WILLIAM PESEK
Sun

You’d expect someone whom the famously dour Dick Cheney entrusts with millions of his dollars might have a gloomy view of the world. Jeremy Grantham does indeed.

“ From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips — it’s bubble time,” he writes in Grantham, Mayo, Van Otterloo & Co.’ s latest quarterly letter titled The First Truly Global Bubble.

Grantham, 68, is chairman of the Boston- based company that, according to financial disclosure reports, in 2005 managed as much as $ 6.1 million for U. S. VicePresident Cheney. And if his own recent actions are any guide, he’s quite the multitasker.

The money manager is a critic of the U. S. energy policies for which Cheney bears considerable responsibility. In February, Grantham donated $ 23.6 million ( all figures US) to Imperial College London to establish an institute on climate change.

Perhaps these multitasking skills helped Grantham make one of the gutsiest market calls in recent memory: That pretty much every asset class, everywhere, is in the midst of a bubble.

It would be comforting if we could dismiss such negativity. After all, isn’t the Dow Jones Industrial Average climbing to all time highs at a time when Japan and Europe are growing, China, India and much of the rest of Asia boom and all’s well in the global financial system?

Sure, and that’s just what worries Grantham. He points to the U. S. in the late 1990s and Japan in the late 1980s — periods when investors thought asset rallies would continue indefinitely.

“ Most bubbles, like Internet stocks and Japanese land, go through an exponential phase before breaking, usually short in time, but dramatic in extent,” Grantham argues, and he has a point.

Bubbles generally require two dynamics: the perception of near- perfect economic conditions and an abundance of cheap credit.

The Bank of Japan left its overnight lending rate at 0.5 per cent last week, giving traders a green light to put on more “ yen– carry trades.” Borrowing cheaply in yen and moving those funds into higherreturning assets overseas has been a oneway bet and markets have little reason to think that’ll change. China’s unprecedented buildup of currency reserves — $ 1 trillion and counting — also may constitute a bubble of sorts.

The amount of liquidity zooming around the globe has Grantham wondering if risk is really as negligible as many investors seem to think.

Looked at from that perspective, perhaps China’s wacky stock rally isn’t so disconnected from the world after all. Modern history offers few better examples of a Ponzi scheme than Chinese shares. The CSI 300 Index, which tracks yuan- denominated A shares listed on the Shanghai and Shenzhen stock exchanges, gained 75 per cent already this year and has tripled in the past 12 months.

In that time, China’s fundamentals changed little. It’s still growing faster than 10 per cent; officials in Beijing still can’t figure out how to slow things down; a lack of transparency still makes it hard to know what’s going on in corporate boardrooms; and Asia’s No. 2 economy still faces risks of overheating, pollution, social unrest and trade wars.

All that’s changed is the amount of attention paid to Chinese stocks, creating a gold rush.

A similar dynamic may be playing out across the global economy. Everyone, as Nouriel Roubini, chairman of Roubini Global Economics in New York, has been warning, is reading about how great things are and throwing caution to the wind. It’s more titillating to read about hedge fund managers making over $ 1 billion a year than about global imbalances.

What makes today’s global financial boom different is that past bubbles came amid lofty claims of new eras. In the 1980s, the new era featured a Japanese business model many said couldn’t go wrong. In the 1990s, the U. S. was awash with similar hubris.

“ This time, everyone, everywhere is reinforcing one another,” Grantham argues. “ Wherever you travel, you hear it confirmed that ‘ they don’t make any more land,’ and that ‘ with these growth rates and low interest rates, equity markets can keep rising,’ and ‘ private equity will continue to drive the markets.’ To say the least, there has never been anything like the uniformity of this reinforcement.”

Markets’ success in withstanding September’s $ 6.6- billion implosion of Amaranth Advisors LLC and more recent turmoil among subprime mortgage lenders prompted talk of another new era. This latest one seems centered on China producing infinite amounts of cheap labour, U. S. deficits being sustainable, major economies growing in synch and deep, diversified markets being able to multitask whatever comes their way.

The trouble, Grantham says, is that the bursting of this bubble “ will be across all countries and all assets, with the probable exception of high- grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected.”

 

Ashley Ford
Province

Small, in housing, can be beautiful, functional and affordable.

That message is not only being preached by Jake Fry and Aaron Rosensweet of Vancouver-based design and construction firm

Smallworks — they are also putting it into practice.

An example of their innovative small-housing design is now on display at the dv-Interior Design and Urban Living Expo this weekend at the Vancouver Convention and Exhibition Centre.

