The DeCourcy Island Farm was featured in a CBC story regarding Brother XII and the Aquarian Foundation.
Port Sidney Marina
Our team is very pleased to announce the sale of the Port Sidney Marina today.
Both our Vancouver and Victoria offices worked diligently to close this $15m+ deal which was no small feat!
Other Recent Sales
We truly enjoy the exciting range of properties we represent – from ranches and private islands to marinas, ski hills and resorts. Re-joining Colliers in 2016 has provided us with fantastic momentum. In addition to the marina, so far this year we have also sold 3 private islands, Dragons Lodge, a large Gulf Island property, and more.
Keep an eye out for our new website with full Colliers re branding coming this summer.
Moresby Island was recently featured on the front page of the Vancouver Sun.
Diamond Water Paradox
If you’ve taken an economics course, you’ll have read about the Diamond Water Paradox, or the Paradox of Value. In a nutshell – despite water being crucial for one’s survival, its value is insignificant in relativity to diamonds, which are not crucial to one’s survival.
The economist Adam Smith is largely credited with this discussion which outlines the concept of Marginal Utility. The concept of Marginal Utility holds that as the quantity increases, each additional unit of a given product or item will provide a decreasing amount of utility or use to an individual (and hence a lower value). Given the (almost) unlimited supply of water in the world versus the limited supply of diamonds, the value of each unit provided of each item differs greatly.
While access to fresh water affects millions of people worldwide, until recently it hasn’t been as significant an issue in North America. A combination of both supply and demand factors have led to one of the worst droughts on record in California, leading to the declaration of a ‘drought state of emergency’ in that State.
Although both mainstream and social media can’t stop talking about it, this drought has been a long time coming, and hasn’t just happened overnight. In fact, it’s an issue facing many regions of the United States. Why is there such a major focus on this one state? California produces about 50% of ALL the fruit, vegetables, and nuts consumed by the entire United States.
What’s on your plate? Water or Vegetables?
In 2013 Canada imported $21.3 billion worth of agricultural products from the United States, $3.6 billion of which was for fresh fruit and vegetables. Interestingly enough, the US imported $21.8 billion worth of agricultural products from Canada in the same year. While it’s hard to summarize statistics, it appears that we import more fresh fruits and vegetables, and export more meat, vegetable oils, animals, and processed fruits and vegetables. Not surprising, given our seasonal climate.
As mentioned in our post titled Food and Shelter, over the past few years grocery prices have been on the rise. While fuel prices were implicated as part of this rise, water supply issues are a key component. How much of California’s water supply does the agricultural sector use? Most of it – farms using an estimated 80% of the water taken out of the environment, or “developed water”. This is an easy ratio to comprehend, but a more interesting way of looking at it is the amount of water each specific crop uses.
Lettuce and broccoli, two fairly common vegetables on a Canadian plate, are two of the biggest consumers of California water. One broccoli crown uses almost 20 litres of water, while one head of lettuce uses over 12 litres.
If one were to measure water consumption for crops on a pound by pound basis, the much vilified Almond would likely be sitting at the top of the guilty pile. One single Almond uses about 4 litres of water. As the supplier for 80% of the world’s almonds, this crop accounts for almost 10% of the annual agricultural water use in the State of California. Taking into account that agriculture only contributes 1.5% of California’s GDP, water consumption between agricultural and non-agricultural users has become a hot button.
The price of BC’s Water
Head north now, up to beautiful British Columbia. While we have not had any real pressing water shortages yet, we have had our own fiery social and political debates on the price of this resource. In particular for one industry user, water bottling plants.
One such water bottling plant is owned by Nestle. Situated in Hope, BC, this plant had been operating fairly quietly since they acquired it from the previous operator, Aberfoyle. That changed in 2013 when the provincial government announced the establishment of the Water Sustainability Act. This Act was brought in to manage our extensive water resources more comprehensively. From what we can tell, Nestle’s operation was used in the press as an example of what the cost of extracting water would be for this type of user. When the general public discovered what Nestle was paying for water, there was a significant amount of outrage expressed.
Under the new legislation, Nestle pays about $2.25 per 1,000 cubic metres, or 1,000,000 litres – this value is up slightly from before. Essentially, Nestle pays the same for 1,000,000 litres as you do for a single bottle at the corner store. Of course Nestle has developed the infrastructure to extract the resource- they provide jobs, and need to market and ship the product. The fact is though, $2.25 is neither an amount that will break Nestle financially, nor does it appear to be representative of how much water should be worth. Much like the poor Almond, Nestle has now been attacked on social media and in the press for being an evil corporation that is profiting from our highly valuable resources. By the way, Nestle is not the only water bottling plant in the Province, far from it.
What about other users of this prime resource? Under the new legislation, agricultural operators pay about one third of what Nestle does, about $0.85 per 1,000,000 litres. Most other water users will fall in between these two rates.
We’re not here to defend Nestle, nor argue whether or not its rates are reflective of the price of water, but to outline water use in a greater context. With the exception of a few areas in the interior, British Columbia is not at risk of running out of water yet. Relative to California our principal watersheds are in fairly good shape. Compare the Fraser River with the Colorado River, the principle river for the Southwestern US and Northwest Mexico. The Fraser River reaches the Pacific Ocean with a volume of some 208 million litres per minute, while the Colorado River no longer reaches the Pacific Ocean. In fact, it ends about 100 kilometres from its previous terminus in the Sea of Cortez leaving ahead of it a long stretch of dry sand.
Canada – More Fresh Water than we need?
Canada has about 20% of the world’s total fresh water supply. Less than half of this amount though, estimated at 7% of the world’s total, is considered to be renewable (part of the annual hydrologic cycle). Consider now that most of this water flows towards the Arctic Ocean and Hudson’s Bay, well away from most of Canada’s population, and we begin to see that perhaps our great water resources might not be that great.
Oil Pipelines vs. Water Pipelines
Canada’s Ambassador to the United States, Gary Albert Doer, was quoted as saying “I think five years from now we will be spending diplomatically a lot of our time and a lot of our work dealing with water,” he said. “There will be pressure on water quality and water quantity.” He also stated that the recent debate between Canada and the US with respect to the Keystone XL pipeline will ‘look silly’ by comparison.
Luckily for Canada we have yet to export water on a bulk basis. Although we do export a lot of bottled water, estimated at between 100 and 500 million litres annually, the majority of the water bottled in Canada is reportedly consumed in Canada. Whether water exports change in the future is largely based on the interpretation of what constitutes a commodity under the North American Free Trade Agreement. At present, water is not defined as a commodity. Considering the pressure on water resources, we expect this will eventually be challenged.
