Landed Newsletter No. 11 looks at immigrants evading taxes (and civil servants avoiding responsibility) in Canada, negative interest rates arriving at retail banks, vulnerabilities in the internet of things, Airbnb's impact on housing markets and much more.
The Landed Newsletter highlights news and resources that you can use to make better real estate decisions, whether you are buying, renting or investing. With a focus on Asia and the Pacific Rim, The Landed Newsletter covers trends, legal and environmental developments and technology.
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CityLab has interesting look at how speculators are bidding-up the market for condos in Phnom Penh.
The South China Morning Post’s Ian Young reports that Canadian tax authorities knew that immigrants buying homes in Vancouver were hiding their income, but failed to act on the knowledge. Young’s report is based on 20-year-old internal reports from the Canadian Revenue Agency that were leaked by agency employees. A follow up story indicated that authorities felt the tax recovered from the immigrant buyers did not justify the effort required to investigate them.
After the British Columbia government introduced a 15% tax on nonresident buyers at the start of August, the price of an average detached home in Vancouver fell more than 16%, to C$1,470,265 (US$1,132,000). New listings and prices in other categories also fell.
British Columbia’s strata (condominium) regulations have changed, so that only 80% of owners must agree before a building can be sold and redeveloped. Previously, 100% had to agree, and the changes have created tensions.
In a move that may signal a top for the Vancouver market, the Ontario Teachers’ Pension Plan is selling a minority stake in its C$4 billion (US$3.1 billion) portfolio, which includes office towers and shopping malls.
The Vancouver Public Library has released “Explore This Vancouver”—a smartphone app that offers an interactive walking tour called “Chinatown Stories: A Narrative Exploration.” The Chinatown tour, which includes historic photos and first-person narration, is the first in a series.
There’s more to British Columbia real estate than Vancouver condos, as these artists living on a homemade island discovered (video).
A report by Fitch Ratings Service estimates that housing demand in China will be resilient until 2030, as the country needs to build 800 million square meters of new homes annually.
Tensions continue to rise between China and its neighbors. Despite Chinese assertions that it is not militarizing the South China Sea, satellite images show reinforced hangars on Fiery Cross, Subi and Mischief reefs that are capable of handling bombers and other military aircraft. Vietnam installed mobile rocket launchers on several of its islands. The Japanese Coast Guard released video of Chinese vessels in waters surrounding the Senkaku Islands, which China calls the Diaoyus. In an op-ed piece, The Economist gloomily concludes “If long-standing tensions ease in the South China Sea, China will ensure they rise elsewhere.”
Hong Kong’s top housing official, Secretary for Development Paul Chan Mo-po, admitted that the government has given up trying to find a solution to the widely abused Small House Policy. In a separate interview, Chan said “People have no need to be afraid” about the land leases that expire in 2047, the year Hong Kong’s “one country, two systems” arrangement with Mainland China ends. Over 350,000 land leases, many of which are in the New Territories, expire in 2047.
Market sentiment rebounded in August. The Land Registry recorded 7,430 sale and purchase agreements, up 39% on July and up 43% year-on-year.
The Hong Kong Government launched another crackdown on owners violating the land lease terms of industrial buildings and has threatened to confiscate property where the owners fail to comply with the regulations.
The Hong Kong Government adjusted the zoning for the former Kai Tak Airport, in a move that will add 11,000 privately built apartments to the redevelopment site.
Indonesia will establish tax havens—where local and foreign businesses can establish shell companies to hold offshore investments—on the islands of Bintan and Rempang, near Singapore.
Nomura Real Estate announced a ¥350 billion (US$3.4 billion) redevelopment project in Tokyo's Hamamatsucho district, near a proposed station for a new maglev train line. Construction is expected to be completed by 2030.
Tepco and Sony will create a smart home package for Tepco customers that tracks the power consumption of individual appliances using internet of things (IoT) technology.
Bloomberg has an up-beat piece about Niseko’s growing economy and population.
The Reserve Bank of New Zealand delayed the introduction of new regulations limiting the proportion of banks lending to owner-occupiers and property investors. The changes, which were to take effect on September 1, will now be effective on October 1.
Rapidly rising home prices, particularly in Auckland, are prompting calls for tighter immigration rules.
Originally published in April, the Straits Times has an interesting interactive map showing the locations of Singapore's unsold homes.
Trends and Ideas
Research by Airdna and FiveThirtyEight shows that in Airbnb’s top 25 locations in the United States, more than 20% of rentals are “commercial”—the kind of rentals that are believed to hurt local residents and communities by removing long-term accommodation from the market. The study considered a unit commercial if the listing was for an entire home or apartment (not room in a larger unit) and it was booked for 180+ days between June 2015 and May 2016.
InsideAirbnb.com is a website showing how Airbnb is affecting housing in cities around the world. In the Asia Pacific region the site provides data for Vancouver, Victoria, Melbourne and Sydney.
Royal College of Art graduate Kristian Knobloch created Ping, a system of smartphone touchpoints that guide renters through the interior of Airbnb accommodations.
In a hint of what the future may hold for Vancouver, the planning commissioner for Palo Alto, California, resigned because her salary was too low to cover the cost of renting a home in the city.
Internet of Things
Nest-brand thermostats and smoke detectors suffered a widespread outage during a heatwave in mid-August.
At the Def Con hacking conference, security researchers demonstrated a proof-of-concept attack that used ransomware to disable a smart thermostat. The researchers declined to name the thermostat’s manufacturer. Another group of researchers used a wireless attack to open 12 of 16 Bluetooth door locks, which they described as having vulnerabilities ranging from "ridiculously easy to moderately difficult" to exploit.
I am enjoying the blog Worst of McMansions, which lampoons the excesses of American architecture. It's humorous and educational.
Negative Interest rates
In the last edition of the Landed Newsletter, I asked how long it would be before banks started charging retail customers to hold their cash. That day has arrived, as Raiffeisen Gmund am Tegernsee, a German cooperative savings bank announced that it would start charging customers with deposits over €100,000 (US$112,000), effective this month.
From October, the Bank of Ireland will charge corporate and institutional clients for holding deposits of more than €10 million.
I was interviewed on CCTV-America on August 19 about real estate in China. My segment starts at the 32:50 mark.
I was also interviewed by the real estate portal Spacious.hk about buying a home in Hong Kong. The interview included a great—if unexpected—question: Who shouldn't buy a home in Hong Kong?
Landed Newsletter No. 11 was published on September 5, 2016.