Anna Asi, M.A.

Chinese investment surge hits Metro Vancouver housing market

Stable Canadian economy and good quality of life is luring 'planeloads' of overseas buyers eager to invest

When real estate entrepreneur Cam Good hosted a group of predominantly mainland Chinese investors this Wednesday at a White Rock condo showing, he was tapping into a market that's surging across much of Metro Vancouver.

Good, president of The Key, a Vancouver-based sales and marketing firm that's focusing on a new wave of Chinese buyers, figures he's sold more than 500 homes to mainland Chinese investors and immigrants in January and February in Vancouver and Toronto.

He's also opened an office in Beijing's business district -The Key China -where Chinese buyers can purchase Canadian condos from a presentation centre and view videos that showcase various condo developments and the virtues of Canada.

"[Chinese investors] have really picked up a lot of steam in the last two or three months," Good said in an interview. "And I believe this is just the tip of the iceberg. There's an über-wealthy upper class forming and there's a strong middle class growing in China. This massive middle class is now getting to a point where they can afford international real estate. And Canada is viewed by the Chinese as a very stable place to put their money.

"There are literally planeloads of Chinese coming here to buy real estate."

Wednesday's attraction was Avra, a 17-storey condominium tower that's slated to be built over the next two years, and Good took along a busload of investors -some from China and some already living here -and their agents to view the plans.

But it's not just condos that are attracting Chinese buyers, with single-family homes and large lots topping the list.

Across the Lower Mainland, especially Richmond and Vancouver's west side, mainland Chinese buyers and immigrants are becoming a major part of the market, in some cases competing with each other through multiple offers.

But the phenomenon is starting to spread to other areas including Burnaby, West Vancouver, White Rock and beyond.

"We predict that this will be a dominant trend for a long time," Scott Brown, senior vicepresident, Western Canada for Colliers International residential marketing, said in an interview. "Some of the most expensive [Vancouver] real estate is only being marketed to Chinese buyers. And Vancouver and Toronto are very popular."

According to a report on new multi-family home sales in the Lower Mainland by Colliers, which recently opened a dedicated office in Shanghai to deal with the increasing demand, a total of 2,711 new multi-family units were sold in the region in the fourth quarter of 2010, making it the most active quarter of the past year.

"As in each quarter in 2010, the health of the market is expected to continue to be positively impacted by increasing Asian immigrant and investment demand," the report, prepared by Colliers and Urban Analytics, concluded.

Scott said the expected offshore demand will continue to be "the dominant story in 2011 that it was in every quarter of 2010 especially in Vancouver-west, Metrotown and Richmond."

The demand for Vancouver properties appears to be fuelled by many factors -including, ironically, a crackdown on property purchases in mainland China that may be moving much of that investment overseas, particularly to Canada.

Local real estate companies are tapping into the demand, which realtors say is also partly fuelled by an easing of travel restrictions by China with the granting of approved destination status to Canada.

As well, local Vancouver area Chinese-language newspapers are being used by realtors and agents to specifically target mainland Chinese buyers, citing Canada and Vancouver's stability and strong local real estate returns.

A recent report in the China Daily, a state-run publication based in Beijing, said Canada was "the most popular choice" for overseas investors while "growing restrictions on property purchases in major Chinese cities [are driving] the country's nouveau riche to look overseas for investment opportunities."

The newspaper noted that most overseas property purchases are motivated by a combination of factors including immigration, education and investment, with Canada, Australia and the U.K. topping the list of destinations.

The China Daily report also said buyers from the Chinese mainland represent between 40 and 50 per cent of the current market for pre-sale projects in Vancouver.

But China's effort to cool an overheating market is just one reason investment is pouring into Canada.

Brown believes there are many factors, especially Canada's image as a great country to live in and a safe place to invest money. "There's no one easy answer, but one of the main drivers is [they] believe that having their children educated in Canada [is good]. The other driver is that Vancouver is a beautiful, livable city and they want to buy their own piece of it."

One recent buyer is former Beijing resident Yang Yang, who moved to B.C. with her husband and young daughter last summer, purchased a detached house in Surrey, and accompanied Good to the White Rock condo showing.

"We prefer the peaceful life here," Yang said in an interview. "Beijing is very crowded and the air pollution is bad there."

Yang said that she and her husband, an IT engineer, are considering a condo at Avra as a place to retire when they no longer need their larger home.

Yang's realtor, Hong Lui, with Interlink Realty in Richmond, said she first noticed a surge in mainland Chinese interest last spring and it's grown increasingly stronger, with a mix of investors, including those who want to immigrate to Canada and others who are looking here after the Chinese government restricted their ability to own several homes.

Richmond MacDonald Realty realtor David Lindsay said: "January and February has been almost exclusively mainland Chinese buyers of big lots, with a house of little value on it. And we're getting multiple offers."

He said, for example, that a typical lot in the Seafair area, which sold for $800,000 in October, is now selling in the $1.2-million range. "I sold one last Sunday and we had four offers. The winning bid was $1.03 million. It was on the market for $968,000." Lindsay believes there's speculation is going on, because some buyers are getting an accepted contract with a clause that allows them to assign the contract to a third party before the sale is completed. "One buyer didn't even set foot on the property."