Using this information, does the current pricing of water adequately reflect the value of water? Based on the concept of Marginal Utility on a Global Scale, our water supply is not very well priced. In fact, from an economic perspective we should be piping our water directly to California. After all, without California (and many other areas) we would have a much more limited variety of fresh fruit and vegetables. Can you imagine how many greenhouses we would need to supply BC’s population with fresh vegetables every day in the winter? Ok, so maybe piping our water is not a great idea, but pricing water based on local use might not make sense any more. Considering how many of our imports require fresh water as a production input might make us think a little differently when we use our resources locally.
If you own a property in British Columbia, then you should be quite familiar with the annual ritual of paying property tax.
Once a year, property owners fork over the amount cited on the property tax notice to help fund local programs and services. Police, fire protection, emergency rescue services, sanitary services, parks, libraries, road maintenance, schools, and hospitals are some of the community services funded by BC property taxes. Or at least that’s what most people believe. Here is a quote from the Federation of Canadian Municipalities:
“Unfortunately, much of the way forward is uphill. Canada’s tax system takes too much from our communities, and puts too little back. Without access to revenues that grow with the economy, and without long-term investment from other levels of government, municipalities continue to face a gap between their responsibilities and their ability to pay.
Our current system, in which municipalities collect just eight cents of every tax dollar, is not sustainable. Nor is it realistic in a world where cities function as economic engines and centers of innovation.
This fiscal imbalance erodes Canada’s competitiveness, while placing a growing burden on property taxpayers, straining local services, and forcing municipalities to delay essential infrastructure projects.”
Did you see that? According to the Federation of Canadian Municipalities, only eight percent (8%) of your property tax actually goes to the municipality in which you live. The balance of the funds go into other provincial, regional, and federal coffers. This 8% value is up for debate however, as the Canadian Federation of Independent Businesses estimates the municipality’s ultimate share to be as high as 15% when transfer fees and other sources of revenue are considered. Let’s just say the value is between 8 and 15%.
Obviously the property tax process can be a little confusing; why, for instance, do you have to pay more than your neighbour down the street? And why is your assessment higher than it was last year? Who, exactly, decides how much you have to pay? Now we know how much of our tax goes into the communities we live, let’s take a closer look at some of these other questions.
Setting the Property Tax Rate
Every year, property tax rates are set for the various municipal and regional services we receive as homeowners. The rate depends on the costs of providing these services. If this cost has increased, your tax payable might increase over the previous year, irrespective of the underlying real estate assessment.
Different municipalities offer different programs and services: your property tax notice will list the items that are paid for through your property taxes.
Determining Your Property Tax
As the name implies, property taxes are determined based on an individual property’s characteristics. Tax rates are usually applied to the assessed value of a property, including the land and any buildings or structures on the land. This explains why different landowners are charged different amounts. A property with a higher market value will pay a higher amount of property tax.
What’s Behind the Assessed Value
Your taxes are based on your assessed value—but who decides what that is?
The group behind the assessed value is BC Assessment, an independent provincial Crown corporation charged with the task of assessing property values throughout British Columbia.
In assessing a property, BC Assessment will generally take into consideration all those aspects that will affect market value: the property’s location; size; topography; shape; use; and, the size, age and condition of buildings and structures on the land.
Although the assessed value is mailed out at the end of the calendar year, it is based on the state of the property as of July 1st of that year. Or rather, the taxes you paid in any given year are based on the value of the property as determined by BC Assessment as of July 1st of the previous year.
How the Assessed Value is Determined
BC Assessment reviews nearly two million properties every year. That’s a lot of information to process.
While Assessors don’t spend as much time in the field as they did prior to our digital age, they still need to inspect properties from time to time in order to verify data. Although municipal and provincial agencies provide such information as building permits, zoning etc., there is no substitute for a physical inspection.
BC Assessment also uses sophisticated computer modelling programs that utilize a wide variety of inputs, the most important of which are your property’s characteristics and recent comparable sales from the neighbourhood.
There are several reasons that your property taxes might change year to year. A change in tax rates can change the amount of taxes you pay. Renovations or other improvements that increase the value of your property or land can bump up the assessed value of your property.
There is another reason that the assessed value might increase, causing your tax assessment to rise—one that can happen even if you haven’t changed a single thing about your property. Assessed values can change alongside the real estate market: if your property is situated in a market that is rising, property values can increase significantly year over year.
Is the Assessed Value the Probable Sale Price Value?
We saved the golden question for last: is the assessed value the same as the market value?
The BC Assessment website states that Property Assessment Notice reports the fair market value of a property. However, considering the sheer volume of properties BC Assessment must evaluate and the fact that properties are not consistently inspected, the assessed value is best considered as a guide only.
The potential disparity between the assessed value and the market value increases in markets where the liquidity is lower. A neighbourhood or region that has a high volume of transactions provides for a high volume of market evidence. The Assessor can use this ‘comparable transaction’ evidence for other properties within that same market. Areas with fewer trades however will make the assessed value much more unreliable as an indicator of true market value.
Finally, the assessed value of your property for tax purposes might be different from the value determined by a mortgage lender or a real estate broker. The most obvious reason is that the assessed value is done on an annual basis only. Furthermore, brokers and lenders will dedicate more time towards researching the property and are able to use the most recent market information to determine the market value. If values differ, don’t be afraid to ask for an explanation to understand the valuation process.
The past decade can undoubtedly be recognized as Canada’s strongest period with respect to real estate appreciation. Significant demand for all asset classes, particularly residential, has led to unprecedented pricing. While ‘strongest’ might be an uncomfortable word for some, it really depends on which side of the fence you reside – the ownership or the non-ownership side.
Real estate has now become such a point of discussion that one cannot open a newspaper or entertain guests without the subject of real estate values or ownership rearing its head. Hand in hand with the discussion on real estate values invariably comes the topic of foreign ownership. While most discussions in the mainstream media have tended to focus on the residential market, there has recently been considerable interest devoted to an asset class that could impact a country’s population in ways that might ultimately be more significant than rising housing costs. This asset class is agricultural land.
Grocery Prices on the Rise
In case you haven’t noticed, the world food markets have experienced several price shocks brought about by supply side interruptions partially due to unforeseen weather related events. According to the World Bank’s “Food Price Watch” May 2014 issue, international prices of food increased by 4% between January and April 2014. Food prices have consistently increased over the last eight years, coupled with several supply shocks, as shown in Figure 1.
The vast majority of households have noticed the recent rise in food prices – from milk and meat to baked goods and kitchen staples. This trend is expected to continue, considering a rising population, changing weather patterns, and higher operating costs (fuel particularly). Securing a nation’s food supply has been a top priority for many leaders, not to mention the increased interest by private agricultural REITS, food producers, and cooperatives.
So how does the residential real estate market in Vancouver relate to Agricultural Land? The simple fact is that global foreign investment in real estate is significant, and the control of agricultural land is one that can have far more impact than the change in supply of office space or apartments in downtown Vancouver.
