Re/Max says the surging commercial real estate market in Vancouver could grow even further with last month’s introduction of the 15% foreign buyer tax.
The real estate company, in a report issued on Wednesday, said the market has already seen a massive interest in commercial properties, with the dollar value of sales increasing 94% year over year in the first six months of 2016.
“It’s doubled from what it was last year at this time. Last year at this time, we’re looking at around $3.5 billion, now we’re at over $7 billion in the first half of this year. But this is before the foreign sales tax,” said Moojan Azizi, managing broker at Re/Max.
While more recent commercial sales data was not available in the report, Re/Max says those foreign buyers looking to avoid the 15% tax, which is only applied to residential properties, could choose to invest in commercial real estate instead.
“You save 15% of the tax, so for someone it could be millions of dollars,” Azizi said.
He said many transactions have been from investors who are looking to buy land to sit on for medium to long terms, rather than those seeking short-term gains.
“People buying land especially along transit routes or property that has development potential in the future ... it’s a lot of land banking,” Azizi said.
“You’re looking at maybe 10 years down the road. You buy it at a high price, because of the fact you get to be able to develop it in 10 years.”
In the first six months of this year, commercial property sales reached $7.14 billion in dollar value, compared to $3.69 billion in 2015, and $2.5 billion in 2014.