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Turner Drake & Partners Ltd.
6182 North Street
Halifax, N.S.
B3K 1P5
Canada

Tel.: (902) 429-1811
Toll Free: (800) 567-3033
Fax.: (902) 429-1891

Suite 221
12 Smythe Street
Saint John, N.B.
E2L 5G5
Canada
Tel.: (506) 634-1811

Suite 11
109 Richmond Street
Charlottetown, P.E.
C1A 1H7
Canada
Tel.: (902) 368-1811

35 York Street
St. John's, N.L.
A1C 5M3
Canada
Tel.: (709) 722-1811

4th Floor
111 Queen Street East
Toronto, ON.
M5C 1S2
Tel.: (416) 504-1811

E-Mail: tdp@turnerdrake.com
Internet: www.turnerdrake.com

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# Wednesday, 05 October 2016

The City of St. John’s Assessment Division recently mailed out its Year 2017 Assessment Notices dated 20th September 2016. You have until 1st November 2016 to file your appeal. This is the second year of the tri-annual assessment cycle: a successful appeal will continue for the remaining two years of the cycle.

The legislated basis for your Year 2017 Assessment is your property’s market value on 1st January 2014 (the “Base Date”) having regard to its current physical condition. If you filed an appeal last year and it has been resolved, you have nothing to fear for the remainder of the re-assessment cycle (assuming your new notice reflects the reduction you secured for 2016). If you did not appeal last year, or your appeal from last year has not yet been resolved, the time to act is now.

If your property’s market value is less than its assessed value, it is over assessed and you should file an appeal on or before 1st November 2016. Market value is the price the property would command if it were sold to an “arm’s length” purchaser (i.e. to a nonrelated buyer) for cash or subject to conventional financing. It is not necessarily the price that would persuade you to part with the property but rather the price you could expect if you decided voluntarily to dispose of the real estate. The best evidence of market value is the sale prices of similar properties that were sold within six months of 1st January 2014. If your property is assessed at less than its 1st January 2014 market value, you may still be over-assessed because the Assessment Act mandates that your property has to be assessed in a uniform manner. This provision attempts to ensure that the tax load is spread across the municipality’s property inventory in an equitable manner. It also discourages the City of St. John’s Assessment Division from deliberately under-assessing property to thwart appeals. So, if for example, commercial properties are assessed on average throughout the municipality at 70% of their market value, you will have grounds for appeal if your property’s assessment exceeds this percentage. If similar properties to your own are assessed at lower unitised rates (e.g. per square foot for office, industrial and retail property; per room for hotels, apartments and seniors’ housing), that is also a sign that you may not be equitably assessed, and may be grounds for appeal.

The Bottom Line: If you did not appeal last year, or your appeal from last year has not yet been resolved, you get another kick at the can. You should appeal if your property is assessed at more than, (1) its market value on 1st January 2014, or (2) the assessment of other, comparable properties… or if you harbour any doubt that your property is overassessed. A successful appeal will continue for the remaining two years of the reassessment cycle.

Action Required: If you file an appeal, be careful not to restrict your grounds of appeal. We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.” If you prefer, we will file the appeal for you. For advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free), or email them at apouliot@turnerdrake.com or markturner@turnerdrake.com.

Wednesday, 05 October 2016 15:41:10 (Atlantic Daylight Time, UTC-03:00)  #    -
Newfoundland & Labrador | Property Tax
# Monday, 29 August 2016

Purchasing a service is risky. You do not know what you will get until you get it. Products are tangible: you can see, feel, and sometimes taste or hear them to judge their quality. Unfortunately, you cannot do that with a service. Quality can only be determined after the service has been delivered. But there is a better way…

Turner Drake is the first, and currently the only real estate consulting company in Atlantic Canada to be registered to the ISO 9001:2008 quality standard. We are also registered as a firm regulated by the Royal Institution of Chartered Surveyors (RICS) for the 2015-2016 year. We are one of only two real estate firms in Atlantic Canada to be RICS registered.

What is the RICS Regulation?

RICS is leading the initiative for a worldwide standard of professional conduct in the land, property and construction sectors. Registered members are required to adhere to three major regulatory components:

1. RICS Rules of Conduct
2. Continuing Professional Development
3. RICS Ethical Standards

These standards are upheld by a risk-based monitoring system to ensure quality services are provided by registered firms. For more information about the program, visit the RICS website.

How is registration achieved?