Agricultural land purchases by foreign companies and state-owned corporations have increasingly been in the headlines, and for good reason. China, Saudi Arabia, the United Arab Emirates, Canada, Qatar, Russia, Japan and Western European nations have all been busy acquiring farmland in other nations that are either more food secure, financially unable to develop their lands, or lack appropriate regulations to prevent the wholesale divestiture of an incredibly important national asset.
If foreign ownership of residential real estate has the potential to (at least partially) skew housing values, what impact will foreign ownership of agricultural land ultimately have on a nation’s food supply, food prices, and security?
Tracking Foreign Investment
With a strong agricultural sector, Australia is an example of a country that lacks appropriate government regulations regarding foreign investment in agricultural land and agricultural businesses – otherwise classified as Rural Land. Recent mass acquisitions of Australian farmland by purchasers from Canada, the UK, the U.S., the UAE, Malaysia, Japan, and others have caused a public uproar and have several political parties campaigning for stricter policies regarding agricultural land purchases by foreign investors.
According to the Australian government’s “Foreign investment in Australian Agriculture” report, 11 percent of Australia’s agricultural land is now foreign-owned, with the highest proportion (24%) in the Northern Territory. Furthermore, according to the Australian Bureau of Statistics (ABS), of the 400 million hectares of agricultural land in Australia, nearly 50 million hectares have some level of foreign ownership (June 2013), an increase of 11 percent from the 44.9 million hectares reported in 2010.
The Australian Greens Party is campaigning to strengthen government policies regarding foreign investment in agricultural land by lowering the reviewable threshold for private companies and taking into account cumulative purchases. Currently, Australia’s Foreign Investment Review Board (FIRB) only reviews investments in land in excess of AU $248 million (unless a sovereign fund is involved), and is not required to take into account cumulative purchases by the same foreign entity that, when combined, comprise $248 million or more. We have made several attempts to contact the Foreign Investment Review Board in order to better understand the demand for Australia’s agricultural land; however, they have been unwilling to provide any additional insight other than what is publicly available.
Both these policies might be subject to change as there appears to be a widespread mistrust of any foreign investment in farmland in Australia. Lowy Institute’s 2012 poll found that the large majority (81%) of Australians are against the Australian government allowing foreign companies to buy Australian farmland . There are also more general concerns that government-owned foreign buyers may out-compete local entrepreneurs in agriculture, and that they will not follow the environmental standards in maintaining the farm land, thus jeopardizing its productivity in subsequent ownership.
The largest investors in Australia’s agricultural land were countries with mature agriculture sectors, able to bring the latest technology and management skills for this sector. Interestingly, the country with the largest investment volume in Australia’s agriculture sector between 2007 and 2012 was Canada, with nearly a quarter of the total investment volume, followed by the UK and US.
In 2010, Alberta Investment Management Corporation (AIMCo), one of Canada’s largest pension fund managers, acquired an interest in 252,000 hectares of forest land in Australia by purchasing Great Southern Plantations for A$415 million. For the moment, this land remains forest, but AIMCo plans to partially transform its asset into agricultural land.
But should we really care if foreign interests control significant amounts of agriculturally productive land? That’s an argument that partially depends on the country, and the nature of the investor, I suspect.
In the case of many African nations that lack the financial wherewithal to develop their lands, perhaps it might be seen as a benefit. At least the host country will benefit from access to employment, a potentially increased food supply, improved technology and industry knowledge, access to capital, and, most importantly, productive agricultural land.
In the case of Australia, a country that is already well-capitalized and a net exporter of agricultural products, the benefits are not as clear. While some might argue that land acquisitions by Canada (as an example) are being made as purely economic investments, much like how any fund would acquire an income producing asset (or stock, or bond), the future ramifications could be considerable. When we consider climate change, population growth, and energy cost increases, a country’s food security starts to look a little different.
In 2013, the Chinese Ministry of Environmental Protection identified 3.3 million hectares (roughly the size of Belgium) of farmland that had moderate to severe pollution and was deemed unfit to support agricultural use.
Some have estimated the cost of remediating this land at over $800 billion. With a population of almost 1.4 billion, it’s not surprising that China has been looking to expand its agricultural land holdings through state-owned enterprises (SOE) to diversify its agricultural land holdings and feed its population. As mentioned, in the case of Australia, state owned enterprise investments remain a politically sensitive issue – the Foreign Investment Review Board must approve each SOE investment regarding agricultural land in Australia.
With an estimated 80 million new mouths to feed each year, the planet’s largely unrestrained population growth will continue to put pressure on our developed farmland.
Canada’s Agricultural Land Policies
So what about Canada? Do we protect our agricultural land and our food production? As outlined previously, while there are no restrictions in British Columbia with respect to foreign ownership of real estate, we do regulate agricultural land. This is done through the Agricultural Land Reserve, or ALR. The ALR is a provincial land use policy that preserves our agricultural land for agricultural uses. At least this controls the fixed supply of agricultural land and will prevent it from being utilized for non-agricultural uses.
What about other provinces? It turns out many of our provinces have fairly stringent regulations when it comes to foreign ownership of land, with respect to agricultural land. Alberta, Saskatchewan, Manitoba, Quebec and Prince Edward Island all have regulations in place that are intended to prevent foreign ownership of agricultural land (although PEI is a little different).
Saskatchewan has historically had the most stringent regulations. Until 2002, ownership of agricultural land in excess of 320 acres was limited to Saskatchewan residents only. This law was changed in 2002 to permit all Canadian residents the right to own farmland in the province. Saskatchewan’s policies appear to be strictly applied. Discussions with Mark Folk, the general manager of the Saskatchewan Farmland Security Board, indicated that its board reviews all purchases of farmland in the province – this is reportedly more than just a cursory review.
It is not surprising to see Saskatchewan has the policy it does. Let us not forget that this is the home of Tommy Douglas, the founder of Canadian Medicare and one of North America’s first democratic socialist governments. Saskatchewan’s political position might have influenced the creation of the Saskatchewan Farm Security Act in 1974, much like the B.C. NDP government created our ALR in 1974.
Alberta and Manitoba also have similar regulations to Saskatchewan that restrict the ownership of agricultural land to predominantly Canadian interests. In Quebec you need to be a Quebec resident for at least 366 days before you are eligible to purchase farmland. On Prince Edward Island you need to get approval to purchase more than 5 acres (not just farmland) if you are not a provincial resident.
Although provincially regulated, farmland in most Canadian provinces can’t be acquired by foreign entities. It would have been interesting to sit with policy makers at the time various policies and acts came into being to understand the factors that led to their creation and the general climate at the time. Certainly the recent global surge in farmland acquisition has had significant impacts in other parts of the world, with respect to raising the question of foreign ownership.