Real Estate Board of Greater Vancouver president Jake Moldowan said he believes lifestyle is the core reason for the interest. "Vancouver is an extremely desirable place to be."

He said that Richmond lots are now going for $1 million to $1.3 million. "And I know that there have been realtors from Hong Kong and mainland China, who fly over there, put packages together, and then bring people over."

Meanwhile, Bosa Properties announced this week that its 34-storey Sovereign tower in Burnaby's Metrotown sold out immediately, surpassing the single day sales record in the Burnaby market by selling $98-million worth of real estate.

© Copyright (c) The Vancouver Sun

January 2011 CMHC Housing Market Report

OTTAWA, February 8, 2011 — The seasonally adjusted annual rate¹ of housing starts was 170,400 units in January, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 169,000 units in December 2010. According to final figures, actual housing starts for 2010 totalled 189,930 units, with activity moderating towards demographic fundamentals by the final quarter of 2010.

“Housing starts moved slightly higher in January because of an increase in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Single-detached and multiple starts showed a moderate decline.”

The seasonally adjusted annual rate of urban starts decreased by 1.7 per cent to 146,900 units in January. Urban multiple starts moderated by 1.5 per cent in January to 82,900 units, while single urban starts moved lower by 2.0 per cent to 64,000 units.

January’s seasonally adjusted annual rate of urban starts decreased by 19.0 per cent in the Prairie Region, by 7.9 per cent in British Columbia, and by 1.0 per cent in Québec. Urban starts increased by 13.3 per cent in Atlantic Canada and by 10.3 per cent in Ontario.

Rural starts² were estimated at a seasonally adjusted annual rate of 23,500 units in January.

As Canada's national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

BCREA Housing Market Update - In Focus: 2010 Annual Numbers (Jan 2011)

BC Real Estate Association (BCREA) Chief Economist Cameron Muir discusses the December 2010 statistics and the 2010 annual numbers.

Building Too Close

Real estate lawsuit in Vancouver

Vancouver Prices Soared in 2010

Region's property values keep climbing

Greater Victoria single-family house assessments are expected to climb from 1.3 per cent in Langford to 12.6 per cent in Sidney, says a company that crunches B.C. real estate data.

The predicted numbers were calculated by Landcor Data Corp. of New Westminster. B.C. Assessment will release official figures on Dec. 31.

B.C.'s real estate market is "still pretty stable," Rudy Nielsen, Landcor president, said Friday. "I predict sales of $48 billion for B.C. this year. Last year, we were at about the same. B.C. is holding its own. Best year we have ever seen was 2007 with $64 billion."

Many factors can influence assessments. If a large number of similar new housing units is developed, particularly over a number of years, that tends to balance out percentage increases, Landcor said. In Langford, for example, builders have been busy in recent years putting together large small-lot subdivisions.

Compare that to long-established and smaller Sidney which has not seen the same boom in housing construction.

Like B.C. Assessment, Landcor numbers refer to assessed values of properties as of July 1, so they do not necessarily reflect a property's current market value. The percentage difference compares 2010 with 2009.

To determine values, a range of criteria is used such as location, nearby sales, a home's age, quality, condition, recent improvements, finish and more.

In Greater Victoria, the average sale price for a single-family house was $636,634 in November, with a median of $530,000.

Landcor forecasts that the city of Victoria will see assessments rise by 12 per cent for single-family homes, and by 2.4 per cent for condominiums.

If a community has a high number of condos available for sale, that would tend to limit percentage changes, Landcor said. The capital region experienced a boom in multi-family construction before the recession hit in the fall of 2008.

Lake Cowichan's assessments are predicted to drop the most on the Island, by 28.5 per cent. That community has lacked a major employer since the Youbou mill closed in 2001.

Around B.C., upscale West Vancouver will likely have the largest percentage increase for detached houses, at 27.7 per cent, Landcor predicts.

John Barry, B.C. Assessment's communications manager, said assessments covering 1.9 million properties, will be mailed Dec. 31. People who signed up for electronic delivery could receive notices that day.

B.C. Assessment's website (bcassessment.bc.ca) will start showing assessments Jan. 1 to 3, allowing property owners to see basic information, he said.

Assessment notices include a personal access number allowing property owners to go online to obtain detailed information on up to eight properties. A wide range of information relating to the latest assessments will also be posted on the website.

© Copyright (c) The Victoria Times Colonist

MLS® stats show more sales, fewer property listings in November

Greater Vancouver residential home sales improved in November compared to the previous four months, with the number of sales posted on the Multiple Listing Service® (MLS®) coming in slightly higher than the 10-year average for that month.

The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 2,509 in November 2010. This represents a 7.4 per cent increase compared to October 2010 and an 18.6 per cent decline from the 3,083 sales in November 2009.

Looking back further, last month’s residential sales represent a 187.1 per cent increase over the 874 residential sales in November 2008, a 13 per cent decline compared to November 2007’s 2,883 sales, and a 6.4 per cent increase compared to the 2,358 sales in November 2006.

“Housing sales numbers were fairly typical for a November and indicate a fairly balanced market. Activity on the buyer side has been stable, with slight increases, over the last few months while the number of homes listed for sale in our region has declined each month since we reached a peak in June,” Jake Moldowan, REBGV president said.

