A little-known firm backed by Ned Goodman has struck a deal to buy Sotheby’s International Realty Canada, part of a bet that the entrepreneurial billionaire and others are making on the future of vacation properties and luxury homes.
The deal will see Montreal-based 360 Vox Corp. take on Sotheby’s Canadian real estate brokerage, including a roster of more than 300 high-end real estate agents that the merged entity hopes will grow to about 1,500 in the next few years.
The deal comes as the tough global economy threatens to decrease demand for recreational properties, the growth in Canadian house prices is petering out, and the business of traditional real estate agents is undergoing upheaval.
But the executives behind the deal believe there are opportunities to be had.
“The markets are in flux, but the industry is reinventing itself,” said Robin Conners, chief executive officer of 360 Vox. Mr. Conners used to work with Sotheby’s International Realty Canada chief executive officer Ross McCredie when both were at Intrawest.
In an interview, Mr. Goodman, who is non-executive chairman of 360 Vox and a significant shareholder, said he sees the recreational property sector as a good opportunity not only in its own right, but also because he believes that it will eventually meld into the wealth management industry.
Mr. Goodman is well known as the force behind the Dundee Corp. empire, a major player in real estate by way of Dundee Real Estate Investment Trust. Bank of Nova Scotia scooped up DundeeWealth Inc. last year, but Mr. Goodman said he continues to focus on wealth management through Goodman Investment Counsel and Dundee Securities Corp. That is why he has moved into the recreational property or vacation condominium business, he said.
“My interest is from the wealth management point of view,” he said. “The long-term aspiration for me is wealth management, which is a business I’ve been in my whole life.”
Mr. Goodman has also become an adviser to, and shareholder in, Skyline International Development Inc., a private company that specializes in destination and recreational properties. Skyline owns two Ontario resorts, Horseshoe in Barrie and Deerhurst in Muskoka, and a number of hotels. “Maybe we [will] put them all together at some point in time,” Mr. Goodman mused.
Although Sotheby’s realtors in Canada sell high-end homes that are not connected to resorts or vacation properties, it was multiunit luxury developments that originally spurred Mr. McCredie to buy the Sotheby’s International Realty brand in 2004.
The problem with the vacation property business traditionally is that it does well in good times, but the fortunes of resort operators can tank in tough economic times, Mr. McCredie said. The vision that he and Mr. Conners share is a company that can develop a project from scratch, not only acting as the developer but also the broker that presells the units and resells them later.
While Sotheby’s International Realty Canada’s base is in this country, the business has become global, in part because foreigners are buying high-end properties in Canada. But Mr. McCredie said it is also because Canadians are developing a reputation globally for being good at marketing new real estate projects
360 Vox has a number of projects under way, including a joint venture for a ski-in, ski-out development in the French Alps.
“When we started on this project, people said, ‘You guys are out of your minds, European markets are in the bucket,’” Mr. Conners recalled. But the first phase of the development sold out, and the second phase is about 70-per-cent presold, he said.
“Those people are still buying. What they’re doing is perhaps buying a little bit more modestly, they’re perhaps buying less square footage, but they’re buying.”