Despite a whopping 28% increase in values in 2013 alone, from a global perspective, Saskatchewan farmland is considered to be very affordable. Couple this with a stable Canadian government, strong financial system, and many other factors, and it’s easy to understand the interest in our agricultural sector. Saskatchewan land prices would undoubtedly be much higher today if not for Saskatchewan’s policy; yet they have still gone up. Determining one single factor for their increase is challenging, but at least part of the increase is certainly due to the change in the policy in 2002 allowing any Canadian interest to acquire land. We would be looking at a very different picture if there were no restrictions at all.
It is interesting that many of our provinces felt it was important to develop foreign ownership restrictions on agricultural land. The protection and control of our food supply is deemed to be important to the economic welfare, the social fabric, and the safety of many of our communities, yet when it comes to other asset classes, there is no such consideration.
Without respect to subsidies or tariffs on agricultural products, goods, for the most part, enter into the supply of global trade. Regardless of who is producing these assets they should ultimately have a similar retail price within given economic regions. As a Canadian consumer, the price of wheat will generally be the price of wheat regardless of who is producing it, and, most significantly, where it is produced – until supply and demand variables change considerably.
Perhaps what we should be considering when thinking about real estate is the ‘product’ that is consumed. The product produced by agricultural land can be consumed globally, but the same can’t be said about residential housing. If foreign investment raises local prices beyond the reach of those tied to the local economy, at a certain point there are no more tradeoffs and concessions that certain economic classes can make. That is, those that are financially unable to afford housing will simply leave the region. Housing is not a good you can import – unlike apples from Washington State or grapes from Chile, goods that are also produced here.
Our politicians enacted effective legislation to protect our farmland – and food security – from foreign investment and control. This protection was obviously put in place with good reason. Some would suggest that Vancouver, and perhaps Toronto as well, is facing a crisis in housing affordability. Whether or not domestic housing values are related to foreign investment has not yet been objectively determined. The fact remains that real estate is becoming increasingly globalized, and with this globalization comes a host of factors that will continue to shape our policies, communities, and, quite possibly, what we eat. Whether or not we enact legislation to control these factors is food for thought.
You’ve probably heard about some person who lucked out on picking up a property in foreclosure at a fraction of its market value – or maybe you’ve just seen the words “Court Ordered Sale” on a property listing description and wondered what it meant.
This introduction on foreclosure properties in BC will give you some insight into the process of buying a property by way of a Court Ordered Sale, including some of the risks involved. We realize that this is not a “how to” for Court ordered sales; rather, it is an overview of the various components of the process.
What is a Foreclosure Property?
When a property owner is unable (or unwilling) to repay a mortgage on a property, a lender can apply to the BC Supreme Court for the right to sell that property and recover its investment. Through the foreclosure process the lender can apply for and receive “Conduct of Sale” that will give it control of the sale process and allow it to list the property for sale with a Realtor, market the property and solicit offers. The process is very specifically regulated by the Court, and any ultimate agreement to sell the property must be approved by the Court. These sales are referred to as foreclosures, or Court Ordered Sales.
The Selling Price
As with most other property offerings the terms and conditions of a Contract of Purchase and Sale, including the ultimate sale price, is usually negotiated between the Vendor (lender) and a Purchaser. Having said this, the Lender still has an obligation to be able to show the Court that any sale is based on fair market value and that the property has been adequately and broadly marketed.
Once the Vendor and Purchaser agree to the terms and conditions of a purchaser agreement on a foreclosed property, the sale process is far from being done.
An accepted offer on a property, subject to a Court Ordered sale process, can include purchaser’s subject conditions such as due diligence, appraisal, inspection, financing, etc. These sorts of conditions are typical in most real estate transactions and are always recommended so that a purchaser can make an informed decision. A deal, though, also needs to be subject to approval by the Court. The Court approval condition is a third party condition that can only be set in motion once the purchaser’s conditions have been fully satisfied and waived.
Once the contract is non-conditional on the Purchaser’s part, an application can be made for Court approval. A hearing date is set and the parties prepare for approval.
As Is, Where Is
It is important to note that properties subject to foreclosure and the Court ordered sale process are sold “as is, where is”. Since the vendor is the lender of the property (and not, in fact, the property owner), it cannot be expected to be knowledgeable about the property to the extent that it can make various disclosures, representations or warranties as to the state and condition of that property. In other words, as a prospective purchaser, it’s a very good idea to retain the appropriate experts to undertake due diligence for things such as zoning and development potential, building condition, financing, environmental condition and other relevant inspections. Once the sale is non-conditional (and assuming it is approved by the Court), there is no turning back.
Once there is a non-conditional agreement between the lender and the purchaser (subject only to Court approval), the solicitor for the lender will schedule a hearing date for the application to be heard by the Court. Applications are typically accompanied by affidavits or reports from the lender, Receiver (where applicable), the Realtor and other parties familiar with the file, that would outline the history of the file, the outstanding balance of the loan, any efforts to collect outstanding balances and marketing efforts that will have been undertaken in order to sell the property for the highest possible price. Depending on the nature of the asset these reports can also include an appraisal and other supporting documentation. The objective of this information is to ensure that the Court is supplied with sufficient background so as to satisfy itself that the proposed sale is, indeed, indicative of fair market value; having been marketed in a comprehensive and generally acceptable fashion. A hearing is typically within 14 days of the application being made to the Court.
An interesting (and sometimes exciting) aspect of the Court approval process in British Columbia is that all of that information supplied to the Court as part of the application process to the Court is available for public scrutiny. The agreed upon sale price will be made public in order to ensure a fair and transparent approval process. Others who have expressed interest in the property will typically have the ability to attend the hearing and observe the proceedings, and even submit competing offers. This means that, unlike the conventional property purchase process, the prospective purchaser with the accepted offer on the property is not necessarily the party who will walk away as the new owner. The hook is though, that any new offers being presented to the Court at the hearing must also be non-conditional and be accompanied by a non-refundable (pending Court approval) bank draft or certified cheque.
The Court Process
On the determined Court date, representatives for the vendor and the purchaser (with the now subject-free contract) will attend court, along with any other interested parties or prospective buyers who wish to submit an offer on the property to the Court. In some cases, no new buyers will present themselves in court. In other cases, we have seen multiple offer scenarios develop before our eyes.
If other parties do show up, they will typically be required to submit an offer in a sealed envelope for consideration by the Court. The new offer will obviously need to be higher than the agreed upon sale price between the seller and the original buyer. While this scenario might appear to provide an unfair advantage to the newcomer, it is worth noting that the Court will always allow the original purchaser to revise its offer, if desired.
Reviewing the Offers
The Court will consider all of the information before it in making a decision on the approval of an offer. If there are multiple offers the Master (Judge), will then open the offers and will review them… and typically, choose the highest bid. It is important to note that the highest offer on paper might not always be the best offer as the Court will also often take into consideration the amount and status of the deposit, the proposed completion date and other factors that might impact the transaction.
