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Technology and data are finally shaking up the world of commercial real estate, allowing the industry to make more informed decisions, respond quicker to consumer trends, and take on more complex projects, says consultancy Altus Group.
The Toronto-based real estate firm said Monday that for the first time, a majority of 400 global commercial real estate executives polled said they are seeing the disruptive impact of technology on the sector.
The shift comes as the wave of investment and startups in recent years are starting to show results and shift perspectives, said Altus CEO Bob Courteau.
“There’s a bunch of really aggressive companies that came in to real estate globally, and they came in with a whole different view of the importance of data and technology.”
New companies, and new executives at existing ones, have caused a significant shift in thinking on the role in technology in the space, he said.
“The orientation of the management teams of historical commercial real estate was to put their investments in the ground, not into things like data and technology.”
The change is stark at the executive level, where 80 per cent of 350 firms surveyed now say they have a chief data officer or equivalent senior executive, compared with only 44 per cent four years ago.
“The last couple or three (years) has seen an explosion in change,” said Courteau.
WeWork may be the most well-known company in the space, but new entrants number in the thousands, by some estimates.
Real Estate giant Brookfield Asset Management, through their venture arm Brookfield Technology Partners, has recently invested in companies such as leasing software provider VTS, automated door hardware provider Latch, and contractor software provider Building Connect.
Meanwhile, real estate service provider Jones Lang LaSalle IP, Inc. launched a US$100 million venture fund in 2018 to invest in the property technology, or “proptech” space, joining an increasingly crowded field.
In Canada, the tech sector has seen numerous startups enter the space including Yuhu, which offers software for building managers, Breather, an on-demand office space provider, Lane, a mobile-focused tool for tenants, and MapYourProperty, which provides analytics for land development.
Early proptech entrants were focused more on efficiencies, like lower energy costs or automating repetitive tasks, but with the wealth of data available there’s the potential to improve future planning and tackle some of the more difficult decisions, said Courteau.
“What am I going to build, what’s the cost to build, what are the consumer trends, what are the upcoming neighbourhoods, how do I create a mixed environment…this is a data rich environment that can have a significant impact on the value of this new building that you’re about to build.”
The survey noted that technology has enabled numerous disruptive trends including multi-family co-living, a sort of dorm-style arrangement with small private bedroom and shared living and kitchen space, as well as co-working spaces and new models for real estate on the retail side to provide more brand exposure and entertainment options.
While adoption has been slower in Canada, many global markets have also started to take advantage of online marketplaces to cut out intermediaries in lending, investment, leasing, and property exchanges. The survey notes that the explosion of proptech firms likely means a significant consolidation is pending, with most Canadian executives polled expecting consolidation within the next 12 to 24 months.
This report by The Canadian Press was first published Jan. 27, 2020.
A Winnipeg man’s registration as a real estate salesman has been cancelled after a family vacated their home on a tight deadline for a sale that never went through, then changed brokerages and, months later, got $60,000 less for their house than what they expected when they moved out.
A Manitoba Securities Commission panel found Reginald Wayne Kehler engaged in professional misconduct and conduct unbecoming a registrant when he signed a document on behalf of sellers without their knowledge, reduced the listing price of a home without their approval, and didn’t tell them for nearly a month that a potential buyer hadn’t paid a promised $100,000 deposit.
The sellers, identified as D.R. and P.R. in the panel decision released Wednesday, were awarded $10,394 from the real estate reimbursement fund. Kehler was ordered to pay $12,075 to cover costs of the investigation and hearing.
The sellers were a military family who had to move in 2020 after the husband was posted to Ottawa.
They chose Kehler as their listing agent, because he had helped them find the home when they moved to Winnipeg in 2018, and they had a good relationship with him, the panel’s decision says.
They listed their house in May and on June 15, 2020, accepted an offer of $570,000 with possession on July 15. A deposit of $100,000 was to be paid within 72 hours of acceptance of the offer.
Kehler was the salesperson for both the buyer and the sellers — but the sellers say he never told them that.
A form that indicated the sellers knew he was also representing the buyer, dated June 15, 2020, was filed.
While it appeared to be signed with the sellers’ names, they said they didn’t see it until March 2021. One of the two wasn’t even in Winnipeg on June 15.
“Kehler, in his interview with commission staff, acknowledges that the sellers never signed this document — we note that the purported signatures on the form look nothing like the actual signatures of the sellers on other documents,” the decision says.
Kehler told commission staff he’d been authorized to sign on the sellers’ behalf, which they denied. The panel found them more believable.
Once the deal was made, the sellers, believing they had just a month before the buyer would take possession of their home, quickly packed up and prepared to move with their two young children.
Meanwhile, the buyer hadn’t made the $100,000 deposit before the deadline — but Kehler didn’t tell the sellers.
Kehler told commission staff that was because he thought the deposit was still coming, and he didn’t want to cause more stress for the sellers.
On July 10, just five days before the buyer was to take possession and the day before the family was leaving Winnipeg, the sellers spoke to Kehler — but he still didn’t tell them the deposit hadn’t been paid.
Kehler “said everything was fine,” according to the decision.
It wasn’t until the evening of July 13, when the family arrived in Toronto on their way to Ottawa and just 36 hours before the scheduled closing, that Kehler told them he’d never received the deposit.
