“Okanagan's largest resort development to generate over $1.5 billion in economic activity,” declared the press release that arrived August 23, 2006, touting Lakestone, a venture of Vancouver-based 20/20 Group Inc.
Vineyards, a golf course, a marina and villas ranging in price from $700,000 to $1.8 million were planned for Lakestone, the latest vineyard-oriented project to be announced for the Okanagan. Concord Pacific's Greata Ranch Vineyard Estates in Peachland, Bellstar Hotels and Resorts Ltd.'s vision of a wine village in Oliver, and The Rise, a 735-acre development with 1,200 homes above Vernon, had led the way into a market where “cautious” never modified “optimism.”
“It takes individual elements that whole resorts have been built on and puts them together in one resort,” John Murphy, president of 20/20 at the time, said. “We've got water, wine and golf, all in one location.”
When the financial crisis hit in 2008, more than $50 million had been spent on the project. Twenty lots were serviced, 10 had sold, and 20/20 was on the hook to Royal Bank.
That's where Macdonald Development Corp. (MDC) stepped in.
“I suggested they just pay off their debt and hang on to the property,” said Rob Macdonald, president of MDC. “[20/20] just wanted to sell the property, so I ended up buying it for $16 million, which was the bank debt.”
The deal closed in 2011, and MDC set about reconfiguring the project, eliminating the golf course and vineyards, downsizing the marina and rearranging home sites across the 550-acre property. Project costs are now in the range of $1 billion.
Plans continue to include 1,365 homes, but, as planning documents note, “the allocation of densities on the site has changed to reflect current market and phasing considerations, while responding to detailed site planning and grading studies that place specific housing types on the most suitable pieces of land.”
Construction and sales resumed last year, with news voters had re-elected the BC Liberals.
“Right after the election, we moved forward with the hard construction and moved forward with the development full-tilt,” Macdonald said.
There are now 116 lots under development.
With momentum building behind the new incarnation of the project, MDC hosted a ceremony with Lake Country Mayor James Baker and Ron Cannan, member of Parliament for Kelowna-Lake Country, on June 20 to signal Lakestone's formal relaunch.
Positive momentum is also building in the province's hotel market.
Carrie Russell, managing director of hotel valuation and advisory firm HVS Canada, told a recent seminar the firm hosted in Vancouver that demand for rooms in Metro Vancouver was up 8.4% in the first quarter over the same period a year ago. Demand for Vancouver International Airport properties rose 14%, making them tops in the country. The performance puts Metro Vancouver on track for a strong year after three years of lacklustre demand.
Credit rising demand to an influx of visitors from Asia, particularly China. The number of visitors from China was up 30% in the first quarter, while travel from Asia as a whole and the U.S. rose 7% and 4%, respectively.
Robert Pratt, president of Coast Hotels Ltd., said Vancouver is attractive to visitors from China because it's familiar yet far enough from China to have prestige. It also offers a blend of urban amenities and wilderness that Chinese travellers find attractive, because a range of experiences is offered in the single destination.
Canadian Tourism Commission numbers indicate the average Chinese traveller stays 14 nights and spends $1,853 per visit. The demand ultimately boosts the value of local hotel assets.
HVS expects per-room sale prices to increase 3% this year and next, and then jump 7% in 2016.
Within four hours and 20 minutes of this column hitting doorsteps last week, the province announced that municipalities won't lose property tax revenues from registered medical marijuana farms that locate off farmland. Beginning in 2015, the facilities will be taxed at the applicable rate – unless they're located on farmland, in which case they'll be taxed at commercial rates.
Marijuana production joins wine and cider production as well as sand and gravel extraction on the province's table of operations permitted on farmland that aren't taxed at farm rates.