Occasionally, the judge might decide that none of the offers are worthy of approval. This might be the case if, for example, the underlying owner is able to convince the Court that the offer(s) is in fact, below market value or if the Court determines that the property has not been sufficiently exposed to the market.
When the deal is approved, the Court will issue what is known as a “Vesting Order”. The order is the approval by the Court and it provided instruction to the Registrar to effect the transfer of the title of the property to the successful bidder. The Vesting Order also serves to extinguish any and all financial encumbrances that could limit the new owner’s rights under the title. The Vesting Order will not extinguish encumbrances such as access easements, reservations of the Crown, restrictive covenants or other non-financial registrations on the title.
Always a Steal?
You might have heard of stories in the United States where buyers pick up a foreclosure property for pennies. You aren’t likely to come across such extreme stories like this in BC. However, there are often some great deals to be had.
While Court Ordered sales do need to reflect transactions at fair market value, it is important to bear in mind that properties sold via this process often have some sort of “hair” on them or a history that might make them more difficult to transact, develop or utilize. “Fair market value” might, in fact, reflect some sort of deficiency or other challenge such as soft market conditions (in the case of a development site). Prudent purchasers look for opportunities and can apply a creative approach where others might have simply run out of steam… or money.
Properties acquired through the Court Ordered sale process are perhaps the best examples of “buyer beware” in our real estate marketplace. Like all investments, though, there is a relationship between risk and reward. For an informed purchaser, the reward in getting a great deal on a prime property can often far outweigh the risk.
On June 26, 2014 the Supreme Court of Canada released a landmark decision concerning Aboriginal rights and title in the Tsilhqot’in Nation v. British Columbia case.
In a unanimous decision, the Supreme Court of Canada confirmed that the Tsilhqot’in Nation holds Aboriginal title to over 4000 square kilometers of land west of Williams Lake. This decision is significant because it is the first judicial finding of Aboriginal title in Canada.
In the Tsilhqot’in Nation case, the Supreme Court of Canada confirmed that in order to establish a claim to Aboriginal title, a First Nation must be able to prove “sufficient occupation” of the land in question at the time of European settlement. Of importance is the Court’s determination that “significant occupation” is not confined to specific settlement sites, as had been determined by the BC Court of Appeal, but extends to lands regularly used for hunting, fishing or otherwise exploiting resources and over which the First Nation exercised effective control at the time of the assertion of European sovereignty. The adoption of the broader “territorial” approach, as opposed to the narrower “site specific” approach, will probably result in larger title claims succeeding in the future.
Once Aboriginal title is established, the successful First Nation will have the right to decide how their land will be used, the right of enjoyment and occupation of their land, the right to the economic benefits arising from their land and the right to proactively use and manage their land. Such use will not be confined to pre-sovereignty uses and customs such as hunting and fishing only. Modern Aboriginal land holders will be able to use their land in modern ways. As Aboriginal title includes the right to reap the economic benefits of resources situated on Aboriginal title lands, successful claims will result in a diminution of resource revenues to the Province from those lands.
Of interest to many British Columbians is what effect, if any, this decision will have on private property situated on land that is subject to a First Nation claim. The simple answer is none. The Tsilhqot’in Nation did not include any privately owned land in their territorial claim, so how Aboriginal title can be reconciled with private property rights is a question for another day.
The Tsilhqot’in Nation decision does not change the basic principles of the Crown’s duty to consult with First Nations but it will compel the Crown to engage that duty more often as the geographical scope of Aboriginal title has been more broadly defined by the Court’s adoption of the “territorial” approach.
It is difficult to speculate about the implications of the Tsilhqot’in Nation decision. Initial reaction seems to range from “nothing has changed” to “the sky is falling.” While it clearly provides certainty to the Tsilhqot’in Nation, what will its effect be on the many other First Nation land claims in British Columbia? Will some First Nations abandon the treaty process and seek certainty through the Courts? How long will that process take? Will the Crown’s broader duty to consult resulting from the adoption of the “territorial” approach enhance or impair resource development on Crown land in British Columbia? The answers to those questions will be revealed over time.
Hopefully First Nations, government and industry will seek ways to collaborate to shape the future of British Columbia. The Tsilhqot’in Nation decision repeated the oft-quoted words of Chief Justice Lamer in the Delgamuukw decision that Aboriginals and non-Aboriginals “are all here to stay.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Real estate investment opportunities have tightened up in some foreign domestic markets, causing more players to look elsewhere for opportunities for capital appreciation and income yields associated with the asset class. In 2013, the United States maintained its dominance as the top destination for direct real estate investment and continued to be the world’s largest and most liquid real estate market. The United States had $214.6 billion of direct real estate investment in 2013, up 21.0 percent from a year earlier.
“Canada top Foreign Buyer of US Real Estate in 2013″
Canada was the top foreign buyer of US Real Estate in 2013, with China and Australia taking the second and third positions in 2013. Over $38.7 billion of foreign capital flowed into the United States in 2013, up over 40.0 percent compared to the $26.8 billion in 2012. Much of this international capital was directed at the primary markets of Manhattan, Los Angeles and Chicago, as well as secondary markets in Houston, Dallas and Seattle.
*Properties and portfolios of $2.5 million and greater; Including development sites
Source: Real Capital Analytics, Jones Lang LaSalle Research
By the end of Q4 2013, the spread between the 10-year Treasury yield and cap rates of top core properties ended in the 200-300 basis point range, a decline of 100 basis points from a year earlier. Despite some volatility associated with the Federal Reserve tapering that began in January 2014, overall interest rates and government yields in the U.S. remain low from a historical perspective. The favorable lending environment continued to provide competitive financing product to make all-in loan pricing for real estate very attractive for borrows of all types.
The U.S. is experiencing an improved housing market, greater lending capacity and improved employment figures, consequently, the U.S. is anticipated to grow at 2.8 percent and 3.0 percent in 2014 and 2015 respectively. As a result, off-shore capital is being deployed in the United States as it seeks a stable economic environment. Analysts are anticipating capital flight out of emerging markets such as China, which is experiencing a slowdown in growth, toward safety and quality sought in U.S. assets.
Foreign capital is expected to remain a growing part of the U.S. real estate market. In 2013, foreign capital made up 10.0 percent of all investment in commercial real estate in the U.S; Canada accounted for approximately 39 percent of this foreign capital. This trend could accelerate if more investors expand beyond absolute core assets and consider opportunities that require a greater risk appetite with potential higher returns; these opportunities include value-add and development.
Canada has been a dominant foreign investor in U.S. real estate over the past four years after emerging in better financial shape from the 2008 Financial Crisis due to stricter bank policies and an ability to issue recourse loans. The deeper pockets of the Canadians allowed the country to invest in U.S. real estate when values were most suppressed. For 2013, Canadian investment represented almost one-third of all foreign activity coming into the U.S. and we can expect this trend to continue. Canadian investors allocated $11.86 billion to U.S. real estate across 458 properties in 2013. The majority of Canadian capital into the U.S. was generated by public real estate operating companies (REOCs) and real estate investment trusts (REITs). Toronto-based Brookfield Asset Management is a public REOC that invested over $4 billion into the U.S. real estate market in 2013, focusing on 90.0+ occupied suburban and CBD office properties, garden style apartments and industrial warehouses located across Dallas, Houston, Los Angeles and Washington, DC.