The expo is the West Coast’s premier design event and attracts great interest from many sectors of the architecture, design and construction industries, and Smallworks’ simple structure hints at where affordable housing in Canada’s most expensive residential real-estate market might be headed.

Fry and Rosensweet — a builder and industrial designer — firmly believe a major part of the solution to the city’s housing problems can be found along the back lanes that lace thousands of city blocks.

Their company has already designed and built highly innovative smaller housing and other types of units, such as studios, that can fit by the lane where you live. Now, it wants to become mainstream.

“We must make better use of the existing land and opening up the lanes and alleys to more affordable and other types of structures,” says Fry.

While he admits that huge debate surrounds the issue, he says it is only a matter of time before the Smallworks philosophy prevails: “There’s no question about it. The model we have created will be followed by others, and city hall will eventually be there as well.”

The pair believe that the challenges of providing adequate and affordable housing can be met in part by some forward thinking from officialdom and greater flexibility of urban thinking when it comes to housing.

And it can be done, they argue, without creating urban sprawl or destroying neighbourhoods.

“We can build a home ranging between 250 and 450 square feet at $200 a square foot compared with at least $325-plus per square foot for conventional housing, and we can have a house up within two months,” he says.

The designs are based on a single or double-garage footprint that fits at the rear of existing properties. Large parts of the buildings are prefabricated at the company’s riverfront shop in Southlands at the foot of Balaclava Street.

Fry says Vancouver is the perfect city for laneway development. He points out the city already has an infrastructure in place to make it work. Most services, such as sewer and power, are already in the alleys and lanes, so it would not require massive disruption to permit such development, he says.

Fry thinks there is a “will” at city hall to make it all possible: “In my discussion with city planners, there was a very positive response to allowing small residences on existing properties.”

The city has already signalled it supports such innovative thinking. Mayor Sam Sullivan, for instance, has launched an eco-density strategy that wants more growth with a smaller footprint.

Various areas of the city, including Kitsilano, Strathcona and Mount Pleasant, are already seeing some laneway development, and the city has a new zoning designation that permits small-lot and laneway housing in certain areas.

Bob Rennie, the marketing face of many a high-rise, high-density condominium tower, is on side.

“I grew up in a lane in Vancouver, and they were the neighbourhood. Density can be green as well, and we must look at all progressive ideas for the better use of the existing land base we have,” says Rennie.

“Of course there will be opposition — there always is — but we have to look beyond that. I think it is a good solution and we are already doing it in some areas of the city, with infill housing.

“We already have the designers and architects to get the design work done. What is needed is a city and planners who are receptive to progressive uses of land.”

There are certainly two distinct camps. Those opposed see any increased density as a magnet for increased crime, traffic problems, questionable quality of construction and destruction of neighborhoods.

The progressives argue the city has really no option and has to do something new. They hold that density is not an enemy of neighbourhoods and in fact makes ecological sense, with fewer people using cars and water and power.

Small Footprints, Big Steps, a study of untapped housing potential in Vancouver, makes a strong case for laneway development.

The study was written by graduate planning students Lisa Brideau, Joaquin Karakas and Karen Trzaska while they interned with the Vancouver City Planning Commission.

Their central theme is: “If we are serious about living sustainably and reducing our ecological footprint, then we need to use our land more efficiently. We cannot keep sprawling our housing out over acres and acres of land.”

Most tellingly, the trio point out that single-family residential neighbourhoods make up 70 per cent of Vancouver’s total land area.

In a two-block section of the Hasting-Sunrise neighbourhood, the study shows, dwelling footprints take up only 20 per cent of the land, public rights of way and so on take up another 18 per cent, while ancillary buildings and undeveloped space, landscaped and sidewalk areas occupy a staggering 62 per cent of the area.

“It is simple math — if the population is going to increase and we recognize sprawl as bad (environmentally, economically, socially and health wise), then we must intensify existing areas, the status quo cannot hold. That intensification can be done with care and style such that it becomes an asset, rather than a burden for the neighbourhood,” the trio conclude.

To which Fry and Rosensweet and those supporting a new approach say “amen.”

© The Vancouver Province 2007

 

NEAR OLYMPIC VILLAGE: False Creek neighbourhood being transformed; not as crowded as downtown

Jeani Read
Province

Jacobsen, the development, has been conceived as a contemporary Vancouver design gem. What else could it be? An iconic modernist design inspired it, was responsible for its name, and has been used to market it.