To satisfy the RICS standards, we had to establish that we had the following programs in place:

• A complaints handling procedure.
• A training program for all employees (we have a 7-year training program that includes 27 in-house training modules [500 hours], completion of the University of British Columbia’s Diploma in Urban Land Economics (DULE) and Bachelor of Business in Real Estate (BBRE) degree, and mentored “on the job” training.
• Professional Indemnity Insurance to ensure that if a claim is received, a designated insurer will respond (not the insurer in place when the negligent act occurred).

What does this mean for me?

We follow the RICS fundamental principles in every aspect of our business:

1. Ethics: You can feel confident that you are dealing with an ethically sound firm.
2. Protection: Independent Professional Indemnity Insurance.
3. Security: We have a clear and transparent procedure in place to resolve complaints as fairly and efficiently as possible.
4. Client Care: Our staff regularly update their skills and knowledge through training and education to give you the best service possible.

We follow the values of the RICS regulation in each and every assignment we undertake. Purchasing real estate services can be a risky business, but we have substantially reduced that risk.

Monday, 29 August 2016 14:25:30 (Atlantic Daylight Time, UTC-03:00)  #    -

# Wednesday, 24 August 2016

Builders of multiple-unit residential apartment buildings will be all-too familiar with the GST/HST self-supply rules administered by Canada Revenue Agency (CRA) under the Excise Tax Act. Engaging with CRA at any level is a knee-trembling experience that is best avoided if at all possible, so spare a thought for apartment builders, who have no choice but to engage every time they finish a new project. The self-supply rules require that builders volunteer the value of their completed asset, remit the GST/HST due and then wait to be told if they got it right. Welcome to the unnerving world of self-supply.

Based on the number of calls we have been getting of late, CRA is growing increasingly suspicious of the values being declared by builders in this new age of ultra-low discount rates and ultra-high property values. They smell profit and want a bigger piece of it. If you’ve been targeted for scrutiny, it’s time to call for reinforcements.

How it works

For those who are unfamiliar with the process and want to follow along, this is how it works. Generally speaking, “used” residential property is exempt from GST/HST and no liability arises when it is sold in the marketplace. But new residential property is taxable upon completion, and for rental property the liability usually arises when the first unit is occupied, at which time GST/HST becomes payable based on the “Fair Market Value” of the asset. The most common situation, of course, is newly constructed rental apartment buildings, but the self-supply rules apply to other types of residential property, including condominiums if the builder chooses to rent them rather than sell them, an increasingly likely scenario in markets where the demand for condominiums has dried up. So on that happy day when the first unit is rented, the builder is deemed to have sold and repurchased the property at its declared (i.e. self-assessed) “Fair Market Value,” and gets to celebrate the occasion by remitting the required GST/HST.

The purpose of the GST/HST self-supply rules is to ensure the builder does not escape paying tax on value-added components of the project, such as the value of employed labour, financing costs and profit, the value of which would have been taxable had the asset been sold rather than rented upon completion. According to the official CRA publication (GST/HST Memoranda series 19.2.3, paragraph 5), the stated purpose of the self-supply rules is to create a “level playing field” and remove the potential tax advantage a builder would otherwise have in constructing a residential complex for rent.

So what is “Fair Market Value” and what does the Tax Court say?

CRA’s Policy P-165R gives some guidance and basically interprets it as the highest price that can be achieved in an unrestricted market – much the same as the industry-standard definition of Market Value. It also recognises the three traditional methods for determining Market Value, colloquially known as the “three approaches to value,” being the Cost, Income and Direct Comparison approaches. While the CRA Policy statement does say that no particular method should be excluded categorically, the Tax Court of Canada has tended to favour the Cost Approach in its rulings on GST/HST self-assessment cases. The most recent Tax Court ruling to cross our desk (Beaudet v. The Queen, 2014 TCC 52) adopted the Cost Approach method in favour of the other methods to establish the Fair Market Value of a residential apartment complex, but only after giving careful consideration to each of the other methods. So don’t be fooled into thinking the other valuation methods have no relevance: on the contrary, CRA will expect all the relevant valuation approaches to be examined and reconciled. They are deeply suspicious that reliance solely on the Cost Approach method conceals genuine profit, whereas the Income Approach method uncovers it. They might be right, but buildings which sell in the marketplace and generate those ultra-low discount rates are cash flow vehicles, delivering stable revenues backed up by full occupancy and a track record of success. New-builds have neither full occupancy nor a track record and must be valued accordingly for self-supply purposes.