Chinese investors allocated $3.12 billion to U.S. real estate across 31 properties in 2013. Chinese capital deployed in the United States is a result of investors looking for more stable environments and diversifying their portfolio. Chinese investors have been targeting real estate opportunities located mainly in the primary core markets, including Manhattan, Los Angeles and San Francisco.
As U.S. real estate markets continue to improve, the Australians have continued to pool capital outside their own domestic markets. As such, they seek greater direct ownership via partnerships, with fund managers offering sector-specific expertise. In 2013, Australia invested $2.68 billion into the U.S. real estate market, with a strong focus on retail and office assets. Over the next few years, Australia is expected to become an even bigger player in the U.S. real estate market.
Also coming out of Asia, we expect Singapore to continue to be a significant source of foreign funds into the U.S. During 2013, the Sovereign Wealth Fund GIC (Government of Singapore) was a very active, as sizeable full-service resort hotel deals were transacted across Hawaii, Arizona and California.
Tax issues in the U.S. remain a relevant issue for most foreign buyers. The Foreign Investment in Real Property Tax Act (FIRPTA) discourages foreign investors from buying U.S. property by requiring them to pay taxes on any realized gain upon the disposition of the asset. In addition, upon acquisition, the purchaser of the U.S. real estate is required to have withheld 10.0 percent of the purchase price upfront at closing to actually cover the tax liability upon the ultimate asset sale. While this has not stopped foreign capital from entering the U.S real estate market, it has somewhat curtailed the amount of overall investment. If the recently proposed exemptions for foreign pension funds and sovereign wealth funds are accepted, foreign players will be on an equal footing and ultimately, increase U.S. real estate investment volume activity.
While some foreign investors are partnering with publically traded REITs to get around the taxation issue, others are simply partnering with no-REIT entities, forming platform deals, or taking on minority stakes to minimize their ultimate tax liability.
Foreign investors are continuously recognizing real estate’s role for capital appreciation and as an income producing hard asset, which serves as an inflationary hedge. New sources of foreign capital into the U.S. will continue to emerge. As such, we expect the U.S. to continue to be the “safe haven” and destination of choice for international capital in 2014 and beyond, with a focus on high-quality office assets and growing interest in residential development in prime and surrounding markets.
Are recent Changes to the Agricultural Land Reserve significant? For more than 40 years, roughly 5% of the land within British Columbia has been classified within the Agricultural Land Reserve (ALR), limiting the use of both privately and publicly owned parcels of land to primarily agricultural-related purposes.
And now, for the first time since its inception in the early 1970’s, the ALR is getting a bit of a makeover.
The new legislation will split existing ALR-designated land into two zones, one of which will be designated to allow for more flexible land uses beyond what was traditionally permitted within the ALR. Here’s what you should know about the new legislation.
What is the ALR?
Back in the 1970’s, land in British Columbia that was suited towards agricultural use was being developed into urban and other non-agricultural uses at a very rapid rate. With the goal of protecting agricultural land, the provincial government designated more than 11.5 million acres of land within the province into the Agricultural Land Reserve.
Parcels of land within the ALR are subject to the Agricultural Land Commission Act, which encourages farming uses and discourages non-agricultural uses. The building of a single-family residence is usually permitted within ALR land, but further development of the land beyond agricultural and ‘agritourism’, is severely restricted.
If Your Property is Designated ALR
If your property is in the ALR—and there are maps that illustrate which properties are affected by the ALR—then your use of the land is limited to what is permitted under the Act.
Generally speaking, properties within the ALR tend to have a lower market value than an identical property that is not in the ALR. That’s because the ALR designation limits a property’s use and development potential.
ALR land is frequently found in rural areas, but you might be surprised to find ALR designated parcels in the middle of developed urban spaces.
Can a Property Be Removed from the ALR?
Technically…yes. A property can be removed from the ALR if you submit an application to the Agricultural Land Commission (ALC), and if the ALC approves it. That second “if” is a rather significant one—each case is completely unique, the ALC is typically not eager to remove the ALR designation and very little agriculturally productive land within the province has been removed.
What Does the New Legislation Mean?
The biggest change introduced by the new legislation is the creation of two zones within the province, namely the changes in the restrictions within Zone 2.
Zone 1 includes some of the province’s most developed land including the South Coast, Vancouver Island, and the Okanagan. This zone, which encompasses the areas within the province with the highest quality soils, will continue to enforce the original ALR restrictions.
Zone 2 consists of land parcels within Northern BC, the Kootenays, the Cariboo, and other parts of BC’s interior. These areas typically have poorer soil quality for agricultural purposes. Some parcels designated within the ALR in Zone 2 will now be permitted additional uses, including food processing, potential oil and gas development, and other non-agricultural activities that make economical sense. The changes in legislation mean that ALR land in these areas can now be used to generate income in ways beyond traditional agriculture.
Another change introduced by the legislation is the restructuring of the Agricultural Land Commission, the group in charge of overseeing the ALR.
Of course, the new legislation doesn’t come without a little controversy. Opponents from the New Democratic Party argued that the Liberal provincial government has ulterior motives. Leaked (and rather unflattering) e-mails between Bill Bennett and Pat Pimm, the ministers behind the ALR bill, hinted that the pair had plans to weaken the ALC. There was some turbulence surrounding Bill 24 when it was first introduced, but ultimately, the bill passed.
Some people are concerned that the changes will impact the province’s food security and affect farmland preservation. The reality is that much of the land designated within the ALR, particularly in Zone 2, is simply not suited towards food production. In theory, these parcels of land can now be used more productively.
What Does This Mean For Me?
If you have property within the ALR in Zone 2, the utility, or Highest and Best Use of your property might change. On a broad brush basis however, given our knowledge of property values and liquidity within Zone 2, this change to the ALR will likely not affect property values significantly on a gross basis. There will likely be some smaller properties that benefit, but overall the changes will be minimal. If you are curious to know whether your property has changed in value, please contact us.
How Drones are Changing Real Estate Marketing
You might have noticed something new in the world of online videos. Drones are recording videos inside active volcanoes, into fireworks displays, over scenic vistas… and they’re capturing real estate from—quite literally—a whole new angle.
Drones, also known as unmanned aerial vehicles (UAV), are essentially a very advanced and highly technical Remote Control aircraft. These are not however the toys that were around even 10 years ago. Incorporating GPS technology, long range receivers, First Person Viewing (FPV), and the ability to set the flight parameters from an Ipad or similar device, these craft are incredibly sophisticated and becoming more ubiquitous by the day.