Total active residential property listings in Greater Vancouver currently sit at 12,384, a 12.1 per cent decline from last month and a 12 per cent increase from November 2009. New listings for detached, attached and apartment properties declined 17.1 per cent to 3,030 in November 2010 compared to November 2009 when 3,653 new units were listed.

“Home values have been relatively stable over the last five months compared to the summer period when we were seeing some downward pressure on prices,” Moldowan said. “It’s the homes priced accurately for today’s market that are receiving a lot of attention and selling right now.”

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 4.1 per cent to $580,080 in November 2010 from $557,384 in November 2009. This price has remained virtually unchanged since June of this year.

Sales of detached properties on the MLS® in November 2010 reached 1,050, a decrease of 9.8 per cent from the 1,164 detached sales recorded in November 2009, and a 226.1 per cent increase from the 322 units sold in November 2008. The benchmark price for detached properties increased 5.6 per cent from November 2009 to $799,312.

Sales of apartment properties reached 1,052 in November 2010, a decline of 24.6 per cent compared to the 1,396 sales in November 2009, and an increase of 156.6 per cent compared to the 410 sales in November 2008.The benchmark price of an apartment property increased 1.9 per cent from November 2009 to $389,168.

Attached property sales in November 2010 totalled 407, a decline of 22.2 per cent compared to the 523 sales in November 2009, and a 186.6 per cent increase from the 142 attached properties sold in November 2008. The benchmark price of an attached unit increased 4.1 per cent between November 2009 and 2010 to $488,733.

The financial problems with the are taking the troubled project in a new direction, as the owners go into receivership. “This agreement gives us stability,” said Vancouver city councillor Geoff Meggs.

“Now, the milestone payments don’t have to become a recurring crisis. If (the developer) lacks the capacity to pay each time, the damage to the asset will be greater, compared to an orderly approach.”

The City of Vancouver has negotiated an agreement with the owners of the Millennium Water development to put the project into receivership and hand over management to accounting firm Ernst and Young.

Millennium recently failed to make a scheduled loan payment, which raised serious concerns about how the company will pay back its loans on the $1 billion project.

In August, Millennium was supposed to make a $200-million payment, but the city received $192 million and by Sept. 20, a total of $197 had been received. The next payment of $75 million was due from Millennium in January.

“They were facing another deadline in 60 days, which was problematic,” said Meggs. “We always had the option to force them into receivership, but we decided to negotiate an agreement for consensual receivership.”

The owners of Millennium Southeast False Creek Properties, Shahram and Peter Malek, agreed to go into receivership to avoid pending legal action.

The city was preparing to go to the B.C. Supreme Court to petition Millennium into receivership.
Receivership is a form of bankruptcy in which a company can avoid liquidation by reorganizing with the help of a court-appointed trustee.

There are a total of 1,108 units in the Millennium Water project. The marketing company hired by Millennium has managed to just sell 259 units out of 737 market sales units, about 35 per cent of the total. This number includes 223 pre-sales units that were sold last year.

The agreement allows the receiver to make immediate decisions about a new marketing strategy and is designed to secure the payment of about $740 million dollars that is still owed by Millennium to the City. The loan for construction represents about $560 million.

“First, we will sit down and produce a marketing plan that makes adjustments to price,” said Meggs “As part of the agreement, Millennium has pledged other types of security that will be used to close the gaps in the repayment program.”

According to Meggs, cutting prices could reduce the amount of revenue that was anticipated from the sale of the units and create a payment gap.

Almost half of the unsold units left on the market are priced at less than $1 million, but another 24 per cent of these units are priced between $1 million and $2 million.
Twenty eight per cent cost more than $2 million.
About 60 per cent of the 119 market rental units have been rented out.

The city is working with a non-profit housing operator to manage 252 social housing units.

New York-based Fortress Investment Group, which was the developer’s original lender, stopped financing the project.

This move forced the city to buy out the building loan to better control costs and finish in time for the 2010 Winter Games.

VANCOUVER-- A new report suggests that low mortgage rates combined with a growing population and an improving economy bode well for Metro Vancouver home sales for the rest of 2010 and 2011.

“For the next year, we’re looking at favourable mortgage rates, a steady flow of migrants to the Lower Mainland, and a growing job market,” Canada Mortgage and Housing Corp. senior market analyst Robyn Adamache said in an interview about the federal agency’s housing market report that concluded sales will remain stable until mid-2011 before trending higher. “We’re looking at about 33,000 sales for Greater Vancouver [in 2011]. We’re looking at 31,000 this year. The 10-year average is about 34,000.

“Balanced market conditions that have been established in recent months will continue over the next nine to 12 months.”

The B.C. Real Estate Association also predicted in its fall housing forecast last week that B.C. housing sales, while declining 12 per cent this year to 74,950 units, will increase six per cent to 79,700 in 2011.

Adamache said that fewer new listings coming onto the market due to modest price growth, and a steady pace of sales will continue to gradually draw down the inventory of resale homes for sale.

The CMHC report predicted that the average home price in Metro Vancouver will increase 12 per cent in 2010 to $665,000, with most of the increase already having taken place. Prices are forecast to increase by three per cent next year to $685,000.

