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YOUR SOURCE FOR REAL ESTATE INTELLIGENCE

The University of British Columbia, Okanagan recently announced its commitment to a second campus, one located in the downtown core of Kelowna. In late July, a revamped version of the project – which was initially brought forward in 2020 – was approved by Kelowna city council. Kelowna, with its relative affordability, is already recognized as a top emerging market in British Columbia. The addition of this campus is almost guaranteed to create and drive future growth of the downtown area and increase its desirability for residency – and for investment.   

UBCO CAMPUS EXPANDS BEFORE BREAKING GROUND 
In 2020, the University of British Columbia made public their plans to build a second campus for the school in the heart of downtown. Initially a 34-storey mixed use building that combines academic and student housing, the project was expanded into a 46-storey project with 500 residential housing units. The development features a proposed tower at the intersection of Doyle Avenue and St. Paul Street, and when built will be the tallest tower in the province outside of Greater Vancouver. Construction for the new building is expected to begin in the fall. Seattle-based architectural firm Olson Kundig, whose portfolio includes Mission Hill Winery in neighbouring West Kelowna, is behind the building's design. The tower will feature a grand atrium on the main floor, eight storeys of academic space, cutting-edge simulated hospital wards to train nursing students, a public art gallery, a public engagement suite and a variety of other learning areas. The project and its subsequent expansion speaks to the need for more housing, and more affordable housing, for younger people in the area. The student housing wait list at UBCO’s current campus has grown from 500 students in need to 1,300 over the past two years, which means more than 10% of its approximately 12,000 student body are in need of housing. A one-bedroom dorm at the University’s current residences costs about $1,200 per month in rent, while an apartment of the same size off-campus could run over $1,800 per month. Housing is desperately needed for students in the area.  

KELOWNA: A TOP EMERGING MARKET 
Canada has many smaller markets with high-growth potential that offer solid fundamentals and well-priced investment opportunities. Home to over 140,000 people, Kelowna is one of the fastest-growing metropolitan areas in Canada by population. The Okanagan, which contains the municipalities of Kelowna, West Kelowna, Lake Country and Peachland, has grown 14 per cent since 2016 according to Statistics Canada and is the fastest growing census metropolitan area in Canada. These numbers make it no surprise that the area was identified by Fundscraper as one of the top three emerging real estate markets in the country. The region has a high employment rate and strong construction, with a robust healthcare economy and a strong retail sector. Beyond that, the part that perhaps makes the area most enticing is bang for buck. The Okanagan can generally provide more per dollar for homebuyers than in the Greater Vancouver area.  
According to Association of Interior Realtors Real Estate Board, the benchmark price at the end of Q2 for the Central Okanagan was $1,112,400. This is a significant increase from the previous year where the price of a single-family home in the Central Okanagan was around $923,500 in Q3 of 2021. That means buyers who entered in the market in 2021 have already seen a marked increase on their home’s resale value. There are just over 30 new developments under construction in Kelowna, which will bring 1502 units to the market before the UBCO tower even begins construction.  
Demand is still high for emerging markets like Kelowna. Housing is needed and the region offers stronger market fundamentals at a lower price. Projects such as the new UBCO campus speak to the need for increased development and more affordable options for those who choose to leave the Lower Mainland. If the tower is completed, it will be the first of many high rises to be approved in the area and will likely signal a change of zoning nearby. Investment in an emerging market like Kelowna is an opportunity to capitalize on the growth of the community at its early stages of increasing density.

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UBCO AND THE FUTURE OF DOWNTOWN KELOWNA

The MLA Canada Spotlight Series is designed to deliver actionable intelligence into the residential real estate market. This report series is to provide insight into the up-and-coming marketplace for homebuyers, developers, and real estate industry professionals alike, offering a comprehensive overview of both the quantitative and qualitative characteristics of trending sub-markets in the Lower Mainland.
This article is one of many in this unique feature series, focusing on Surrey Centre. Brought to you by the MLA Canada Advisory Team.
 <a href="https://mlacanada.com/sites/default/files/2022-02/Surrey%20Centre%20Spotlight_MLA%20Advisory.pdf" target="_blank">Download Full Report</a> 
The main profiles of Surrey’s homebuyers consist of young professionals, young couples, and investors. With a strong plan for economic growth, alongside upcoming commuting opportunities with new SkyTrain infrastructure, the city has become an attractive place for many looking to start a family, career, or sourcing somewhere to invest in real estate. We explore the key reasons why these buyer profiles are looking to Surrey as their next purchasing decision.
"The largest demographic group in Surrey Centre is residents age 20-29. Millennials and Generation Z are continuing to outpace other age categories. Why is this important? It speaks to affordability and it speaks to needs. The majority of this population breakdown falls within the average age of first-time homebuyers across Canada, " Ryan Lalonde, President of MLA Canada.