The majority of drones that are being used today are ‘quadcopters’ although you will also see larger hexacopters and octocopters used in aerial filming with much larger cameras attached. Historically, the use of drones has been somewhat limited to military purposes and for special operations, such as scientific research, disaster relief, and search and rescue.
More recently, the use of drones has broadened significantly: for example, you might have heard about Amazon’s plans to eventually use drones to deliver its packages. One of the most significant ‘newer’ uses for drones is capturing graphic content using onboard cameras. Just as drones have changed the landscape of sports, nature, and tourism videos, it has also introduced some exciting new opportunities to the world of real estate. Here are just a few of the ways that drones are helping reinvent the world of real estate marketing.
Aerials at a Fraction of the Cost
The use of video for real estate marketing is nothing new, but until now, it has often been limited to panning views of individual rooms or, at best, a walking tour through a property. Just a few years ago, if you wanted to film aerial views of a property, you had to do so by helicopter—which is very, very expensive.
The highest quality drone videos are still quite expensive to produce, but nowhere near as prohibitively expensive as a helicopter shoot. While aerial video might seem over-the-top for a single-family residence, it can be incredibly useful for properties such as large estates, private islands, and more.
Condominium developers are also using them to capture the precise views from specific units—before the units are even constructed. Potential purchasers can make sure that they like the view before signing on the dotted line.
New Levels of Access
Not all properties are easy to photograph. In fact, not all properties are easy to navigate. Private islands benefit significantly from aerial photographs to provide that much needed context as do large estate properties. Similarly, getting good photos of treed properties and large development sites is extremely challenging from the ground. Drones are changing the way properties are photographed.
Viewing Properties Remotely
Real estate continues to become an increasingly international industry. Buyers look for investment properties well beyond their own backyards. However, distance means that it is often not feasible for investors to travel to see a property in person. High quality photographs and videos are absolutely essential in providing purchasers an accurate overview of a property. Drones offer these international buyers the next best thing to walking through the property themselves. Taking virtual tours to the next level, drones allow these buyers to see every nook and cranny of a property—including tight spaces or hard-to-reach spots that they might not even be able to access in person.
The future of drone video looks promising—albeit a little hazy. In the United States, drones have been temporarily banned from National Parks. Further, using drones to film real estate in the US is actually illegal: the Federal Aviation Administration considers it to be unlawful to fly drones for commercial purposes, which includes real estate marketing. In Canada the use of drones or any Remotely Controlled model aircraft is permitted without any special permits.
A model aircraft is defined in subsection 101.01(1) of the CARs as: “an aircraft, the total weight of which does not exceed 35 kg (77.2 pounds) that is mechanically driven or launched into flight for recreational purposes and that is not designed to carry persons or other living creatures”. To be considered a “model aircraft”, all three conditions must be met:
(i) the aircraft must weigh 35 kg. (77.2 lbs) or less,
(ii) the aircraft is mechanically driven or launched into flight for recreational purposes, and
(iii) the aircraft are not designed to carry persons or other living creatures.
In the event that an operator is utilizing the drone for commercial purposes where they are financially remunerated, either directly or indirectly (the definition is quite broad), then such an operator will be required to fill out a form with Transport Canada in order to be granted a Special Flight Operation Certificate.
As with any new technology, it will surely take some time until laws and regulations are fully caught up, although it seems that there is increasing public pressure to restrict or at least control their use. But anyone who has seen the incredible footage that a drone can capture will probably agree: drones aren’t going anywhere.
The Story Behind the Woodfibre LNG Site
Given that Woodfibre could be the first active liquefied natural gas project in BC, that quiet isolation might not last long.
When we represented the sellers, Western Forest Products, in the sale of the Woodfibre site in 2013, we knew that the story of this property was far from over. Woodfibre is more than just a plot of land: it represents British Columbia’s industrial past, and the province’s quest to develop the industries of the future.
When you’re heading towards Whistler on the Sea to Sky Highway, you’ll notice that amidst the views of the Coastal Mountains and Howe Sound, there is a large industrial facility situated across the water. That 212-acre parcel of land just southwest of Squamish is the Woodfibre site.
The Woodfibre Mill
The site now known as Woodfibre was first developed more than a century ago, when a small sawmill was built on the property. Over the next few of decades, the property expanded into a pulp plant.
The area, known first as Mill Creek but eventually renamed to Woodfibre, began to grow into a bona fide community. Its location on the west upper side of Howe Sound meant that it could only be accessed by boat. People lived and worked in Woodfibre for several decades. The mill employed over 750 people at its height of operational capacity.
Over the course of its life the Woodfibre pulp mill exchanged hands a few times. Towards the end of the 1950’s, the residential community (then owned by Alaska Pine & Cellulose Limited) was shut down. Community members eventually dispersed into other nearby towns.
Western Forest Products and Woodfibre
British Columbia-based forestry company Western Forest Products eventually took over the Woodfibre mill in 1980. Western Forest Products brought the mill up to modern standards, and the pulp mill once again began to serve as one of the main economic drivers in the area. The industrial site created jobs in the community and contributed approximately $2 million annually to the municipality in property taxes.
Shifts in the industry in the province—namely high production costs and increased international competition– lead to Western Forest Product’s decision to close the pulp mill in 2006. The facilities on the Woodfibre site were dismantled and sold to a company that planned to rebuild the mill in China.
In early 2013, Western Forest Products announced the tentative sale of the Woodfibre property to a privately owned, Indonesian-based company called RGE Pte. Ltd. The sale is subject to environmental remediation, among other conditions, and is expected to be finalized at the end of 2014.
The property was purchased with intentions to develop a small-scale liquefied natural gas processing and export facility.
LNG: A Crash Course
LNG is natural gas that has been converted into liquid, which makes it easier to store and transport over long distances.
The LNG industry has been developing at an increasing pace since the early 2000s, when the industry benefited from new technologies that made the production and transportation of LNG more affordable.
Demand for LNG, particularly in Asia, currently exceeds supply, and many countries are making plans to enter the industry, including the United States, Australia, and of course, Canada.
Woodfibre: BC’s First LNG Project?
Once the property sale has officially been completed, Woodfibre LNG (owned by RGE Pte. Ltd.) will decide whether or not to proceed with the LNG project. If they do, the plant could be up and running as soon as 2017.
The project has the support of the B.C. Liberals and provincial premiere Christy Clark, who campaigned on the promise of developing BC’s LNG industry.
There are some obstacles in Woodfibre’s future: activists are concerned about the new owner’s environmental track record, while Squamish residents have opinions about the new LNG plant’s impact on their community.
Here is the Link to the Woodfibre LNG site.