The famous “egg” chair by Arne Jacobsen, one of Denmark’s foremost modernist designers, was the symbol. That egg (a red one) has been moved all around the southeast False Creek neighbourhood, photographed in all kinds of out-of-context places on the street, lots of juxtaposition between sleek chair and funky surroundings, a great promotion.

Now that the display suite is finished, the hard-working team can take a photo of the Jacobsen chair in its proper place in the Jacobsen living room, and call it, “Finally at home.”

“Our vision was to create a true modernist flat or loft,” says Intracorp’s Don Forsgren. “It’s young, fresh, with an urban edge — but more fun than downtown Vancouver.”

Jacobsen was a mid-20th-century designer synonymous with clean, modern design, says Forsgren. So Jacobsen the development has polished concrete floors, integrated appliances and sliding panels.

“We spent a lot of time in the planning,” says Forsgren. “One side of [each] home has all the closets behind a seamless cabinet to create a clean line and the cabinets are gloss white with high reflectivity. It’s light and bright. We want it to be a blank canvas for your own design.” Even the computer station is built into this wall, to further smooth things over.

The big benefit of this effect, he says, is that the living spaces seem a lot bigger than they are, and can accommodate (as in the display suite) a huge sectional and dining for eight in a 695-square-foot home. The whole end of the suite is wall-to-wall glass, with nine-foot-two-inch ceilings. Those all-glass window walls make for maximum light.

The bedroom can be part of the living space if you open it up like a loft — or private, if you close the translucent panels. The bathrooms have met with enthusiasm, says Forsgren. The six-foot shower with rain shower head, marble vanity, large backsplash, mirrored wall with integrated storage and — yes! a full-length mirror — is going over very well. The kitchen appliances are high-end, Euro-style and sleek, as befits the whole picture.

Also key to the allure will be the new neighbourhood, says Forsgren. “This is really part of the urbanization of southeast False Creek,” he says. “It’s being driven by the new Olympic Village, and it’s going to be a very hot spot. I think there’s going to be a larger transformation than people realize — with public facilities like community centres and parks, and retail and a non-motorized marina. A lot is happening, and it will happen before the Olympic date.”

Realtor Fred Chan is one of the insiders who really gets it about southeast False Creek. “Now you can still see a few old buildings and auto shops, but in a few years the whole area will be changed,” says Chan, who’s bought two large loft units for himself and his son Alex.

Chan likes the “unique” design of Jacobsen with its brightness and glass walls, and also Intracorp’s good reputation, but location was the selling point for a variety of reasons.

“It’s only two or three minutes to Terminal and the SkyTrain station, and a minute to Main and the bus line, so it’s easy to get everywhere,” says Chan. “And, I like the density. Downtown has become too densely populated,” he says. “I like a little breathing space.”

THE FACTS

WHAT: Jacobsen is 125 loft-style homes in a six-storey building on south-east False Creek

WHERE: At 2nd Avenue and Quebec Street

DEVELOPED BY: Intracorp

SIZES: 425-1,400 sq. ft.

PRICES: $229,000 – $998,000

CONTACT: Open daily, noon to 5 p.m., 2501 Main St., 604 709-9844, www.jacobsenliving.com.

© The Vancouver Province 2007

 

Tony Gioventu
Province

Dear Condo Smarts: We purchased a townhouse in Langley before Christmas in a phased development. We seriously misunderstood what we were getting, and what our costs were going to be. As it turns out, the strata is almost 15 years old. We never considered we were part of the older section, so under new warranties we thought we were safe.

In March, we received an engineering report that shows the first 50 units built in the ’90s are leaky condos — and we have to pay for the special assessments of the leaky townhomes as well. Our inspectors didn’t investigate the older units, and no one advised us of the risks. Yes, we’ll qualify for a no-interest loan, but considering the payments, we may have to sell and take our losses. Please let people know the risks in a phased strata.

— Carol and Kevin

Dear Carol & Kevin:

It’s important to understand what phasing is and it’s important for buyers to read disclosure statements and get their questions answered before the deal is closed.

A phased development is a strata plan that’s built, developed and sold in groups over a period of time set out by the developer as part of its master plan.

It can be a few homes — 10 units divided into two phases, building and selling five at a time — or 500 homes with 10 or more phases.

Each phase sets out the proposed number of units to be built and when they are projected to be built and completed. Once each phase is ready for sale, the developer files the strata plan for that phase, which in turn creates the titles for each of the units.