YOUNG PROFESSIONAL SINGLES
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With increased job opportunities and proximity to transit in the Surrey Centre area, young professional singles are looking to Surrey as a place to enter the market. They are early to mid-career status, age, and active lifestyle make Surrey Centre a desirable place for first-time homebuyers, as they remain both image and spending conscious. Surrey Centre offers young professional singles plenty of neighbourhood amenities, transit accessibility, and job opportunities.

YOUNG PROFESSIONAL COUPLES
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Surrey provides young professional couples with a place to find their first home. The city’s growing job opportunities are an attractive aspect for many young couples who may be newly married, young in their career, and digitally savvy. With plenty of amenities and proximity to transit, young professional couples can easily live an active lifestyle throughout many neighbourhoods in Surrey.

INVESTORS
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Investors understand the strong market conditions and rental return opportunities across the city of Surrey. They may range from first-time investors or experienced investors looking to grow their portfolios. Since Surrey offers plenty of schools, neighbourhood amenities, and access to transit, it proves an attractive place for investors, as these are large factors of their considerations. Many portfolio investors are practical, sensible about their purchase decisions, and price-sensitive who look for the best return on their investment into small, low-spec units.

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SURREY ATTRACTS YOUNG BUYERS AND INVESTORS

There’s no shortage of acronyms when it comes to the real estate industry but one that is particularly important, and topical, is REDMA. 
Short for the Real Estate Development Marketing Act, REDMA itself is not new — the legislation was introduced in 2004 primarily as a protective measure for consumers and to promote transparency with multi-family builders making changes prior to completion of a home. The latter is subject to requirements including disclosing prescribed information about the project and securing sufficient funding to ensure homes will be delivered as promised to buyers. 
Previously, developers had nine months to prepare marketing for properties and secure financing and a building permit. However due to the pandemic and the ensuing initial uncertainty, last spring the province temporarily increased the window to 12 months. Fast forward to present day, and the Superintendent of Real Estate has now made the modification permanent. 
The amendment is also in response to addressing an increasingly difficult and stringent permitting and financing process due in part to the growing complexity of big, mixed-use urban projects. 
 “I've been advocating for a long time that we needed the early marketing period to be extended, and when Covid happened the superintendent of real estate [did implement it]. Since then, we've been telling them this needs to be a permanent change and they've been listening,” said Suzana Goncalves, Executive Vice President of Sales and Marketing at MLA Canada. 
 “This gives developers an additional amount of time to hit their pre-sale financing targets and get their building permit in place, which is incredibly important when we think of less active markets in particular. It will help to avoid drastic holdback of supply like we saw in 2019 when developers didn’t have the confidence in the market to guarantee hitting 65% of unit sales during that early marketing period. This should promote more stable supply releases.” 
To put it into perspective, Goncalves gives the example of a larger-scale community development of 300 homes with a requirement of having approximately 60 to 65 percent — 150 to 170 units — pre-sold in order to move forward. Additionally, this should give developers more confidence to provide family-sized homes which often take longer to sell and in which we are in short supply of. 
With this permanent change from REDMA, the future of pre-sale potential has become even brighter. As the demand for more inventory continues to rise across the Lower Mainland, this additional time that developers now have will allow more products to come to market, meaning more choices for homebuyers in an increasingly pressurized marketplace.