As well, new home construction in Vancouver will increase in 2011, approaching the 10-year average level as demand for new housing strengthens. “Homebuilding will increase modestly next year as developers seek to add to the stock of housing to accommodate approximately 16,000-18,000 new households each year,” said Adamache.

CMHC noted that housing starts across the province will also hold steady this year before gradually rising in 2011.

“Builders are expected to begin construction on more new homes next year in response to steady housing demand,” CMHC’s B.C. regional economist Carol Frketich said about the forecast of just under 26,000 total starts for 201, slightly below the 10-year average.

Nationally, CMHC said home construction is expected to continue easing in the final quarter of this year before stabilizing in 2011.

The BCREA reported Monday that residential sales in B.C. declined 36 per cent to 5,507 units in October compared to the same month last year. The average price climbed six per cent to $521,859 in October compared to the same month last year.

“B.C. home sales have posted moderate gains since the summer months,” added BCREA chief economist Cameron Muir in a statement.

Year-to-date, B.C. residential sales dollar volume declined two per cent to $32.5 billion, compared to the same period last year. Residential unit sales declined 10 per cent to 64,735 year-to-date.

The report stated that the average residential price in B.C. is forecast to climb seven per cent to $498,500 this year and decline by one per cent to $495,600 in 2011.

Meanwhile, the City of Richmond is reporting that after a sluggish 2009, a record has been set in 2010 for total building permits issued in a year.

The city reported that at the end of October it has processed 1,511 building permits with a construction value of over $769 million, greatly exceeding the $163 million value in 2009 and beating Richmond’s previous record of $658 million in 2006.

“While the sheer number of projects is impressive, the city has taken a sustainable approach to development that was well thought out in our City Centre Area Plan,” Mayor Malcolm Brodie said in a statement.

Sales levels in Lower Mainland real estate markets remain somewhere between the highs of 2009’s market rebound and the lows of 2008’s sales collapse, reports from the region’s major real estate boards show.

In Metro Vancouver, realtors recorded some 2,337 sales in October through the realtor-controlled Multiple Listing Service, which was down almost 37 per cent from the frenetic pace of the same month a year ago, the Real Estate Board of Greater Vancouver reported Tuesday.

However, October’s 2,337 sales were some 71 per cent higher than the recessionary October of 2008, and board president Jake Moldowan said agents have “seen a lot more consistency and less volatility” in sales levels and pricing over the past few months.

“As we enter the final two months of the year, buyer demand is in closer alignment with supply than we’ve seen for most of 2010,” Moldowan said. “Those buying today recognize that they

still have a chance to enter the market with near-record-low interest rates, while gradual reductions in inventory have eased downward pressure on prices.”

In the Fraser Valley, realtors made 1,014 MLS sales in October, down 40 per cent from the same month a year ago, but 32 per cent higher than the doldrums of October 2008.

“With help from near-record-low mortgage rates and a steady decrease in the supply of homes, we’re getting back to what I call a ‘normal,’ balanced market,” Deanna Horn, president of the Fraser Valley Real Estate Board said in a news release.

In the area of Metro Vancouver covered by the Real Estate Board of Greater Vancouver, the benchmark price (an average of typical homes sold) for detached homes hit $796,833, which was up 6.3 per cent from the same month a year ago.

For townhouses, the benchmark price hit $487,530 in October, up four per cent from the same month a year ago.

For condominiums, the benchmark price reached $390,074 in October, up 2.4 per cent from the same month a year ago.

In the Fraser Valley’s board area, which includes Surrey, the benchmark price for detached homes hit $505,759 in October, up three per cent from October 2009, but down 0.3 per cent compared with September of this year.

For townhouses, the $319,058 benchmark was up 2.2 per cent compared with the same month a year ago, but down 0.9 per cent compared with September.

The benchmark for Fraser Valley condominiums reached $240,542 in October, up 0.2 per cent from a year ago and was 0.4 per cent higher than September of this year.

This is a roller coaster simulation of the last 35 years of the Vancouver Real Estate market. The actual graph you're riding is the inflation adjusted value of a house in Vancouver BC based on data collected by Royal LePage and calculated by the UBC Centre for Urban Economics and Real Estate.
** Courtesy of Vancouver Condo **

Watch below:

TORONTO, Nov. 2 /CNW/ - 2011 promises slowing, steady growth and decent prospects for Canadian real estate investors as long as the U.S. economy does not drag them down, according to the Emerging Trends in Real Estate® 2011 report, released today by PwC and the Urban Land Institute (ULI). The report reflects interviews with and surveys of more than 875 of the industry's leading real estate experts, including investors, developers, lenders, brokers and consultants in both Canada and the U.S.

Canadian property owners and financial institutions cannot help contrasting their reasonably healthy condition with precarious U.S. markets. Canadian fundamentals trend near equilibrium, employment is recovering and banks boast sound balance sheets, putting Canada in a better place and boosting confidence that the local market can escape issues faced in the U.S. However respondents say a weak U.S. dollar and sputtering U.S. economy dampen cross-border commerce, especially hurting Ontario industrial markets, which serve Midwestern U.S. manufacturing centres.

