The new VW 1 and the growth of Urban Real Estate

As cities get denser and denser, people movement in and around cities is becoming increasingly difficult.

Three solutions exist: mass public transit, car sharing and smaller, individual vehicles.VW-1-Liter-Car-Front-Door-Open-1280x960-th

If one looks at Canada’s major urban areas, you may have noticed that more and more condo towers spring up, and the urban real estate that sells the quickest is usually very close to rapid transit stations. The traffic volume on the Canada Line, connecting Vancouver’s airport to downtown, is already past the 10 year projection for 2020 after only two years of ridership, and two recent condo projects along this line were sold out in a weekend.

A second trend is the very quick uptake of car sharing firms like Car2Go. I use it frequently in Vancouver, but also now in Calgary when I travel there, or recently on a family trip close to my native Düsseldorf. There must be close to 30 cities now that have car2Go Smartcars. They are shared by the user base for around 35 cents a minute or $18/h, incl. gasoline, insurance and parking in residential streets or downtown parkades – incl. one-way rentals – very handy for expensive cities !

The third trend is smaller individually owned vehicles, as not everyone loves public transit, nor is it always practical, especially once you leave the denser urban core. Not everyone (the author being one of them) loves hustle and bustle and 24/7 noise from too many people and vehicles, and thus prefer to not live downtown, but close, with more limited transit choices. Hence, the individual vehicle, be it a bicycle, a motorcycle, an electric car or a small diesel/gasoline powered car will be with us for many decades to come.

The most economical car in the world

The most economical car in the world

I find the idea of electric cars and small cars fascinating, not because I am a climate change fanatic, (quite the contrary actually as I think it is way overblown and only very partially man made), but because I grew up in a household where energy consumption always was discussed, because I think huge cars are a waste of precious (land) resources, because I own a Vespa that fills up for less than $10/tank and because I am an enthusiastic car2go user.VW1-2seater

You will see more electric cars even in Canada (mainly Vancouver due to very high gasoline prices at now well over $1.60 per liter of super) and select European and West Coast cities. BC, Washington State, Oregon and California are working on a grid of electric charging stations from the Baja California all the way to Whistler, BC, the so called BC to BC highway. As you may know I am working part-time as a local councilor in my neighborhood (www.myuna.ca) and one such project on our plate are electric charging stations on UBC Campus and a similar one in downtown Vancouver.

Although fascinating, electric cars will be a niche product for many years to come due to their limited range, their high cost, the time it takes to charge, the conflicting battery exchange options, the limited availability of charge stations and their inability to work well in cold weather. But, like all things new and allegedly “green” they are in vogue today and Tesla’s share price has reached lofty heights. Perhaps a short sale candidate. Also, much of the infrastructure is heavily government subsidized. Without those subsidies e-stations would not be viable. People will find out – in time – how impractical an electric car is – a fad for the urban rich, really, in addition to a second gasoline powered car. BC, for example, had subsidies set aside for 5000 such e-cars and not even 100 people applied !VW-1-Liter-Car-Interior

Of more worldwide interest, in far far higher volumes, will be smaller, gasoline or diesel powered vehicles, that accommodate one or two people. Think SmartCar, think BMW’s Mini, think the new Fiat 500 or think the new not yet released VW 1 pictured. This car, touted at the VW shareholder meeting recently as the “most economical in the world” needs less than a liter per 100km or 258 mpg, has a travel distance of over 600 km with a top speed of around 100km/h. It is over 3 m long, about 125 cm wide an a meter high, is made from carbon fibre and not painted to save weight, for now. It has roll-over protection and will go on sale next year first in China: for about 4000 Yuan or $600 and will seat two people. More on this car here.

So, coming back to real estate, it begs the question why dense urban cities like Vancouver, Toronto or Montreal still have wide roads, the same parking fee for small or large cars and free bridges for big cars.

A new era of driving and commuting is upon us !

Is your investment portfolio positioned to take advantage of it, for example by owning rental properties in urban growth markets, RRSP or TFSA eligible ?

Thomas Beyer, President

prestprop.infectious.ca