.”

However, the association points out that if five-year bond yields remain at the current level, “a 5-year qualifying rate of under 5 per cent should follow suit.”

The contract rate refers to the interest percentage listed on the face of a note or a bond.

The qualifying rate refers to a lender’s determination of what a borrower can afford. This takes into account a person’s income, debt obligations, utility, and living costs, as well as the amortization period and mortgage rate.

The qualifying rate is forecast to fall to 4.99 percent in the second quarter and 4.84 percent in the third quarter, before rising to 4.99 percent in the fourth quarter.

“While there is an outside chance of a rate cut from the Bank of Canada, our baseline is for the Bank to remain on hold for 2019,” the BCREA states. “Therefore, we are forecasting no change in the prime rate, from which variable rates are discounted.”

The BCREA predicts that the qualifying rate will rise to between 5.14 percent and 5.34 percent in 2020.

Metro Vancouverites carry large debt loads

According to the Canada Mortgage and Housing Corporation, Metro Vancouver leads the country in the ratio of liabilities to annual income at 242 percent.

The mortgage debt-to-interest ratio in this region is 178 percent, which is three times the figure in St. John, New Brunswick, which has the lowest rate in the country.

CMHC released this chart in December, showing that Metro Vancouver residents, on average, have the highest debt-to-income ratio in the country.
Canada Mortgage and Housing Corporation

In October 2017, the Office of the Superintendent of Financial Institutions announced that the minimum qualifying rate for uninsured mortgages to be the greater of two figures:

* the five-year benchmark rate published by the Bank of Canada;

* or the contractual mortgage rate plus two percent.

This meant that many homebuyers could not take out as large a mortgage, reducing the value of what they could afford to purchase.

That, in turn, is one of the factors cited in the monumental slowdown in the Metro Vancouver housing market in 2018.

The BCREA report questions whether these new mortgage stress-test rules can continue to apply to Canadians with more than 20 percent in home equity.

That’s because the association maintains that they “will be stress tested at a rate much higher than what we estimate as a long-run equilibrium mortgage rate”.

“Given the disruption caused in Canadian housing markets by the stress test at the presently lower rates, the stress test is not likely to be sustainable in the long-run as currently constituted,” the BCREA declares.

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