Land Assembly is in the news again.
“Million-dollar land assemblies speculate on zoning changes” is the title of the latest Vancouver Sun article dissecting the trend to assemble and sell land to Mainland Chinese investors.
“The flow of money out of Mainland China has intensified because of concern over the weakening economy there” and “more than US $150 billion exited the country in the month of August alone.”
With the understanding that a portion of these funds is being re-invested in Vancouver real estate, Vancouver Sun begs the question – “Is the faceless Chinese investor at the heart of the debate over Vancouver Housing affordability?”
London Pacific asks – “Are investors seeking the right real estate investment advice?”
Which brings us to Land Assembly 101. Land assembly redefines land value through the principle that the value of the whole is greater than the sum of the individual parts; that by combining multiple properties to form a larger development site the land owner can realize a higher return. The principle while true, is not always applicable, and it is imperative that land owners and potential investors seek expertise in this niche of commercial real estate to qualify the opportunity.
Residential realtors who are marketing assembled sites to offshore investors without due diligence and a determination of the true latent value are not helping the industry. “In many cases, the value is just not there,” says London Pacific’s Ben Williams. “When brokering an assembly on behalf of property owners, it is the agent’s responsibility to understand relevant market intelligence including Municipal policy implications and timelines for approval.”
Unfortunately, many of these “hot” land assemblies have been in areas that City Hall has stated are “not designated for rezoning” and that “prospective buyers would be taking a gamble.” – The Vancouver Sun.
Spot rezoning is no longer an approved methodology; intense and lengthy neighbourhood planning and community consultation is now paramount to this City. Speculators need to seek the right advise or be ready for a very long hold.
Read the Van Sun article HERE