Government Operations Committee on Aug. 27th, 2024

[Thomas Aabo]

As per my opening remarks, we believe as real estate agents that this was a very attractive enterprise for a very attractive asset in a rarefied part of the city that is, per Mr. Miller's commentary, frequented by 95% of government dignitaries from other foreign organizations. The Government of Canada was able to secure the asset well below the average price that other foreign governments pay for their assets. It's our estimation that it was a very attractive price.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Mr. Aabo, in your experience, do you expect the value of this property to go up?

[Thomas Aabo]

We can't speculate, but we can certainly say that the Steinway building, as an example, is considered by many in the industry as one of the finest examples of modern architecture. They're certainly not going to be building many more of them. There's only a limited amount of space there. It's a prime location. Given that real estate is primarily about location, space and availability, we believe it will substantially increase in price over the years.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Looking at—

[The Chair, Conservative, Kelly McCauley]

I'm sorry. We are past our time, Mr. Kusmierczyk.

Mrs. Vignola, go ahead, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Good morning, Mr. Miller and Mr. Aabo.

Mr. Miller, the median price of properties in New York is $1.6 million, which means that 50% of properties are worth less than $1.6 million and 50% of properties are worth more.

What can a buyer expect to get in Manhattan for $1.6 million? Is it even possible to find a property at that price in Manhattan? Also, is it in a good location?

[Jonathan Miller]

I'm sorry. There's no interpretation coming into my headset.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay, that's fine.

I could do the interpretation myself, but I won't.

[The Chair, Conservative, Kelly McCauley]

Mr. Miller, lower down on Zoom, it shows a planet. If you click on that, it should give the interpretation. I apologize. We should have done that in advance for both of you.

That's your time, Mrs. Vignola.

[Voices]

Oh, oh!

[The Chair, Conservative, Kelly McCauley]

We'll start from the beginning, Mrs. Vignola. Can you ask your question again, please?

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes, of course.

I was saying that the median price of a property in New York is about $1.6 million. That means that 50% of properties have a selling price of less than $1.6 million and 50% of properties have a higher selling price.

Mr. Miller, what can you buy for $1.6 million? Is it possible to buy property near UN headquarters at that price?

[Jonathan Miller]

I'm sorry, but I....

[Thomas Aabo]

If Mr. Miller is unable to hear the question, I might be able to answer it.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes, please, Mr. Aabo.

[Thomas Aabo]

Thank you.

If I understand the question correctly, you're saying that the median price of an apartment in New York City is $1.6 million, meaning 50% are less and 50% cost more. The question was, in what areas can you purchase such an apartment? I think the answer, simply put, is that you can purchase an apartment in pretty much every area for $1.6 million. That's a meaningful amount of money. However, once you start adding certain requirements to that apartment, you will dwindle down the number of units, depending on what area you are looking in.

Mr. Miller's firm has a number of studies that can tell you exactly how much apartment, per square foot, you can get in each neighbourhood in New York City. I'm sure he'd be happy to share that with you.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

What can you buy for $1.6 million? Could you buy a property in Midtown Manhattan for that? If so, would it be suitable for a consul's residence?

[Jonathan Miller]

I think I figured out the interpretation.

In Midtown, $1.6 million U.S. would probably get you a studio apartment, which sounds like it would not be adequate for the needs of the consulate.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

My next question is for Mr. Aabo, but you can expand on his answer, Mr. Miller.

According to the description of the house, it has luxury elements that include wall coverings, flooring materials and other amenities such as stoves and fridges.

Would an identical apartment in the same building, minus the $19,000 in marble and appliances, have still sold for about $6 million U.S.?

[Jonathan Miller]

The answer would be no. The value of the property is essentially the sum total of the amenities that go into it, so the quality of the construction would be inherent in the value of the property.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

What you're saying is an apartment of the same size, but without those extras, would probably be a little less expensive, but less attractive.

[Jonathan Miller]

That is correct.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that is our time.

Mr. Bachrach, it's over to you, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to both of our witnesses for appearing and helping us understand a bit better the context in which this transaction took place.

The one thing that stood out to me was the drop in asking price from $10.7 million to $6.9 million. Is that usually seen or is it out of the ordinary? It seems like a fairly significant drop in asking price.