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Saturday, Oct 31, 2020

Is Vancouver really an ‘insular, little village’? So says its most powerful real estate developer

In contrast to his churlish assessment of Vancouver, Westbank’s Ian Gillespie has ridden the wave of internationalism and foreign money that defines the city today

When I met Ian Gillespie a few years ago, he gave me a book of his thoughts and reflections on a career that has made him Vancouver’s most prominent and polarising real estate developer.

It weighs 2.8 kilograms (6.2lb).

The dashing founder and boss of Westbank Corp is not a man overburdened by self-doubt.

Long regarded as one of the city’s most powerful people, Gillespie has been downright ubiquitous this past month, dominating discussions about art, affordability and city-building.

The first furore hit the fan a couple weeks ago. More precisely, it splattered against the newly installed 3.4 tonne kinetic sculpture called Spinning Chandelier, which is and does exactly what the name suggests, suspended under the Granville Bridge.

Commissioned and paid for by Westbank, the giant C$4.8million (US$3.6 million) light fixture by artist Rodney Graham was hailed by Mayor Kennedy Stewart as the city’s “most important piece of public art”.

Critics hailed it as a gaudy, tone-deaf and unironic distraction for residents of the most unaffordable city in North America.

Then, on December 10, the Squamish Nation voted to partner with Westbank to build an enormous 6,000-home development on a 4.7-hectare (11.6-acre) piece of land on the city’s Westside that had been returned by the federal government in 2003. The site’s Squamish residents had been forcibly removed and their homes burned in 1913 to accommodate the Canadian Pacific Railway.

Then, on December 10, the Squamish Nation voted to partner with Westbank to build an enormous 6,000-home development on a 4.7-hectare (11.6-acre) piece of land on the city’s Westside that had been returned by the federal government in 2003. The site’s Squamish residents had been forcibly removed and their homes burned in 1913 to accommodate the Canadian Pacific Railway.

Because it will sit on First Nations land, the joint venture with Westbank will be exempt from British Columbia’s rent controls, its foreign-buyer tax and speculation tax, as well as municipal taxes.

Sitting like a sour cherry on top of it all was Gillespie’s description of Vancouver and his critics last week. “It’s an insular, f***ing little village we live in sometimes,” he told Bloomberg interviewer Natalie Obiko-Pearson.

A fortune built on Vancouver’s transnationalism

Insular? It’s a rather churlish assessment from someone who has made his name and fortune on the sheer internationalism of his home city, and whose glittering real estate projects are marketed in Beijing, Hong Kong, Shanghai and beyond.

They embody the decoupling of Vancouver’s housing market from local incomes, a phenomenon documented by peer-reviewed research.

Gillespie himself needs no confirmation of the transnational nature of Vancouver’s real estate scene. He is nobody’s fool. He recognised this wave long ago and rode it to riches, like the gangly surfer dude he resembles.

His very first project as an independent developer was in 1994: the nondescript London Plaza at the corner of Number 3 Road and the Westminster Highway in Richmond, BC, at the epicentre of a rush of Hong Kong people and capital that would help make Richmond the most Chinese city in the world outside Asia.

When I visited his superb office in May 2014, a black-and-white portrait of a Chinese-looking man hanging on the wall caught my eye. This was the late Hock Meng Heah, who Gillespie said had been “like a godfather” to him.

Gillespie went to school with Heah’s son, when Heah was running Abbey Woods, the listed Canadian operation of Malaysian billionaire Robert Kuok (former owner of the South China Morning Post).

Heah became Gillespie’s mentor, and Abbey Woods partnered with the upstart developer on a series of projects. Then Gillespie bought out Abbey Woods, taking it private with HSBC financing that was arranged by the Kuoks, and rolled the company into Westbank.

Since then Westbank has become defined by a series of luxury projects culminating in Vancouver House, an improbable skyscraper designed by starchitect Bjarke Ingels that appears to twist like an Escher drawing from the base of the Granville Bridge. It is due to open soon.

The nearby Spinning Chandelier satisfies a requirement for developers to fund public art as part of big projects.

Vancouver House itself was marketed around the world – intensively in Hong Kong and mainland China – as what Gillespie called “a piece of art that is going to be valued by people who collect art. If they don’t value it then I don’t want them to buy it.”

The dissonance in Gillespie’s recent assessment of “insular” Vancouver is that, on the one hand, his business depends much on Vancouver’s true, transnational nature, with his real estate sold to a globalised elite. On the other hand is the instinct to scoff at concerns about this phenomenon’s scale and impact, lest it fuel inevitable pushback from local earners.