"The big difference for Canada has been the sound condition of its banks," says Chris Potter, leader of the Real Estate Tax practice for PwC Canada. "We have no distressed banks and few distressed owners and sales. Now, rising interest rates coupled with tight bank requirements and broader economic concerns tamper down a recent home buying spurt, particularly in Ontario and B.C., where purchasers stepped up activity before HST went into effect."

While capital returns, investment opportunities will be limited. Institutions dominate the major central city markets, holding on to assets for steady income instead of trading. Emerging Trends respondents exemplify the hold-on mentality: they think it is a good time to buy, but do not want to sell. In this "compressing cap rate" environment, many deal-starved Canadians will be active in the U.S., where they should have greater opportunity to spend and find higher yields.

Canada has one of the world's healthiest capital markets and few borrowers confront refinancing issues. Overall in 2011, Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital, the result of non-satiated buyers.

"In Canada, the real estate industry didn't get overleveraged and the markets never suffered any interruption of credit availability," says Holly Allen, leader of the Real Estate Deals practice for PwC Canada. "Canadian banks benefit from a combination of institutional risk aversion and relatively stringent government regulation."

• Insurers and Pension Funds - A dominant handful of large insurance companies and public pension funds will continue to command ownership of the nation's trophy commercial assets—downtown office space and regional malls.
• REITs - Prices levelled off after strong run-ups in 2009. For 2011, analysts do not see "much room for big gains," and these stocks should stick close to valuations.
• Foreign Investors - It is hard enough for domestic investors to find good acquisition opportunities, foreign players will struggle even more to break in. Offshore investors can't build portfolios easily.

Best 2011 Investor Bets in Canada

Respondents to the Emerging Trends cite the best invest or bets for 2011, including:

• Remove portfolios of select low-yielding assets and reinvest opportunistically in a U.S. market recovery.
• Time investments to the market and buy down-but-not-out city-centre hotels and struggling industrial properties in the Greater Toronto area.
• Buy apartments if you can find anything available, they offer the best security.
• Look for underperforming infill retail or commercial space and position for redevelopment as condos.Canadian cities will continue to grow vertically as planners seek to encourage 24-hour environments.
• Reserve land sites inside the Toronto greenbelt for future residential development; demand and pricing should continue to increase.

Markets to watch

For 2011, major Canadian real estate markets settle in a fair to good investment range, with only modest investment prospects and constrained development potential. Toronto bumps Vancouver from the top ranking city to invest and develop in the Emerging Trends survey, while Calgary must hope to recuperate from cooled demand and a touch of development binging. Population continues to concentrate in and around a handful of major 24-hour cores scattered from coast to coast, leaving extremely limited investment opportunities in small cities and rural areas in between. Shut out of primary cores, some investors scrounge for product in select secondary and suburban markets.

• Toronto - Some softness creeps into the office market as major tenants "play musical chairs" and move into new Class AAA development projects. Market vacancy will not increase materially above the current mid-single digits, and any near-term additional office development will be small and niche. New condo projects pop up in all directions. Some respondents worry about flattening apartment rents as condo investor's lease out units. High housing prices and immigration flows help make apartments a good bet. Investors retain interest in buying and holding industrial properties, which should recover from higher-than-average vacancies and rent declines once the U.S. gets untracked.
• Vancouver - Office and condo markets almost defy logic and stay "red hot." Many wealthy Asian investors park money with plans for eventual citizenship. Institutional investors control the relatively small office market, which enjoys minuscule vacancies. Vancouver's natural barriers control development and attract investors—a powerful combination. But some respondents are uneasy: "The market is artificially inflated; it's been too hot for too long." The HST raises costs and temporarily cools demand for mid-tier housing in some areas outside the core.
• Ottawa - Nothing much will change. The government does not downsize but the city will never attract the same lobbying intensity or contractor-related business seen in the U.S. The Ottawa Convention Centre opens next year and could provide a potential market lift, particularly for hotels and retail.
• Montreal - The Montreal market will continue to hold its own as respondents cite its good value and better yields. Besides mainstay Quebec provincial government offices, the city benefits from a fairly diversified economy, including aerospace and financial services.
• Edmonton - Edmonton avoids the level of oversupply that deflates Calgary. The oil services business thrives and locals expect positive impacts to filter through the economy, including employment growth.
• Calgary - Sprawl and overbuilding "temporarily" subdue outlooks, but "absorption will come." Developers retreat in the face of high vacancies and show no appetite for new office projects. Locals put faith in robust commodities markets and U.S. consumption of oil from tar sands. Expect spreading hot growth to resume in coming years.

Reflecting modest expectations, property sector ratings improve over last year's tepid forecasts, especially for apartments and offices. Retail and industrial hold up, but hotels suffer from reduced U.S. tourist travel. Commercial markets promise to deliver cash flow but not much appreciation, while housing prices could ebb after an unsustainable surge. Most investors take heart in consistent metrics from markets, which linger in reasonable equilibrium; it beats write-down's, defaults, and foreclosures.

"Not only has the Canadian real estate industry been able to weather the downturn in the economy better than other markets, the environment in the U.S. has allowed Canadian investors to be opportunistic," says Lori-Ann Beausoleil, national leader of the Real Estate practice for PwC Canada. "Canadian investors looking to expand into the U.S. market or who are already in the U.S. have been able to take advantage of some great growth opportunities and purchase assets at a distressed price."