Whether or not the final result matches other market valuations done on the same property for other purposes – typically mortgage financing – does not appear to distract the Court, which remains firmly focused on the specific issue at hand. That was perhaps most clearly expressed in an earlier Tax Court decision (Sira Enterprises v. The Queen 98-2463-GST-G) when it said “[t]he Court’s duty is to determine the fair market value of the properties for the purpose of the GST. The Court is not interested in the fair market value of these properties for the purpose of sale, and indeed there might be many factors which might have to be considered if the court were required to determine the fair market value for the purpose of sale, which may not be relevant for GST purposes.”

So protect yourself and sleep well

Our advice to builders is to be pre-emptive: have an independent assessment of the Fair Market Value done upon – or even in advance of – completion to support the self-assessed value being reported for GST/HST purposes. That puts you in the best possible position to defend a future challenge, and will undoubtedly help you sleep at night.

So if you, or someone close to you, is losing sleep at the prospect of engaging with CRA, give our Counselling Division a call.



Written by Lee Weatherby, Vice President of our Counselling Division. For more information about our counselling services, feel free to contact Lee at (902) 429-1811 or lweatherby@turnerdrake.com

Wednesday, 24 August 2016 14:55:06 (Atlantic Daylight Time, UTC-03:00)  #    -
Counselling
# Tuesday, 23 August 2016

When you think of the ideal office space, what are your must-haves? An environmentally friendly building? Open work spaces? Proximity to your home or city amenities? These are considered some of the most commonly desired traits in office space by HRM tenants. Office space that fit this bill is becoming more available in the downtown core. Does this mean that the recent trend of moving into office space in the suburbs will come to an end?

HRM comprises eight urban and suburban sub-markets: Central Halifax, Central Dartmouth, Downtown Peripheral Halifax, Suburban Halifax, Peripheral Dartmouth, Burnside/City of Lakes, Bedford and Sackville. Notable changes to these submarkets since 2011 include 950,000ft.2 of new office space added to the rental market in Central Halifax, Bedford, Burnside/City of Lakes and Suburban Halifax.

With the current lagging economy, it is not surprising to learn that vacancy has almost doubled in the last five years, especially considering the plethora of new office space brought on stream throughout HRM. Vacancy increased in every submarket, but the changes in vacancy rates indicate a shift in where demand for office space is flowing – to suburban business parks. For example, Burnside/City of Lakes and Suburban Halifax experienced among the lowest increases in vacancy. The chart below reflects how the distribution of total rentable area by sub-market has changed in the last five years.



It’s not all bad news for the CBD, though… vacancy in downtown Halifax saw a below average increase in vacancy. This begs the question: because suburban space was highly available, are tenants moving there because they wanted to, or because of its availability? With more space coming on stream in the downtown core consistent with commonly desirable office traits, does this mean tenants will start to shift back toward the downtown core?

In the last year, vacancy increased in the downtown core, not because of tenants vacating the area, but because there is more inventory available. Urban space is competing against new, modern office developments in suburban business parks (previously the only option for new office space in the city) and the population is concentrating in the urban core. With rental rates stagnating as vacancy rises, this is the prime opportunity for tenants to move into new space… and perhaps that space will be in the downtown area.

Click here to read more, including a map showing the spatial distribution of vacancy rate changes since 2011. This topic was covered in detail in this month’s TDP Trends, a free service provided to decision makers with property portfolios in Atlantic Canada. Each month, it provides information on demographic, psychographic, migratory, income and wealth distribution, investment, technological, space utilisation, and other trends influencing property values now or in the future. TDP Trends are archived on the public area of our website.

Tuesday, 23 August 2016 14:01:14 (Atlantic Daylight Time, UTC-03:00)  #    -
Economic Intelligence Unit | Nova Scotia
# Monday, 15 August 2016

Linear projects such as transmission line rights of way (RoW) are fertile ground for seeds of suspicion, mistrust and hostility. The scale of the project which may involve dozens, if not hundreds of property owners ensures that the acquiring authority is required to deal with a similar number of individuals. The very nature of the scheme, the forcible taking of property from people who individually stand to gain little from its outcome, often fans the flame of opposition… an experience that pits the “little guy” against corporate Canada. This is worsened if the acquiring authority deploys agents who rely on bluff, bluster and bonhomie rather than real estate expertise, and consider it their mandate to minimize the compensation payable.

