Expert questions huge real estate sale in Downtown Vancouver

VANCOUVER (NEWS 1130) – Imagine buying a property, selling it for three-and-a-half times what you paid and then finding out it sold again just weeks later for even more money. That’s exactly what happened with a few properties in Downtown Vancouver recently.

And a local real estate expert admits the figures are mind-boggling. Tsur Somerville with UBC isn’t sure he believes the ultimate figure the properties on Nelson Street were apparently sold for.

A pair of developers initially bought the condo buildings for $16.8 million, and then sold them to a consortium of investors organized by Sun Commercial Real Estate (Suncom), for $60 million, according to the South China Morning Post. Just a month after that sale, an individual buyer paid $68 million.

“If the prices are true, and that’s a really big if, because when you’re looking at a transaction that’s being done through the transfer of the company you don’t actually know what prices are and whether or not they’re cash or whether or not they’re a complicated share swaps. In that sense it’s entirely speculative. But you’re looking at prices that are completely out to lunch in terms of what could realistically be developed there with any prices even remotely connected to prices as they exist right now, especially in the condo market,” explains Sommerville.

“I certainly think if you’re getting more transactions like this, particularly on property then you’ve got to be really, really worried about how this plays out. If lots of people grossly overpay for land and they’re not willing to sell that land and take a loss, then you have real supply issues and property challenges going down the road.”

He says he trusts the $60 million figure is true. “But the second transaction of the $68 million — there’s a whole lot of reasons why that might not necessarily be a realistic transaction, and I’d certainly be a lot more concerned about the legitimacy around Suncom and their business model and their actions.”

Suncom is being reviewed by the BC Securities Commission.

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