Now in its 32nd year, Emerging Trends is the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 875 leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants.

VANCOUVER — Two local developers are proposing a landmark $500-million mixed-used project that would include a 48-storey residential tower just north of the Burrard Street Bridge.

The joint proposal by Jim Pattison Developments Ltd. and Reliance Properties Ltd., called the Burrard Gateway development, is one of the largest projects proposed for downtown Vancouver with the main tower 102 feet higher than is now allowed under existing city bylaws.

However, the site is one of six identified by the City of Vancouver where developments could potentially go higher than currently allowed if they add such amenities as significant architectural interest, a high degree of sustainability and not impact view corridors.

The six sites include three in the central business district, two near the north end of the Granville Street Bridge and one near the north end of the Burrard Street Bridge.

“We feel we’re delivering on the expectations set out by council,” Reliance Properties president Jon Stovell said Tuesday at a news conference held to release details of the 774,000 square-foot project, promoted as a significant gateway project on the Burrard Street corridor and a dramatic entrance to downtown Vancouver as people crest the Burrard Street bridge heading north. “The city has said that this and five other sites are suitable for this height.”

He said the project team will now submit a rezoning application to the City of Vancouver, with the public hearing process getting underway in the spring.

“This is the beginning of the process,” added Stovell, who believes the project could be finished by 2014 if it gets the go-ahead. “And we think there’s a lot of support. It’s of city-wide interest [and] we want to engage the public.”

Located on Burrard and Hornby streets, north of Drake Street, the rezoning would involve 23 separate city lots, 14 owned by Reliance Properties and nine owned by Jim Pattison Developments. The project would include a flagship “glass cube” Toyota dealership, replacing the one that’s now there.

As proposed, the development consists of three towers of 13, 36 and 48 storeys, another seven-storey residential/commercial building fronting on Hornby Street, a 50,000-square-foot three-storey Toyota dealership (including four levels of service facilities below ground) with a total space of more than 750,000 square feet. Uses would include market strata and rental housing, office and retail space, the Toyota dealership and several community amenities including a 5,200-square-foot daycare centre, a car-share program, parking for nearly 800 bikes, community gallery space, and money for rental housing in the Downtown Eastside.

There would be about 600 residential units in the project, designed to achieve LEED gold status with an emphasis on energy savings.

According to the proposal, the current height limit of 364 feet for the main tower would be increased to 466 feet — as tall as One Wall Centre — and the permitted floor space for the project increased from 379,500 square feet to 774,318 square feet.

Jim Pattison Auto Group president Bill Harbottle said the project would establish a new standard for auto dealerships. “This represents an opportunity to launch the next generation of urban automobile dealerships. It’s a vertical operation over seven floors, with a glass showroom.

“We believe it will be Toyota’s flagship location in North America.”

James Hancock, associate director of the project’s architect, IBI/HB Architects, said the project would be a “significant architectural development” that would become the “heart” of the local neighbourhood.

“The view corridor to the Lions has been respected.”

According to a City of Vancouver release, the proposal to allow higher buildings stems from a desire for more housing and job space in downtown Vancouver, along with public benefits.

The city said that while the buildings would be visible in the skyline, they would not impact protected public views of the mountains.

It said the proposal for higher buildings came forward in January 2010 after the Vancouver Views study concluded the public would accept a change as long as mountain views are maintained.

According to the developers, the rezoning process will involve public open house meetings, a public hearing with Vancouver City Council and review by Vancouver’s tall building design panel, including two internationally recognized architects from outside of Vancouver.

For more details visit: http://www.burrardgateway.ca

HIGHLIGHTS

• Over the past three rate deci­sions, the Bank of Canada has managed to take the overnight rate off the floor, and up to a level of 1.00%.
• However, we concur with the widely held belief that further hikes are off the table for now: a pause is by far the most likely outcome for the October 19th decision.
• There are three main reasons for our forecast.
• First, global conditions have become increasingly uncertain, and not a little gloomy.
• Second, Canadian economic data has consistently disap­pointed, and suggests future subpar growth.
• Third, intra-meeting Bank of Canada communications have been quite dovish.

After a sequence of nail-biting rate decisions extending back to the spring of this year, the market can finally coast into a Bank of Canada rate decision on auto-pilot. This one overwhelmingly argues for a pause, at least insofar as global and domestic economic conditions are concerned. The signals emanating from the Bank of Canada provide a welcome confirmation of this sentiment.

Market Developments

The bond market has suffered from a case of whiplash over the past several rate decisions. The pattern for the Bank of Canada has been to under-promise and over-deliver. That is to say, each statement has bemoaned the uncertainty in the world, and yet a rate hike has always followed like clockwork. This strategy was a clever one, as it pre­vented the market from tightening rates before the Bank of Canada was ready. Indirectly, it has prob­ably helped to keep the Canadian dollar in check throughout the summer.

However, for the first time in recent memory, the Bank of Canada’s communi­cation strategy was a little off kilter at the September meeting (or, more charitably, the market’s interpretation may have been awry). It failed to convey the expected degree of caution or concern. Thus, although the market had been prepared to take future rate hikes off the table, an October hike was briefly coaxed back into contention. At its peak, the market priced odds for this of over 50%.