Eventually, they received $4,000 of the deposit, but the sale of the house never closed. The sellers scrambled to extend the insurance on their old home and make sure they continued to pay the utility bills, the decision says.
Kehler then recommended they relist the home, and it went back on the market at $574,900.
On Aug. 10, 2020, Kehler recommended the price be reduced to $569,900. Instead, the seller said he should reduce the price to $567,900.
But when the seller looked at the online listing on Aug. 22, it was listed at $564,900.
The sellers also asked Kehler about maintaining the property, since they were no longer in Winnipeg. He agreed he would, but friends ended up going and mowing the lawn, the decision says.
The sellers asked Kehler and his brokerage about what could be done to “make things right,” the decision says, but they never received any responses.
On Sept. 5, they hired a new brokerage to sell the home. Under the new real estate salesman, they accepted an offer on Dec. 13, and closed the deal Jan. 2, 2021, receiving $507,500 for the home.
Kehler’s actions were “contrary to the best interests of the public” and undermined “public confidence in the real estate industry,” the decision says.
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Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout The Wall Street Journal
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Robert McLister: Tax shelters don’t make housing more affordable, but those with the cash would be foolish not to use them
Published Apr 19, 2024 • Last updated 55 minutes ago • 4 minute read
With housing unaffordability near its worst-ever level, our trusty leaders are on a quest to right their housing wrongs and get more young people into homes.
Part of Ottawa’s big strategy to “help” is promoting tax-sheltered savings accounts and pumping up their contribution limits. That, of course, stimulates real estate demand amidst Canada’s population and housing supply crises. But save that thought.
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First-time buyers now have three government piggy banks to stockpile cash for a down payment:
1. The 32-year-old RRSP Home Buyers’ Plan — which lets you deduct contributions from your income to defer taxes and then borrow from the account interest-free for your down payment (as long as you wait 90-plus days to withdraw any contributions);
2. The 15-year-old Tax-free Savings Account (TFSA) — which lets you save after-tax dollars, grow your money tax-free and withdraw it without the taxman taking a bite;
3. The one-year-old First Home Savings Account (FHSA) — which is a combination of an RRSP and TFSA. It lets you deduct contributions from income, compound it tax-free and never pay tax on withdrawals used to buy a home. You can even save the deduction for a year when you need it more — when you’re earning more money.
Assuming you have the funds and contribution room, these tax shelters can combine to help you amass a supersized down payment.
“Looking at the FHSA alone, with the max annual contribution room of $8,000 for 2023 and 2024, a potential first-time home buyer could have as much as $16,000 deposited in the account today for a down payment,” says Eric Larocque, chief mortgage operations officer at Questrade’s Community Trust Company.
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“If you also add in the cumulative contribution room of $95,000 for the TFSA, it amounts to $111,000 in potential funds available — and that’s before incorporating investment gains from either account.”
And it doesn’t stop there. RRSP, TFSA and FHSA savings limits keep increasing. If first-timers have enough contribution room, down payment savers in 2024 can sock away even more in these tax-sheltered troves.
“Factoring in the recent changes to the Home Buyers’ Plan, which now permits RRSP withdrawals of up to $60,000 — up from $35,000 — we land at a potential total of $171,000 in deposited funds that can be tapped for a first-time home buyer’s down payment,” Larocque adds.
That’s quite a wad — easily enough to cover the 20 per cent ($139,706) down payment required to avoid mandatory (and pricey) default insurance on the average home. Canada’s average abode is now worth $698,530 by the way, according to the Canadian Real Estate Association.
Here’s the rub: Canada’s living costs are sky-high, and real disposable income has trended downward. So, how’s an average first-time buyer household, raking in less than six figures, supposed to amass such a stash?
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Based on national averages, saving 10 per cent of one’s pre-tax income per year (who does that?) would take a young FTB couple over 15 years to sock away $140,000. History shows what would happen to home values if you waited 15 years — they’d jet off without you.
If you have no other resources and your bet is that historical appreciation rates continue — despite slower population growth, more building and potentially higher long-term rates — you’re better off saving less and buying sooner with a five per cent down insured mortgage.
So, does Big Brother really expect your typical first-time buyer to max out all these savings plans? Nope. But hey, throwing a buffet of options at you sure paints a pretty picture of government effort, doesn’t it?
Ottawa’s dirty little secret is that these nifty programs crank up demand, turning renters into buyers. So don’t bet on them making the home-owning dream any cheaper, for first-timers or anyone else.
Take advantage of them anyway.
The government sets limits on these tax shelters with well-off home buyers in mind. One lucky bunch who can make use of all three down payment savings plans is the first-timer with prosperous parents.
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Such buyers can make a withdrawal from their parental ATM (a living inheritance, some call it), deposit that cash in all three savings vehicles above and reap: hefty income tax savings or deferrals (thanks to the FHSA and RRSP deductions); tax-free/tax-deferred growth on the investments; and tax-free withdrawals if the money is used to buy a qualifying home (albeit, you’ll have to pay the RRSP HBP back over 15 years, starting five years after your withdrawal).
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The more opportunities it gives people to save for a down payment, the more Ottawa worsens the imbalance between purchase demand and supply. And that, of course, boosts real estate values skyward — which is dandy for existing owners but contradictory to the government’s affordability messaging.
But hey, these tax treats are ripe for the picking. Home shoppers with the means — especially those with deep-pocketed parents — might as well take advantage of all three accounts.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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