Woodfibre LNG’s proactive response—including switching the plant’s energy source to electricity to minimize environmental impact and noise pollution—illustrate that the site’s future as an LNG facility looks promising. We won’t know for sure until 2015 what will happen—but we’ll definitely be following the story!
Top 10 Considerations before you buy your Private Island
Have you ever thought of buying a private island? It’s not that far out of reach when compared to other recreational options in Western Canada. In British Columbia we are blessed with a protected and breathtakingly natural inland waterway that contains numerous private islands. The Canadian Gulf Islands are part of the same archipelago as the San Juan Islands in Washington State and have many of the same characteristics. There are about 100 islands in the Gulf Islands area (increasingly referred to as the Southern Gulf Islands) with eight of the larger islands enjoying regularly operated ferry service. The private islands in the Southern Gulf range in size from less than a ¼ acre to more than 1,440 acres The principal attraction in the ownership of an island is the basic feeling of splendid isolation from that other world across the water. Owning an island comes with its own set of unique issues. If you are intent on buying a private islands, following are what we consider to be the top 10 things to consider:
The location of an island is one of the most critical considerations. Be aware of the surrounding area and the services, amenities, or lack thereof, that are available. Some private islands are close to larger communities, which is attractive to some buyers but a detriment to others. Other islands are less accessible, which again, is attractive to some purchasers and less so to others. Generally, the more remote the island, the tougher the access.
Where you live and how you plan to get to the island is a key consideration. Private islands, by their nature, are generally only accessible by private boat or float plane. Traveling by boat from Vancouver to your private island can be very quick (or slow) depending on weather conditions, the speed and stability of your boat and the location of the island. The most common method of transport by many island owners is by floatplane, which is faster and much more convenient than boat travel. Traveling time from the floatplane dock at Vancouver International Airport to your private southern gulf island can take as little as 15 minutes.
The quality and extent of the improvements are important aspects of any island purchase decision. It is important, as with any home purchase, to gain a good understanding of the nature, age and maintenance requirements of the buildings situated on an island. Some purchasers want to have complete luxury while others are more interested in having limited improvements. The utility served by the improvements is one of the most important factors to consider when buying. An over improved island may prove to be much more difficult to sell because it defines the previous owner’s vision more than the new purchaser. The cost of renovating or building new on any island is always higher than in locations where there is ready access to workers and materials.
Most, but not all islands, have some moorage potential, some islands offer only summer moorage and the floats must be taken in during the winter months. Can you imagine arriving at low tide by boat or float plane with your kids, luggage and groceries and scrambling across slick seaweed, and barnacle covered rocks to get to the dwelling? Many island purchasers own larger vessels that they want to be able to keep close at hand. Good moorage should be a priority consideration.
The larger islands generally offer more interesting elevations because of their size. Many islands have some steepness and some have only cliffs or high banks making access to the sea difficult. Others have low-lying areas and nice open beaches. Water access is an important consideration. Building sites on higher banks offer arguably better views and are better protected from winds. Lower bank waterfront, however, provides that sense of being at one with the ever-changing ocean. Most people prefer low-bank waterfront. Of course, any island that offers differing topography will appeal to differing tastes and preferences.
6. Water Frontage
While the upland area of an island is important, its shoreline will always be the focal point. Whether we are talking about a private island or a waterfront estate on Vancouver Island or the Mainland, the shape of a property often dictates the desirability of the waterfront. An island which possesses a variety of shoreline characteristics is likely best. The mood of each special place is different and will be appreciated differently at different times of the day or year.
7. Flora and Fauna
Many islands, due to their steepness and rugged nature, tend to have sparse forest cover and almost no ground cover due to the lack of topsoil. Some islands have a great variety of plant life from thick forests to fern clad cool glades, open grassy meadows, swampy areas and even ravines where the forest floor is almost devoid of any growth because of tall evergreens that filter out the sunlight. Islands tend to be uniquely individual eco systems that host varieties of flora; from wild flowers blooming in spring; to native Fir, Cedar, Arbutus and Garry Oak trees; to fruit trees that provide a spectacular announcement of the coming summer season and annual harvests in the summer and fall; to the salal undercover that characterizes so many of the Gulf Islands. All areas have shoreline animals such as mink, sea and river otters, and the ocean is home to a myriad variety of fishes, sea lions, seals and pods of killer whales. The air belongs to the soaring eagles, hawks, great blue heron, woodpeckers, owls, kingfishers, gulls, ducks and geese and many other sea birds and song birds. Deer are common and a nuisance to the serious gardener but high fences around the growing area can thwart these animals. Bears, wolves and cougars are rarely, if ever seen on any of the Gulf islands.
Smaller islands tend to have more difficulty in producing drinking water from wells. As in many parts of the world, water can be scarce on some islands. We often do not think about a lack of water here as a result of the amount of rain we typically get; however drinking water is another matter. Larger islands tend not to have difficulty proving water. Some smaller islands rely on rainwater collection, or on state-of-the-art desalination plants. Desalination is actually relatively inexpensive compared to drilling 300 feet, or more, into solid rock in the hope of finding water. In addition, a desalination plant will produce excellent quality (and great tasting) drinking water. Water storage is another key consideration. During the dry summer months when wells tend to be less productive, water storage capacity is valuable from the perspective of both having a sufficient supply as well as having fire-fighting capacity. Remember, when you are on a private island, help can sometimes be a distance away!
Telephone and On-Site Services Depending on the individual, the availability of on-site services can have a big impact on one’s enjoyment of an island. A small percentage of private islands enjoy the luxury of electricity. Most island owners get by with using solar inverter systems and propane for cooking, refrigeration, and hot water. In effect, on site power generation can provide all of the conveniences of the city. Some islands have shore cable power. Shore cable power offers tremendous convenience for those used to such luxuries. In some cases, however, the cost of running undersea power cables long distances and through great depths is prohibitive. Large private islands such as James Island and Subtle Island, have a significant underwater power cable. Regardless, electricity is a tremendously valuable asset on an island if for no other reason than to keep the ice cubes flowing. Telephone service is no longer a necessity due to excellent cell phone and satellite coverage up and down many parts of the coast.
A good caretaker can be worth his or her weight in gold. Since islands are very private places, it is always worthwhile to consider the security of the investment. Vacant properties can be inviting to casual explorers, campers, kayakers or other members of the public. In addition, there are unfortunately vandals and thieves out there on our beautiful coast and any waterfront property not in eyesight of a neighbour should have a caretaker or someone keeping an eye on the premises for the owner. A caretaker should also be there to ensure that the island continues to operate properly throughout the year. Winter storms can cause trees to fall, shingles to become detached from roofs and other damage to occur. An onsite caretaker should have the ability to act as a security guard as well as a handy man and ambassador to visitors. With all considerations aside, the fact remains that the splendid isolation of owning your own island will always have tremendous appeal. Perhaps it is the idyllic fantasy complete whereby you are the master of your own island…the master of your own domain…and destiny.