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12 MONTH REDMA WINDOW SUPPORTS OVERALL MARKET HEALTH

AN INSIDE LOOK AT THE VIRTUAL HOME BUYING EXPERIENCE IN 2021
Curious about what it’s like to buy property online after the last year? We asked MLA Sales Director, Richard Klein, how the virtual home buying experience is rapidly evolving to benefit the home buyer.
A year into the pandemic and online real estate sales are flourishing. With less in-person interaction preferred, the need to bring the online experience closer to real life is growing exponentially. Website photos and social media posts are used to promote new real estate listings more than ever. Now interactive 3D tours, virtual open houses, and live-streaming are quickly becoming the norm. 
MLA has always been tech-forward, which became even more of an advantage over the last year. Our relaunched MLA Live platform brings all the aspects of viewing and deciding on a home in one online package. We had a chat with MLA Sales Director, Richard Klein, who shared insights into the shift to a primarily digital home buying experience and how MLA is ensuring it’s an advantage to home buyers, and not a gimmick or obstacle.
 HOW ONLINE/TECH-FOCUSED DID YOU SEE THE REAL ESTATE INDUSTRY PRE-PANDEMIC AND HOW DID IT GROW OVER THE LAST YEAR? HOW HAS IT BENEFITED CLIENTS IN LIGHT OF COVID?
There’s no question that real estate, eCommerce, banking - any industry really, has seen a really big shift to digitization and the use of technology. But I think real estate has lagged behind, generally, with using tech in a meaningful way to make consumers’ lives easier. 
At MLA Canada, real estate intelligence has always been our focus, keeping us ahead of the curve. We aim to make it as easy as possible for our customers to get real estate information as quickly as possible.
 FROM YOUR CUSTOMERS’ SIDE, HOW DID THEIR EXPECTATIONS IN BUYING ONLINE AND USING DIGITAL TOOLS CHANGE FROM PRE-PANDEMIC THROUGH TO NOW AT THE ONE-YEAR MARK? 
Customers already start their shopping process online for most purchases - it’s the same with real estate. They would find a listing, developer, or maybe the MLA Canada website. They would also inquire for more information or specifications, a brochure link. 
Looking at eCommerce, 10 years ago, the idea of buying something as simple as shoes or clothing online was pretty alien to most people, but now it’s second nature. I think that the real estate industry has to accept that much more of the buying audience wants to get information quickly and make meaningful decisions beforehand. COVID has only accelerated this. 
Consumers are becoming more demanding about the information they have access to. In real estate, we sometimes see that information isn’t provided so readily to consumers, which is a frustration. Now if you want to buy a car, with Tesla a good example, you can get all the information you need online, purchase online, organize a test drive online, and you can have the car delivered online.
That said, the industry needs to adapt so that there is enough information for consumers - so there are no friction points.
“THE KEY IS WHEN YOU’RE BUYING, YOU WANT THE LEAST FRICTION AS POSSIBLE BEFORE YOU MAKE YOUR DECISION.”
VIRTUAL HOME TOURS AND OPEN HOUSES: WHAT CLIENT EXPERIENCE DO YOU LOOK TO PROVIDE AND HOW DO IN-PERSON SHOWINGS FIT IN?
We always want to personalize the experience. We want to be targeted on how we treat each client. Consumers are more demanding now. They can tailor every element of their online shopping experience from custom items to delivery speed. Why shouldn’t they expect that from real estate? We see that as the way forward. We think the consumer should have the power to make considered decisions that are also fitted to their needs. For a virtual-only experience, it has to be as close as possible to reality. With 3D tours like Matterport, these app experiences have to be realistic, seamless, and intuitive.
On in-person and virtual showings, I think they can end up complimenting each other quite well. One example is Smith and Farrow, a development by Boffo. We had a completely remote event with over 550 people log on for the tour of the showhomes. What’s interesting is, because we have a very large physical space for the sales gallery with 10,000 sqft., we were also able to invite people to the sales gallery while providing the right safety information before coming. That way, people still had the option to have the tactile experience in its entirety, but everything else they needed was provided online.
Buying real estate is probably the most significant purchase of your life, as an investment or a place to live in yourself. Tech-forward is critical, but I see an in-person experience at the end of it. I don’t see the entire process getting automated. The critical thing about the digital experience is that you’re arming the consumer with as much information as possible. People want to feel empowered. They will really make a considered decision online, but there will always be a human experience - touching and feeling a new home - will always play a part.
 MLA WAS AHEAD OF THE CURVE WITH THE MLA LIVE PLATFORM, WHICH WAS REVAMPED LAST SUMMER. CAN YOU SHARE HIGHLIGHTS OF IT AND WHAT THE PROCESS IS LIKE? HOW DOES IT HELP THE SELLER AND THE BUYER?
MLA Live is a fantastic tool, part of a trend that COVID accelerated no question. The idea of doing something remotely when not comfortable in person is understandable. But MLA Live as a platform speaks to a much wider international trend. Vancouver is a multi-ethnic, eclectic city, and the number of people set to move here are from all over the world and they’ll have to consider real estate, either buying or renting. The Canadian government is planning to bring in 1.2 million immigrants over the next three years, in light of the pandemic.
If we can digitize the process, like with MLA Live, we can give anyone in the world the opportunity to have an experience that’s as close to in-person as possible.
 “THE FRUSTRATION FROM CONSUMERS HISTORICALLY FOR REAL ESTATE IS THE ABILITY TO GET INFORMATION QUICKLY AND EASILY. AND WE’RE TRYING TO BREAK DOWN THOSE BARRIERS.”
What’s critical to you might not be critical to another customer - so on MLA Live, we give access to all pieces of information. We can look at the range of amenities that you specifically need - school options, parks, public transit, a coffee shop within walking distance. 
So, if a client does physically walk into a sales gallery, we want them to have as much prior information as possible and already have their mind made up on a lot of their decisions. Then in-person, they can see, touch, and be assured of the physical aspects. MLA Live is something I expect us to use a lot with a more international market, with more people looking at Vancouver from overseas.
 HOW DO YOU SEE THE VIRTUAL HOME BUYING EXPERIENCE PROGRESSING INTO A POST-COVID WORLD?
Moving forward, I do think when you decide on buying real estate, it won’t just be about the ‘product’ itself - the home - it will be about removing the barriers to making decisions around buying the home. So, is my interaction with my agent really seamless? Do I get lots of information that really resonates? Can I easily get video, photos, and other vital content online? Did I have all my questions answered quickly? Also, what is the post-buying experience? How much engagement are we having?
 “WE WANT TO TAKE AWAY THE FRICTION POINTS FOR CONSUMERS. WE WANT TO MAKE THE PURCHASE PROCESS AS SEAMLESS AS POSSIBLE. WE WANT TO ARM THEM WITH AS MUCH INFORMATION AS WE POSSIBLY CAN.”