Once the phase is registered and the strata plan is filed, it becomes a functioning part of the strata corporation. Strata fees are due on each lot, and each lot exercises voting rights.

(Bylaws regarding pets, rentals or age restrictions can only be amended once the final phase has been conveyed to the strata through its AGM, or if the developer grants permission in writing to adopt such bylaws and the strata votes in favour by 3/4 vote. In a strata with many phases being built over years, it could be a long time before restrictive bylaws can be imposed.)

When purchasing in a phased development, ask how many are still to be built and when they will be finished. You may be in a development that will be under construction for a long time, or at the end of a phase with an already well-developed community.

Once the final phase is complete, all units from all phases are one strata and share all the common expenses, liabilities and use of facilities.

Review the history of the strata, minutes and financials to ensure it is well maintained and serviced and there are no scary surprises, or you may pay for years of use, neglect and dispute.

© The Vancouver Province 2007

Sun

A neighbourhood with sustainable features is a neighbourhood that meets resident needs while protecting the environment and leaving an affordable legacy, says the CMHC, Canada’s national housing agency.

In a sustainable neighbourhood:

– Homes are located near shops, schools, recreation, work and other daily destinations.

As in a village, these destinations are a pleasant, convenient and safe walk, cycle or transit ride from home. (This helps people reduce driving costs and enjoy the health benefits of walking and cycling.)

– Homes are affordable.

– Land and services, like roads, are used efficiently.

In sustainable neighbourhoods, old or new, Canadians can find not just a home to live in but a community to thrive in.

THE VILLAGE ATMOSPHERE

Streets are for people, not just for cars. The human scale of the streets and the slow speed of the cars make them comfortable, safe and pleasant places to walk.

Neighbours can meet each other along the street; they can stop and chat at the shops, by the front porch or at a nearby park. And children can play safely.

VALUE FOR MONEY

A neighbourhood is only sustainable if its home meets the needs of residents at a price or rent they can afford.

But avoidance of long-term expenses can make a seemingly unaffordable home affordable. Living in a neighbourhood where you can drive less, or not need a car, can save you money.

You can also reduce heating and cooling costs if you live in a compact home with shared walls, such as a townhouse or an apartment.

A smaller home and a smaller lot also means less money and time on upkeep.

GETTING AROUND

Shopping, schools, recreation and public transit are available within a short walk from home so you don’t have to use your car every time you go out.

Street trees also make it a pleasant place to walk.

A mixed-use neighbourhood is also a good place to have a home business because photocopy shops, supply stores and meeting places, like coffee shops, are nearby. By living close to your work, you can get there easily by transit, foot, bike or a short car ride. This means spending less time in traffic.

It’s also good for your health, pocket book and the environment.

A SAFE NEIGHBOURHOOD

A friendly neighbourhood means that people look out for each other. Homes close to the sidewalk with porches and windows out front allow you to keep an eye on the street.

A mix of homes, shops and offices means that the neighbourhood is active throughout the day and evening. Also, traffic is less frequent and slower, making it safe for children to play. Bike lanes are provided for safety.

AGING IN PLACE

A neighbourhood that offers a variety of housing choices ranging from apartments and condos to townhomes, duplexes and semi- or single-detached houses, is a neighbourhood you can stay in throughout life’s changes. As your age, family and income change, you can still find a suitable home in the same neighbourhood, where you have put down roots.

COUNTRYSIDE CARE

Because these neighbourhoods use land efficiently, natural and rural areas outside the community are also preserved for farming, wildlife, and recreation.

A HEALTHY PLACE

Walking and cycling improves your physical health. Less stress from traffic congestion is also healthier, and less driving means the air is cleaner.

Nature is preserved as much as possible; streams and forests left in their natural state are part of the community, with trails to make them accessible.

CLEAN RAINWATER

Streets and properties with fewer paved surfaces and more vegetation means that there are more places for ground water to soak back naturally into the soil.

This means that rainwater is returned to the groundwater and streams at a natural, slow rate. This keeps water clean.

– Choosing a Neighbourhood with Sustainable Features, Canada Mortgage and Housing Corp., on the Internet at cmhc.ca

 

© The Vancouver Sun 2007

Sun

A Downtown Eastside restoration by the Salient Group sold out in less than three hours.

The 29 apartments in the Paris Block average 700 square feet in size and were priced from the high $200,000s.

The 100-year-old, six-storey brick building is located on Hastings Street a half block east of the Woodward’s project.

© The Vancouver Sun 2007