Few acquiring authorities assess compensation on a property-specific basis before opening negotiations, or follow the leadership of the Nova Scotia Department of Transportation and Infrastructure Renewal and agree to the owner retaining professional advice at the acquiring authority’s expense. Most regard the property owner as a hindrance. They wait until negotiations founder before preparing an accurate estimate of the compensation properly payable under the Expropriation Act presumably on the assumption that, since they have not expropriated the property, anything goes. Even when a formal estimate of loss is prepared by an independent appraiser, it may not address the entire compensation… little wonder then that property owners distrust authority.

As part of our Counselling Division, which has completed the valuation and negotiation of compensation for several large infrastructure projects, I have seen tension between the acquiring authority and landowners unfold. Based on those experiences, here are the Top 5 reasons property owners use to warn the acquiring authority to “Stay off my land!”

5. The Grudge

One of the most difficult obstacles to overcome is a landowner who simply does not trust the acquiring authority. Often this is because they have been forced to part with their land in the past to make way for an already established RoW, and their previous experience was not a good one. Landowners that are approached yet again may view the current acquisition as a way to “settle the score” for an acquisition they feel was handled poorly in the past. A landowner that has a longstanding negative view of the acquiring authority may be difficult to deal with from Day 1.

4. Uninvited Guests

Much like the stress caused by termites, cockroaches or your in-laws, many landowners worry about the uninvited guests that a new RoW across their land may bring: hunters, recreational vehicles or people looking for a quiet place to dump their garbage. These concerns generally involve worries about damage to the land, liability issues and environmental impact.

3. Au Naturel

Appearances can be deceiving, and sometimes scrub land that appears to have little value may offer far more than meets the eye. Land can harbour an abundance of natural resources from which its owners can profit, such as cultivated crops, gravel deposits, minerals and harvestable timber. Often overlooked is the cost to extract these valuable resources and the fact that market values in many areas already incorporate resource values. Remember to be conscious of over-counting and double-counting when it comes to compensation payments.

2. Nothing Will Ever Be the Same

The general impact of the new RoW is something that almost every landowner contemplates. Some consider the impact to be minimal and will be happy to support the project in exchange for fair compensation payment, but others view the impact as harmful and often have many legitimate concerns that should be addressed. Common concerns include changes to view planes, interference with access, increased noise levels, loss of windbreaks, parcel severance and health concerns.

1. The Greatest Subdivision that Never Was

If I had a nickel for every time I was told that a new RoW was impacting a future subdivision … well, I’d have at least a couple bucks! Impact on future development potential is hands down the most common theme that I have encountered. Sometimes legitimate subdivisions or lands ripe for development are disrupted by RoW projects, and in those instances landowners should be compensated accordingly. However, in my experience many of the “subdivisions” that RoWs just can’t seem to avoid are more of a dream than a reality.

Overall, I would say that the concerns expressed by landowners are often a blend of rational and irrational thought. The world is becoming a more sophisticated place, and landowners are better educated and have access to more information than ever before. In the past, liaison with landowners may have simply included a couple of phone calls and a pat on the back from an employee of the acquiring authority. Nowadays the representative of the acquiring authority should have an increasing number of abilities including exceptional interpersonal skills, above-average organizational skills, patience and training in real estate valuation techniques.

The representative of the acquiring authority should give all landowners the benefit of the doubt and listen carefully to all of their concerns without judgement. Listening to the concerns of a landowner and working with them to mitigate as many of these items as possible is a great way to gain a landowner’s trust. However it is important to be aware that some landowners will go to extreme lengths in order to disrupt the project or increase the compensation payable to them. Good record keeping and a genuine understanding of the burdens that a RoW may bring to a landowner are key.

In the end, you’ll rarely win over every landowner involved in a RoW acquisition, but by keeping these five points in mind, hopefully you can minimize the number of times you hear the phrase “STAY OFF MY LAND!”



Written by Matthew Smith, Manager of our Counselling Division. For more information about our counselling services, feel free to contact him at (902) 429-1811 or MSmith@TurnerDrake.com.