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POST-PANDEMIC VIRTUAL HOME BUYING

The news of impending mass immigration has been known for some time — as borders reopen, an influx of fresh residents is expected to arrive in the near future and settle down. In December 2021, Canada announced it reached and exceeded its immigration target welcoming more than 401,000 new permanent residents in 2021, which surpassed the previous record from 1913. This is the most newcomers in a year in Canadian history. With demand already outpacing supply more than ever due to the ongoing pandemic, housing affordability will almost certainly be impacted. 
"Immigration is one of the foundational pieces that drives our real estate market. The federal government has increased our targets for immigration, and we expect to see 1.2 to 1.3 million new Canadians coming into Canada over the next 3 years,” said Cameron McNeill, MLA Canada Executive Director, in a podcast episode. 
“Historically, that is a very high number. It will be the single largest immigration wave this country has ever seen, and of course everyone is going to need a new home. Quite often, new immigrants into Canada choose the urban centres as their primary choice to live, like Vancouver and Toronto. Therefore, incredible pressure is being felt on the city, and we have zero supply. That's part of the reason why we are seeing prices push up again," adds McNeill. 
Besides boasting the most temperate climate and geological diversity in the nation, the Lower Mainland especially is enticing given its status as one of the fastest growing tech hubs in North America, anchored by global companies like Amazon and Microsoft currently occupying large amounts of downtown real estate. 
With our current inventory unable to keep up with consumer interest, many buyers, fatigued from fighting multiple offers on single family homes, have turned to pre-sale and the evidence is in the statistics. “In 2021, there were 183 projects released in the Great Vancouver marketplace equating to close to 20,000 homes, of which, close to 80% of those have already been sold or absorbed. In comparison, the market will typically see from 11,000 – 12,000 homes released on average,” stated Suzana Goncalves, MLA Canada Executive Vice President of Sales and Marketing. 
While construction is forging ahead, government red tape —most notably a slow and inefficient permitting process — is constraining a timely delivery of product. 
“The cities and municipalities are frankly moving slow. A project takes years to even get approved let alone built. Typically, if a developer was to acquire land today, they wouldn’t even be able to offer it for sale for approximately two years at least. Then roughly a year to organize sales, finance, and construction costs. Then perhaps another two years to build, depending on its form of construction. That is a five to six-year timeline,” added McNeil. 
This trickle effect and resulting supply issues are reflected in home values. Despite predictions, the Greater Vancouver composite benchmark price for all residential properties rose to $1,230,200 in December, a 17.3 per cent increase compared to 12 months prior. This is a trend likely to continue as the country begins to welcome a record number of residents moving forwards and the pandemic continues to affect the market.

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