Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1301

https://500px.com/embed.js

Canada is a resource rich country. And one of the things that commonly happens to countries with a lot of resources is that they begin to myopically focus on the immediate gains from resources at the expense of long term innovation and economic development. 

This is known as the “ resource curse .”

The Martin Prosperity Institute here in Toronto recently published a report that looks at this exact topic: Canada’s urban competitiveness through the lenses of its resource economy and its knowledge economy. In the end, Richard Florida and Greg Spencer conclude that two can and should work together, but that we need to stop neglecting our cities:

“The oil and gas industry is not necessarily a constraint on the creative economy, but in the past decade or so it has come to dominate thinking around economic development policy-making. It is time to use the resources from the energy economy to build a more secure future as an urban knowledge economy. We can also use talent and technology to deepen and expand the resource economy.”

And one of their key recommendation is something I have argued for many times here on Architect This City:

“A New Federalism for Cities: It is time to give cities the taxing and spending powers they require. Cities must be given more control over their own destinies if they are to prosper in the 21st century.”

Now, here are a few interesting charts from the report.

This first one looks at the relationship between a city’s population and its creativity levels. The two are positively correlated, which means that, in this context, bigger is better.

This second one splits Canada in half – east and west – and then looks at how average income levels are affected by creativity levels (the knowledge economy). Here we see that in eastern cities, income levels are positively correlated with creativity levels. But in western cities, changing creativity levels have almost no impact on income levels. 

Finally, this third chart compares the relationship between oil and gas employment (LQ = location quotient) and average income levels. What it finds is that income levels and oil and gas employment are positively correlated in the west, but there’s almost no relationship in eastern cities. 

The way to read this chart is to think of the LQ as the employment multiple relative to the national average. So for example, a LQ = 10 means that the oil and gas employment levels are 10 times the national average. As you probably guessed, the pink dot way out on the right is Fort McMurray .

If you’d like to read the entire report, you can do that here . I hope that our new Prime Minister, Justin Trudeau, will read reports like this and spend more of his efforts investing in our knowledge economy – which means investing in our cities.

I am very interested in the social side of buildings. What I mean by that is that we usually focus on the quantitative side. We look at sale prices. We look at average prices per square foot. We look at reserve fund balances. And as I recently argued , this is all very important stuff. I think we should do much more to make this data publicly available.

But there’s also a side to buildings that’s harder to measure: the human side. Sale prices and staged MLS listings don’t tell you what the people who live in the building are like. What the vibe will be like at the pool during the summer. If you can expect to find dog poo in your elevators. But when you live in a multi-family building, I think most people will tell you that the qualitative side also matters.

So this morning, I thought I would run a little experiment and pull the top Instagram photos for a random sampling of relatively new condo buildings in Toronto. These are public photos that have been uploaded and tagged with that building’s location ID. 

Obviously there’s an inherent bias since I figure Instagram users probably lean towards Millennials. Also, the top posts could be easily skewed by a small number of heavy influencers. But I still thought it would be interesting to see if any particular identities started to emerge. And I do see some differences that reflect what I would have expected. I wonder how these might relate to the original marketing for the buildings.

What do you think of the photos below?

Feel free to do the same for your building and post the photo in the comments below. That could make for a really interesting discussion. My building is the first photo.

https://500px.com/embed.js

After I wrote this week’s post about Chinese homebuyers in Vancouver , I was surprised to learn about the racism debate that flared up in the city / on Twitter. I guess this really is a touchy subject. (See:  #donthave1million )

My reaction to the research was: Great to see someone ( Andy Yan ) putting in the time to try and better understand a market phenomenon. It’s painful how opaque real estate markets can be. Let’s get even more data so that we can make even better policy decisions. I didn’t read it as: let’s deliberately single out a race.

Because the reality is that we all knew this was happening.

Bloomberg recently published an interesting and related article that talks about China’s money exodus and how the Chinese logistically get their money out of the country. There are restrictions in place. 

But first, here are two snippets from Bloomberg that describe the order of magnitude we’re talking about:

This flood of cash is being felt around the world, driving up real estate prices in Sydney, New York, Hong Kong and Vancouver. The Chinese spent almost $30 billion on U.S. homes in the year ending last March, making them the biggest foreign buyers of real estate. Their average purchase price: about $832,000.

In total, UBS Group estimated that $324 billion moved out last year. While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left.

Now here’s how it is being done:

It works like this: Chinese come to Hong Kong and open a bank account. Then they go to a money-change shop, which provides a mainland bank account number for the customer to make a domestic transfer from his or her account inside China. As soon as that transaction is confirmed, typically in just two hours, the Hong Kong money changer then transfers the equivalent in Hong Kong or U.S. dollars or any other foreign currency into the client’s Hong Kong account. Technically, no money crosses the border – both transactions are completed by domestic transfers.

And here’s a snippet that stood out for me because it shows how easy this has become:

While the first exchange has to be set up face-to-face, customers can place future orders via instant-messaging services such as WhatsApp or WeChat, and money changers set no limit on how much money they can move.

Given the scale and complexity of this issue – housing affordability – I have to believe that cities and policy makers would be far better off with more, rather than less, information. I hope we can work towards that.