Monday, 15 August 2016 12:43:03 (Atlantic Daylight Time, UTC-03:00)  #    -
Counselling
# Monday, 18 July 2016

As a recent addition to the Turner Drake team, one of the first major jobs I worked on was collecting data for our December 2015 Market Survey of leasable office and warehouse space in St. John’s, Newfoundland. Given my experience of Newfoundland was limited to a couple trips to visit my girlfriend’s family, being tasked with getting a handle on an entire city’s office and warehouse market seemed a daunting task. However, it has proven to be one of the best learning experiences during my first year at Turner Drake. As a newcomer to the real estate industry, speaking with building owners and managers gave me insight into the issues they were facing, and a more intimate understanding of the market in Newfoundland than I expected to develop in such a short period of time. After such a positive experience, I was excited to be tasked with collecting data on the St. John’s market again for our June 2016 survey.

The June survey is smaller than the December survey: we only gather data on the office markets, with the exception of HRM, where we surveyed both the office and warehouse markets. Don’t think that this means it was an easy job: at Turner Drake, “smaller” rarely means small.

To ensure our data collection met the rigorous standards of our ISO 9001:2008 quality standard certification, our surveyors undertook a month-long data gathering process. We began by compiling an inventory of every new office or industrial space with a minimum rentable area of 5,000 ft.2 in our five target markets (St. John’s, Moncton, Fredericton, Saint John and Halifax). As the number of cranes on our cities’ skylines attest, this was no mean feat. However, this was just the beginning.

The meat and potatoes of the data gathering process is distributing and following up on more than 550 surveys for our June report (and more than 900 for the December version). We begin by sending every one of our contacts an Inventory Form for each of the buildings they are responsible for. This year, we took a bold step forward and sent the survey forms by… email! If we’re lucky, the respondents complete the form with information on the size of their buildings, the current vacancies, the rental rates they are realizing, and a few other pertinent details. Then they check the little box saying “Please send me a copy of the final report” and we’re done. However, things are rarely that easy, and Turner Drake surveyors won’t rest until the job is done! If we don’t receive a response, we send a follow-up email, and if that isn’t returned, we call, and if our calls aren’t returned, we call again… and again… and again… until we get the data we need.

After all of the data has been gathered, it is entered into our CompuVal™ system. CompuVal™ allows us to track vacancy and rental rates over time for both individual buildings and entire markets, as well as analyze the data to predict future trends. To ensure no errors are made, our surveyors review each other’s work, “cleaning up” typos or other mistakes.

All told, the data gathering process can take several hundred hours to complete. For our June surveys, our four surveyors spent more than 330 hours gathering data. This is the point where we turn things over to our Economic Intelligence Unit, who work their magic by taking the raw data and turning it into a vibrant picture of the local market.

If you’re interested in learning more about our Market Surveys or purchasing a copy, give our Economic Intelligence Unit a call at (902)-429-1811 or visit our website.



Written by Colin Walsh, Consultant in our Lasercad® and Valuation Divisions. To learn more about Colin, visit our Facebook page to see his Featured Consultant article.

Monday, 18 July 2016 12:19:35 (Atlantic Daylight Time, UTC-03:00)  #    -
Economic Intelligence Unit | Newfoundland & Labrador
# Thursday, 02 June 2016

For the past 20 years, Turner Drake has affirmed the importance of certified space measurement by providing Lasercad® services throughout the Atlantic Provinces and onwards to Ontario. Lasercad® is an essential tool in creating a more intimate understanding between building owners and managers and their buildings’ space inventory.

Lasercad® is a property measurement service which provides precise measurement and calculation of all building areas in accordance with the various industry Standard Methods of Measurement, including the Building Owners and Managers Association (BOMA). Whether you own or manage a small retail strip plaza, an industrial warehouse and fabrication facility or a large multi-level office building, BOMA has a standard for you. We comply with the rules and regulations set by these standards together with our own standard operating procedures to produce measurements with an accuracy of 1 cm, and a closing error of no more than 2%. Furthermore, Turner Drake is the only space measurement company in Atlantic Canada governed by a system certified to the international ISO 9001:2008 quality standard. When it comes to space measurement, we provide precise results in a timely manner: exercising regular calibration of laser equipment and ensuring on-site measurement within 1-2 days of your request.

Measuring an excess of 1.7 million square feet of space in the past year, we have been able to collaborate with a wide variety of clients; from small independent building owners to large commercial REIT’s, working in unison to help our clients properly allocate their space inventory and improve the efficiency of their buildings. With staggering vacancy rates it has become paramount for building owners and managers to not only allocate their space inventory properly, but to optimize the use of this space. Tenants have also become increasingly familiar with the BOMA Standard, requesting certified space measurements prior to accepting lease agreements. Our space certificates therefore provide accurate representation of each tenant space, creating piece of mind to prospective tenants while also creating value as key marketing material for building owners and managers.