Let us consider, for example, the toilets in Vancouver House.

At an event before our interview, one of Gillespie’s lieutenants had told marketers (and me) that the project would feature an “asset management” programme catering to the unique needs of absentee owners. That’s a fancy way to say they would flush the loos and run the appliances in empty apartments, owned by folk who mostly lived elsewhere.

When I asked Gillespie if this was an entirely desirable situation, he wrinkled his nose. “I don’t think it is an important part of the offering,” he said. “I may differ with Michael [the Westbank executive] on this, to be frank.”

But it is in the toilets of Vancouver House that Gillespie’s vision of the city collide with an increasingly sceptical public and the policymakers who depend on their votes.

In 2017, amid general uproar about housing unaffordability and the deleterious impact of foreign money in particular, the city introduced a municipal tax on empty homes (the 2020 rate will be 1.25 per cent of assessed property value per year), which was swiftly followed by a provincial speculation and vacancy tax (up to a whopping 2 per cent of declared value, per year, depending the tax status of the owner).

The recoil against the commodification of Vancouver housing that produced these policies was in no small part because of the Vancouver House model of real-estate-as-collectible.

This strikes me not so such a matter of insularity as awareness.

Indeed, Vancouver has not turned inward – it has merely joined Gillespie in the realisation that its housing market is beholden to forces lying far beyond the shores of English Bay.

In fact, the rest of the world, from New York to Hong Kong, now looks to Vancouver as a leader in how to deal with runaway unaffordability.

‘It’s just growing pains’

Gillespie takes his self-appointed role of city builder very seriously, and with his eyes firmly fixed on the horizon.

It is as if the daily concerns of Vancouverites are the merest motes drifting before his gleaming vision for their city.

When I asked him five years ago about the role of Chinese money in Vancouver’s market, he segued to talk about Chinese immigration, saying that “without doubt if your lens is 40 or 50 or 60 years”, this would have a “hugely positive” impact.

Yes, he said, a locally earning buyer might see things differently “because you are bidding now against buyers from around the world, [not] just against your co-worker down the street”.

But he likened the competition for housing to a soccer match. “Do you want to play soccer against a bunch of guys here in Vancouver? You might beat them. But suddenly you find a couple of Brazilians that you are up against and you are going to get your butt kicked.

“What’s going to happen is that everyone is going to raise their game.”

I asked him if he ever felt guilty about Vancouver’s unaffordability crisis.

“I feel guilty every day but never on this point,” he laughed, before turning serious. “No, because I absolutely know that the next generations will be better off, for attracting the best and brightest to Vancouver.”

Maybe Gillespie is right. Maybe Vancouver’s players and incomes will rise to meet the challenge.

It hasn’t happened yet. From 2005 to 2015, median household incomes in Vancouver rose by 11.2 per cent. In the same period, the city’s unaffordability ratio (price:income) rose by 100 per cent, from 5.3 to 10.6, placing it in second place behind only Hong Kong on the Demographia unaffordability ranking of 378 cities around the world.

But Gillespie is in it for the long haul. “You can’t tell me that bringing the best and brightest to Vancouver isn’t going to make for a better city,” he said. “It’s just growing pains.”

When we spoke, Vancouver’s market was on the cusp of another massive price spike that would see detached house prices increase by more than 40 per cent.

The swathe of new taxes since then has curtailed those excesses, but the benchmark price for all residential housing in Vancouver still remains about C$1 million (US$760,000).

It is a depressing and fanciful number for those relying on the city’s median household income of C$72,662 (US$55,210) according to the most recent 2015 census figures.

On a dismal recent afternoon, I watched as the Spinning Chandelier lit up and descended from the underbelly of the bridge. It does this three times a day. As the fixture began to spin, its dangling crystals flared like the skirts of a dancer.

Westbank says the chandelier is destined to become an “urban icon, turning a dark under-bridge into the enjoyable focus of public celebration”.

Maybe it will. In the long haul. But that day, it was just me and one other photographer watching, along with some bored-looking construction workers on the Vancouver House site.

It spun. I stared. In the manner of a kitten at a cat toy.

A worker snapped me out of it. He looked at me and let out an ironic-sounding “woohoo”, before trudging off into the freezing rain.


Quote of the Day

Sometimes the best way to make money is when most people say you are wrong and nuts.

Carl Icahn
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