Tourism numbers are at record highs, the economy is one of the hottest in the country, and its airport is expanding to keep up. So why is Canada’s West Coast paradise teetering on the edge?
By Chris Fair
Although a relatively small big city by global comparisons, Vancouver shines bright in its value proposition and visitor perception. Its century-old city motto of “By Sea, Land and Air We Prosper” invokes the brand attributes that drove it to a respectable 30th-place in our World’s Best City Brands ranking, powered by its 8th-overall finish in Air Quality and 36th-overall on the planet for Parks and Outdoor Activities, two large components of our Place metric.
Vancouver’s long-lauded inclusiveness also helped its brand, as the city is considered “the most Asian city outside of Asia.” According to Statistics Canada, 43% of Greater Vancouver is of “Asian” ethnicity (predominantly ethnic Chinese, Indians and Filipinos), eclipsing the next two top North American cities: Toronto (35%) and San Francisco (33%). Globally, the city ranked 10th in the vital People metric of our Best City Brands index, which measures the relative diversity of a city’s population.
RECORD-HIGH TOURISM NUMBERS
It’s no surprise, given its openness and enviable location between Europe and Asia, that tourism to the city continues to soar. Vancouver saw record visitor numbers in 2015, with 9,368,521, a healthy 4.8% increase over 2014, also a record.
Emboldened by the global demand and quickly running out of room for international carriers, Vancouver International Airport (better known locally by its code of ‘YVR’), just announced its 20-year, $5.6-billion upgrade plan. Even before this bold initiative, it received CAPA Centre for Aviation’s prestigious ‘Airport of the Year’ Award in late 2016. In future years, we can see the city quickly moving up from its middling 77th finish in our Connectivity metric for the number of destinations served by direct flights.
CITY ON THE HEDGE
Vancouver’s appeal to dreamers—seekers of divine aesthetic, on-demand leisure in Canada’s mildest climate, and the freedom that only a towering mountain range or an ocean view can reaffirm—means visitors fall in love hard. It’s why so many who’ve passed through for centuries–human settlement in the area stretches back 10,000 years—following herds, gold, fish stocks or Expo 86—either stay or make plans to return, next time with their families.
Owning a piece of this water- and mountain-embraced land has always commanded a premium, elevated by an immigrant class that differs from the rest of the country—less ‘starting over’ and more ‘curating their future in the right place.’
But it’s in the past decade that Canada’s West Coast jewel has caught the eye of the international real estate investor class aggressively seeking the bounty that always hid in plain sight among the rainforests and winding beaches: cleanliness, safety, liberalism and a particularly Canadian embrace of the new and novel.
In April 2015, Laurence D. Fink, chairman of BlackRock Inc., the world’s largest asset manager, told the global 1% that comprise his clientele that real estate “in Manhattan, apartments in Vancouver, in London” are superior to gold—gold!—as instruments for “global families worldwide to store wealth outside their country.”
Vancouver today is a ‘hedge city’—one of perhaps a dozen urban centers like London, Singapore and New York (the top finishers, in order, in our 2017 World’s Best City Brands ranking) considered safe financial havens for the world’s wealthiest investors. Most notably, the foreign buyer is predominantly Mainland Chinese, given the century of immigration and deep roots of that ethnic community here. The city’s proximity to rapidly ascending Asian markets and wealth-generating urban centers—combined with China’s looming crackdown on foreign investment by nationals and Canada’s weak currency—means the city has been on sale to foreign capital for quite a while. Canada’s more alluring and relatively seamless path to residency for those able to pay for it also makes settling in Vancouver easier than, say, Seattle.
The result is that Greater Vancouver—home to more than half the B.C. population—is now mentioned along with such global centres as New York, London, San Francisco and Sydney, with its housing and real estate suddenly subject to the same commodification as other financial assets… but with a fraction of the high-paying jobs that normally justify such valuations. Despite the implementation of much-overdue but cosmetic “foreign buyer” and “empty home” taxes, most of Vancouver’s next generation of prospective home buyers don’t have a prayer. And those already in the market are seriously considering cashing out (especially now, when sales have stalled somewhat) and relocating to smaller urban centers in British Columbia—usually bucolic Victoria, the provincial capital on Vancouver Island, or the high desert of Kelowna and its wine country and dry powder snow.
WILL THE CITY’S MANAGEMENT CLASS FLEE?
Another result of skyrocketing housing costs in Vancouver is the potential loss of the city’s most valuable resource—its skilled young people. In a recent Resonance report titled Future of B.C. Housing (available as a free download here), we discovered that more than half of the city’s homeowners are considering selling their home and buying in more affordable markets in the next five years. Even more alarming is that 40% of Gen-X homeowners in Metro Vancouver (aged 35 to 54) indicate that they are considering selling their home and moving to a more affordable market in the next five years.
Potentially losing half of the management-age population in the city of Vancouver could have serious implications for the future of the local economy. Even if half of that divestment is re-allocated to more affordable housing in the suburbs, there is the threat of thousands of middle managers and senior leaders leaving local companies already struggling to find staff.
But who can blame them for fleeing North America’s least-affordable city? According to the Real Estate Board of Greater Vancouver, the benchmark price of a home in Greater Vancouver last fall was $933,100. The benchmark price of a detached home was $1,577,300. Despite these astronomical home prices (and rents), Vancouver is last in Canada for median total incomes for 25- to 55-year-olds with bachelor degrees, at $41,981, according to 2011 Statistics Canada data (the latest available).
Not surprisingly, ‘housing, poverty and homelessness’ are among the top voter issues in the May 2017 provincial election, the first time ever that shelter ranked up there with perennials like healthcare or the economy. But being a hedge city, in a bidding war with the rest of the world, will do that to a place.
IS YOUR DESTINATION AT A CROSSROADS?
All destinations—even idyllic, well-positioned ones like Vancouver—face challenges that threaten their brand equity, perception and livability. The key to developing and managing a successful place brand for all cities and destinations today should start with an understanding of comparative advantages and weaknesses versus their competitive set. With data on more than 200 cities worldwide, Resonance can help your city—large or small—analyze and understand your key strengths and the differentiating characteristics that define your destination’s brand. To learn more about our approach to place branding, download your free copy of the Resonance 2017 World’s Best City Brands report here or get in touch.