In a recent audit of office buildings in Atlantic Canada, we discovered the average area represented in a lease was misstated by 10.1%. Such large discrepancies are typically a result of inaccurate measurements, space modifications on lease renewal that are not corrected in the new lease and the use of a non-standard or inappropriate method of measurement.

Let me tell you about a key aspect of the BOMA 2010 Office Standard Method of Measurement: using this standard requires careful consideration of the “dominant portion” when certifying the subject space. The dominant portion refers to the inside finished surface of a vertical exterior enclosure i.e. window glazing, painted gyproc, etc. To classify as a dominant portion, the finished surface must constitute 50% or more of the vertical dimension between the finished surface of the floor and the finished surface of the ceiling.

Here, you can see an area boundary using the BOMA 2010 Office Standard Method of Measurement. The blue area highlights the use of the dominant portion, a key aspect of this standard.



And here is an area boundary using a non-standard or inappropriate method of measurement.



Now, consider an older office building with 300 deep inset windows comprising roughly two ft2 of space along each windowsill. If these windows were indeed classified as the dominant portion, this would warrant an additional 600 ft2 of rentable space in which the building owner benefits! Your space inventory just increased by 600 ft2 without lifting a hammer!

Educating oneself with the appropriate Standard Methods of Measurement is vital to ensuring proper allocation of space inventory. Knowing your inventory and allocating it appropriately has proven to increase building efficiency and more importantly, increase earnings potential amongst building owners and managers alike.

Although certified space measurement is our specialty, our highly skilled and creative Lasercad® team also provide advice for space planning. We have worked with local developers, measuring portions of and/or entire buildings to provide As-built Plans for proposed renovations, including the virtual placement of demising walls to optimize tenant areas as required by the client. We also provide fire evacuation plans, site parking and layout plans and building mechanical and HVAC systems plans.

Your space is our primary concern, let our Lasercad® team quickly and accurately allocate your space inventory so you can get back to leasing that additional 600 ft2 you just gained. For additional information about these services please visit our website.



Written by Patrick Mitchell, Consultant in our Lasercad® Division. To learn more about Patrick, visit our Facebook page to see his Featured Consultant article.

Thursday, 02 June 2016 10:39:41 (Atlantic Daylight Time, UTC-03:00)  #    -
Lasercad
# Friday, 13 May 2016

Every year at this time, the Island welcomes the prospect of summer with an explosion of colour: yellow daffodils, orange tulips, green grass, blue skies and dancing waters. Less welcome is the annual burden heralded by flowering of the 2016 Assessment Notices. If you are a property owner, you should have received it by now. It was officially mailed on May 6th and you have 90 days in which to file an appeal or wear the consequences for the rest of the year. If your property is enrolled in our PAMSTM Property Tax Manager program, you can relax; we are already reviewing your assessment and will file an appeal if the opportunity exists to reduce your tax load. If your property is not yet PAMSTM protected, procrastinate not: you have work to do.

The legislated basis for your Year 2016 assessment is your property’s Market Value on January 1st, 2016. However, the Assessment Act also implicitly includes a “uniformity” provision hidden in the appeal process, so similar properties are required to have similar assessments. You should appeal your assessment if:

(1) Its Assessed Value > Market Value as of January 1st, 2016, or

(2) Its Assessed Value > Assessed Value of Similar Properties.

The first test is to estimate your property’s Market Value on January 1st, i.e. the price it would fetch had it been offered for sale during the last six months of 2015. Purchasers look to the future, but their expectations are usually coloured by recent history. So if, for example, you own a tourist related facility, your 2015 season will impact its value to the degree that it would influence potential purchasers for 2016 and beyond. The Market Value too is based on its anticipated selling price… not the price that would persuade you to dispose of the property.

In 2012, our Economic Intelligence Unit conducted a demographic study of Atlantic Canada for a national client. Their study utilised data from the 2001, 2006 and 2011 Statistics Canada censuses. The rate at which our regional population aged during that period is frightening; the rate at which it will age over the next ten years is terrifying. Last year, a government initiated study was released, which reviewed the changes to the economy resulting from that demographic change. The report studied Nova Scotia but its conclusions apply to all three Maritime Provinces. The report is not a happy read.