However, these expectations were quickly snuffed out by Governor Carney’s speech a few days later. In it, he noted “non-negligible risk to the downside”, that “renewed weakness in the United States could have important implications for the Canadian outlook”, and that “the Bank will have to chart a careful course for Canadian monetary policy.” A subsequent speech on September 30th added to the caution. He noted that “the evidence is mixed [that growth in advanced economies will be self-sustaining]”, he criticized the quality of newly created Canadian jobs, and noted that, internationally, “very low policy rates could be in place for longer, and unconventional monetary policies could even be expanded in some major countries.” Tellingly, he also observed that “there are limits to [the] divergence” between Canadian and U.S. policy rates.

In turn, the market has worked to price out rate hikes, and currently sits at a cautious probability of under 20%. This is about right. A hike would be most unexpected, and a pause is entirely justifiable.

International Context

Canada can never be contemplated in complete geo­graphic isolation. As a small open economy, it is especially susceptible to global influences. These influences have been mostly undesirable of late. European fiscal problems have re-captured some of the market’s attention, with a newfound emphasis on an Ireland sorely in need of a fiscal pot of gold. U.S. economic data has been regularly disappointing and always weak, lending credence to double-dip soothsayers.

In turn, the U.S. Federal Reserve now muses openly about another round of quantitative easing. Japan has beat it to the punch, delivering its own brand of printed money and lower borrowing rates. The likes of Australia have paused when hikes were expected, and a host of other commod­ity players sit on the sidelines, such as New Zealand and Norway. Sweden provides a potent exception to the rule.

To get a full sense for the global desperation now regu­larly on display, some major nations have succumbed to interventionist FX policies that amount to feasting upon one another’s tails.

Canada is unlikely to adopt easier policy or to intervene in its currency market, but there are nonetheless conse­quences from the global actions. First, in the absence of a compelling need to raise rates, it would be unseemly to hike based upon lukewarm evidence whilst other countries contemplate cuts. Second, the Canadian dollar is likely to act as a shock absorber, transferring some economic weakness from abroad to Canada. Third, while the act of American quantitative easing itself might superficially ar­gue for tighter Canadian policy since it is already sending Canadian borrowing rates lower, this is powerfully offset by the thought that if the U.S. needs quantitative easing, the economic prospects for the U.S. (and by extension Canada) are also threatened.

Macro Developments

Within Canada’s confines, economic data have been quite weak, and far worse than expected. The TD Surprise Tracker shows an uninterrupted period of economic misses. The latest monthly GDP figure was negative, the latest Canadian employment report similarly revealed a net loss of jobs, and the most recent print of core CPI showed a flat monthly print.

This is not to say that Canada is in dire straits, because the country enjoyed quite a heady run through late 2009 and early 2010, and the amount of slack has been neatly trimmed. However, with GDP growth on track for no better than about 1-2% in the third quarter, and not much in excess of 2% thereafter, the urgency is gone. Housing is settling down and consumers are exhibiting more caution.

Our suite of Taylor Rules argue policy rates are about right given economic conditions. Granted, there is a huge variance among them, ranging from a recommended policy rate as high as 3% for the traditional Taylor Rule, to near zero for certain measures that incorporate smoothing and exchange rate effects. But the mean and median of the nineteen variations centre around the current policy rate of 1.00%, suggesting no great mismatch.

Under The Microscope

In the absence of a rate change, the Bank of Canada’s statement will be important, and should exude softness.

Current economic conditions should be described in more negative terms, with global growth sputtering and recent Canadian growth disappointing expectations.

Paired as it is with the quarterly Monetary Policy Re­port, the Bank’s forecast will get a rework. The statement should highlight some of the key points, including a likely downgrade to both the domestic and international forecast, as qualitatively signaled in the September statement. The magnitude of the downgrade is important: 2010 is mostly baked into the cake, and so the 2010 forecast will probably drop from 3.5% to about 3.0%, but this doesn’t convey much truly new information. 2011 is the more important year, and this is where the forecast becomes relevant. The Bank of Canada previously anticipated a 2.9% gain. By contrast, the IMF recently forecast 2.7%, and we at TD project just 2.0%. The forecast will likely be downgraded to somewhere in this range. If it arrives around 2.5%, the collective downgrades will result in an output gap that remains far from closed at the end of 2011, and instead the Bank may project a return to full capacity around mid-2012, or even later. Given the substantial shift, we highlight the risk that the inflation fore­cast might be pitched downwards, too, with a later return to a sustainable 2% level.

The Bank of Canada has tried to avoid commenting on the balance of risks in recent communiqués. We suspect this may again be the case. In the July MPR, the Bank assessed the risks as “roughly balanced”. It failed to comment on them in the September statement, but Governor Carney more recently spoke of “non-negligible risks on the downside” without bothering to comment on the status of upside risks. We are hesitant to predict a reprise of these comments, as the Bank has now had an opportunity to recentre its fore­casts, such that the risks should again be balanced, at least in theory.

