Investors at Vancouver’s Olympic Village have flipped some of the project’s highest-priced condos for quick profits of $500,000 per unit, while Vancouver taxpayers seem likely to lose about $400 million on the soured deal.
The Province’s investigation of sales records of 30 units in the Village’s high-end Canada House suggests the city’s plan failed to capture significant funds that could have been returned to taxpayers, according to several industry experts.
The Canada House — including 60 luxury units in the waterfront building that housed Canada’s men’s gold-medal hockey team — was released for sale in 2012. In November 2010 the city had tasked receiver Ernst & Young with selling Village condos to regain as much as possible of the failed private project’s $1.1-billion liability.
Unlike most of the Olympic Village — which still has 68 unsold units six years after going to market — Canada House attracted investors right away.
Property document searches of half of the 58 units sold in Canada House revealed five quick flips.
In one stunningly profitable sale, a buyer purchased a unit for $1.27 million in August 2012 and sold it for $1.7 million in September 2012 — a $433,840 profit in one month.
In another case, a unit bought for $2.2 million in October 2012 was sold for $2.6 million five months later.
In three other units — each purchased at around $2.2 million in late summer 2012 — investors sold in 2013 for profits of $500,000 in each case.
Since initial sales in 2012, many units in Canada House had appreciated by about $300,000 in 2013, according to property assessments. In that period Vancouver’s overall condo market had been generally flat or down. That raises the question of whether the revenue-rich Canada House units could have been priced higher when they were sold on behalf of Vancouver taxpayers in 2012.
Burnaby property developer and realtor William McCarthy — whose research paper, The Failed Experiment of Vancouver’s 2010 Olympic Village, was sharply critical of the city’s handling of the project — believes taxpayer losses of up to $600 million seem realistic.
“The Canada House pricing, whatever money was left on the table, that just accelerates the taxpayer losses,” McCarthy said in an interview. “So when properties get flipped that closely to the first sale? Let’s just say the pricing of the Olympic Village has been perplexing and troubling from the beginning.”
“I’m not surprised that a number of units were flipped for substantial profit,” said another expert, who did not want to be named. “The city left money on the table (at Canada House) while it overpriced many of the ‘dogs’ in other buildings that still haven’t sold.”
The expert said that a city hall manager with knowledge of Olympic Village finances reportedly acknowledged privately that losses “close to $400 million” are estimated.
Another Vancouver real estate expert, who asked not to be named because of a potential conflict, said the Canada House condo flips could be troubling, but there are no crystal balls in marketing, and cases can be made for various strategies.
“Is the right objective maximizing every last dollar for the taxpayer, or is it getting these things sold at reasonable prices off the books?” he said in an interview.
“The developer’s strategy is to sell the thing out and move on. There is a point, though, that these (Olympic Village units) had become public assets, and perhaps that meant they needed to be dealt with differently … than if they were a developer’s assets.”
Although industry experts say that both the city and the receiver must have detailed and current predictions about final losses on the Olympic Village, neither the city nor the receiver would answer The Province’s request for a financial update on public liability.
Lesli Boldt, speaking on behalf of the receiver, stated: “Prior to the marketing of suites for sale at Canada House, the receiver obtained an independent third-party appraisal for all properties at Canada House to inform the pricing strategy. Price lists for Canada House were publicly available throughout.”