If you own a “lifestyle property,” e.g. motel, golf course, vineyard, restaurant, etc., past sales of similar properties may not be a reliable indicator of your property’s current Market Value. This type of property is usually owned by an owner operator, many of whom are now reaching retirement age. Unfortunately, the pool of prospective purchasers is shrinking rapidly as the entire population ages. Fewer purchasers translate into lower values. This is over and above any adverse impact resulting from declining tourist dollars as Americans in particular shun foreign travel.

If you own an office building in Charlottetown, you may be suffering from burdensome vacancy rates. Our most recent survey (December 2015) covered 100% of the rental stock and revealed an overall 15.69% vacancy rate… well above the sustainable economic rate and up from 10.4% from the previous year. Our survey of industrial space recorded an overall vacancy of 14.00%. If you own an office or industrial building, you should carefully consider if an appeal is warranted.

The provincial assessment authority sometimes assesses property at less than its Market Value to forestall appeals. There is an assumption by most property owners that they will not be able to successfully challenge an assessment if it is less than the property’s Market Value… even if the assessment is higher than those of similar properties. This is not the case. Buried in the appeal section of the provincial Real Property Assessment Act is the requirement that “the Minister shall demonstrate the uniformity of the assessment in relation to other assessments” (Section 28 [1]). Thus, albeit somewhat belatedly, does the Assessment Act acknowledge that similar properties should have similar assessments. Comparing commercial properties and their assessments can be a little tricky however, which is why we have built an Assessment Database for the entire province that allows us to conduct peer group comparisons… and quickly determine whether your property is uniformly assessed.

The Bottom Line: Fortune favours the brave.

Action Required: Call our PEI Tax Team members Mark Turner and André Pouliot at 902-368-1811 (Charlottetown) or toll free at 1-800-567-3033. Alternatively, you can email them at markturner@turnerdrake.com or apouliot@turnerdrake.com. Using our proprietary software CompuVal®, our PEI Assessment and Transactional Databases, and basic property information provided by yourself, they can usually determine in a five minute telephone conversation whether you should appeal. There is no charge for this service, nor will big men come to call.

Friday, 13 May 2016 15:41:46 (Atlantic Daylight Time, UTC-03:00)  #    -
Prince Edward Island | Property Tax
# Thursday, 05 May 2016

Immigration into Canada is nothing new: the country admits an average of 253,875 immigrants each year. This number is responsible for almost two-thirds of the national population growth from 2005 to 2015. Based on a housing demand projection study conducted by the Canada Mortgage and Housing Corporation (CMHC), a 1% increase in immigrant population causes housing demand to rise by about 0.66%. However, the Maritime housing market is facing a projected decline in the coming years due to three interdependent facors: an aging and shrinking population, a dearth of immigration and very low rates of economic growth. This is not new information: alarms were given by various sources and it’s time to halt the slide.

History has proven that an aggressive immigration policy can help smooth the impact of an aging population (e.g. Ontario and Vancouver). It is not surprising, therefore, that increasing migration into the Maritimes is an effective way of addressing the adverse effects of our aging population. New immigrants will not only help increase the production of goods and services but will also directly increase the demand for housing.

Becoming a Maritime immigrant myself, I have a special interest in exploring the relationships between immigrant and housing trends in this region. I came to Canada in late 2012 as an international student and have seen several immigrants who decided to stay and purchase a house here. Many of them are below age 40, well-educated, and economically independent. Do they represent the majority immigrant group in the Maritime Region? I decided to dig into the data to find the answer.

The Maritime Immigration Trends

Immigrants comprise less than 6% of the Maritime Provinces’ total population, but 20.6% of the national population. Immigrant inflows to the Maritimes fluctuated dramatically from 1991 to 2006, however in the last decade, trends have been rising. This can be attributed to new policy initiatives (e.g. provincial nominee program, skilled worker express entry) aimed at attracting more immigrants to the Maritime region. From 2006 to 2011, the number of immigrants to PEI rose six-fold. Not surprisingly, employment growth in PEI caught up with the national average during the same period. Although this growth is from a small base, it still means the island is attracting more than twice as many immigrants compared to its share of the total population.




Maritime Immigrants: Countries of Origin and Demographic Profile

The United States and United Kingdom were the top two source countries of the Maritime immigrants during the 1980s. The position was taken over temporarily by some Middle Eastern countries (in the aftermath of the Gulf War) and China in the 1990s. In the last decade, the US and UK again became the top two sources of immigrants, but China and other Asian countries are listed among the top five.



The map above shows the percentage of the total population formed by Maritime immigrants in in 2015, along with the most common countries of origin. Immigration to the Maritimes is heavily slanted in favour of Halifax County (NS), Queens County (PE), Westmorland County (NB) and York County (NB). However, according to the immigration demographic profile report provided by the Atlantic Metropolis Centre, more than one-fifth of immigrants who arrived in the Maritimes from 2006 to 2011 declared their intended destinations to be outside a Census Metropolitan Area (CMA), which indicates the potential for allocating new immigrants to rural areas.

The age profile of immigrants in the Maritimes is dominated by the lower age group according to the most recently released Statistics Canada data. About 75% of immigrants who arrived from 2011 to 2015 were under age 45, and 7.5% were under age 25. The corresponding numbers for resident Maritimers aged under 45 and under 25 in 2015 were 44.3% and 14.7% respectively.

The Housing Situation and Needs of Immigrants

There have been many reports and studies exploring the current economic and population trends in the Maritime region: evidence shows Maritimers are now on the brink of an extended period of decline. The unavoidable aging trend is weakening the Maritime housing market and will continue to do so unless effective action is taken. The key to slowing down the aging trend is to be open to the outsiders by targeting and attracting skilled immigrants to the region.

In last month’s TDP trends, we explored the HRM residential house market tipping point. In the Atlantic Region, most first-time buyers are aged 25 to 34, followed by a small portion in the 35 to 59 group. Second-time buyers are also primarily aged 25 to 34. Finding suitable and affordable housing is an essential step in immigrant integration. With relatively lower housing prices (compared to Ontario and Vancouver), the Maritimes have advantages in attracting potential younger aged immigrant home buyers. Such a future can have only one outcome: reversed housing declines in demand for the aging population trend, which will boost the regional economy.



Written by Chen Shi, Consultant in our Economic Intelligence Unit. To learn more about Chen, visit our Facebook page to see her Featured Consultant article.

Thursday, 05 May 2016 09:56:23 (Atlantic Daylight Time, UTC-03:00)  #    -
Economic Intelligence Unit | New Brunswick | Nova Scotia | Prince Edward Island
# Friday, 08 April 2016

If you live in Nova Scotia, you may have noticed that the rate of job creation in the province has slowed during the past decade. Not only has this trend directly affected the job market, but it has also reduced activity in the resale market and in new housing construction. These effects on the housing market aren’t due to reduced supply, but instead are caused by a lack of demand.

The HRM population is aging. The number of 60+ year old residents is increasing rapidly in Nova Scotia and throughout the Atlantic provinces. Because of the aging population, fewer residents are buying single-dwelling homes, which is accelerating an already generally weakened regional housing market.

Additionally, in Atlantic Canada, only 35% of homebuyers are identified as first-time buyers (the majority of whom are aged 34 and under; see stats below from CAAMP), which is 10 percentage points below the national average. Out-migration of young people to other parts of the country is one major cause of this low percentage.

Based on the NSAR MLS® and Turner Drake in-house data, the most commonly purchased home in HRM is single-detached (more than 3,900 each year). More than half (64%) of those purchasing this type of home are typically second-time buyers. On the lower side of the market, there are approximately 878 purchases of semi-detached and row homes in HRM each year, about two-thirds of which are typically bought by first-time buyers.

According to statistics from the Canadian Association of Accredited Mortgage Professionals (CAAMP), most first-time and second-time Canadian homebuyers are aged 25-34. Subsequent buying is most often among those aged 50-59. Less than 2% of home purchases are made by those who are 70 years or older. Why does this matter? The bottom line is that as the population ages, more people are less likely to purchase first-time, second-time, or even subsequent homes.

As the majority of single-detached first-time buyers (aged 34 and under) and subsequent buyers (aged 50-59) reaches peak levels, expect the single-detached demand to level off, and then start to decline. The HRM population reached its peak levels of these age groups in last year. Therefore, housing market sales will continue to decline slowly throughout 2016 and in the next few years.

Click here to read more, including tables outlining the statistics discussed above. This topic was covered in detail in this month’s TDP Trends, a free service provided to decision makers with property portfolios in Atlantic Canada. Each month, it provides information on demographic, psychographic, migratory, income and wealth distribution, investment, technological, space utilisation, and other trends influencing property values now or in the future. TDP Trends are archived on the public area of our website.

Friday, 08 April 2016 16:59:10 (Atlantic Daylight Time, UTC-03:00)  #    -
Nova Scotia