As for the forward-looking statement, it probably re­mains in place: “any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.” Perhaps there is a chance the Bank opts to put more frills on the front end as per the preamble offered in Carney’s September 30th speech: “At this time of transition in the global recovery, with risks of a renewed U.S. slowdown, with constraints beginning to bind growth in emerging economies, and with domestic considerations that will slow consumption and housing activity in Canada, any further reduction in monetary policy stimulus would need to be carefully con­sidered.” Either way, no one will race to price in additional rate hikes at subsequent meetings with that sort of verbiage.

Medium Term Outlook

Our medium term outlook remains for a Bank of Canada on hold through the end of the year and into early 2011. We then imagine a slow but steady pace of tightening that results in a 2.00% overnight rate at the end of 2011, and a 3.00% rate at the end of 2012. Of course, the outlook remains colored by a kaleidoscopic set of factors that are subject to change, and the market takes a more cautious view than we.

This report is provided by TD Economics for customers of TD Bank Financial Group.

Sometimes it feels good to be surprised, but Tuesday’s anticipated announcement by the Bank of Canada that it is maintaining its target for the overnight rate at 1 percent was a relief.  The global economic recovery is entering a new phase, and the Bank of Canada is now expecting weaker-than-projected recovery across the board, especially in the United States.  Canada is not an exception in this shift in projections since July’s Monetary Policy Report, as the Bank continues to expect the economic recovery here will also be more gradual.

Corresponding to the overnight right maintaining at 1 percent, the Bank Rate is set at 1 ¼ percent and the deposit rate is set at ¾ percent.  Growth rates in Canada are expected to be 3.0 percent in 2010, 2.3 percent in 2011, and 2.6 percent in 2012.  Although a portion of this more subdued profile is a result of the more gradual global recovery, it also takes into account a more subdued expectation for Canadian household spending.  The projections around household spending come from the decline in housing activity, and as a result, the increased focus on household debt considerations.

Instead of focusing on household and government expenditures, the composition of demand in Canada is expected to shift towards business investment and net exports.

Inflation in Canada has remained slightly below the July projections of the Bank of Canada, but the expectation is that the economy will return to full capacity by the end of 2012 instead of the previously forecasted beginning of that year.

It was a combination of all of these factors that the decision was reached to maintain the target for the overnight rate at 1 percent.  This new announcement continues to keep considerable monetary stimulus in place to continue to achieve the 2 percent inflation target during a time when Canada is coping with a significant excess of supply.  Given the transition in the global recovery, the weaker U.S. outlook, constraints beginning to moderate growth in emerging-market economies, and Canadian considerations that are expected to slow spending and housing activity in Canada, the Bank would need to carefully consider any further reduction in monetary policy stimulus.

Although this announcement is driven by a weaker global economy, the management of the painful current global reality within the confines of the Canadian economy should create a sigh of relief for the real estate and mortgage industry, as there is not any new pressure being pushed onto the industry after a painful 2nd quarter in 2010.

VANCOUVER (NEWS1130) - There was a slight increase in home sales in Metro Vancouver last month.

September saw a 0.8 per cent spike over August, but that's still down almost 40 per cent from September, 2009.

Real Estate Board of Greater Vancouver President Jake Moldowan says the market has been holding steady, and the amount of time houses are on the market has dropped. "Activity is pretty stable, prices remain pretty stable here. One of the things that's quite interesting is our days on the market are down for the first time in 6 months.

He says they've also seen a spike in foreign investment. "We jumped to about 2.6 per cent in July, in August we jumped to about 4 per cent and in September we're now over 6 per cent."
He says September's numbers are consistent with July and August.

OTTAWA -- Canada's housing market should return to "more normal" conditions this fall following a summer slowdown, a report from real estate firm Re/Max said Tuesday.

The company, which overseas real estate agents throughout the country, said despite some improvement in the housing sector this fall, sales in most markets are unlikely to return to the brisk pace seen late last year.

Re/Max said the threat of higher interest rates, stricter mortgage regulations and new harmonized sales taxes in Ontario and British Columbia - elements commonly cited for recent sluggishness in residential real estate - had just a "nominal impact" on the housing market.

"Economic uncertainty played a much greater role on softer housing conditions over the summer months," the company said in a statement.

But despite slower overall sales in recent months, Re/Max said demand remained high for luxury homes. It said sales of "upper end" homes were up at least 20 year cent, year-to-date, as of August in all the 19 major markets it tracks.

For this period, Re/Max said home sales are up in more than half the markets, and prices have risen in all. The highest average home prices were seen in Vancouver ($667,227), Toronto ($430,055) and Victoria ($495,993).

© Copyright (c) Postmedia News

A new report says the cost of owning a home is increasing in markets across Canada, putting homeowners under duress as their mortgage rates rise.

RBC Economics Research says higher housing prices and mortgage rates have been the driving forces behind the decline in housing affordability in the second quarter of 2010.

This has left Canadian homeowners under "greater than usual stress," the report says, with the housing market in Vancouver being among the most vulnerable in the country.

The report says the Vancouver market -- the most expensive in the country -- is at a point where property owners are paying almost as much as they ever have to own a home.

That raises "a red flag" and the Vancouver market may well see a price correction, the report says.

Robert Hogue, the RBC senior economist who authored the report, says "the one market that really sticks out is the Vancouver market."

On Monday morning, Hogue told CTV News Channel that Vancouver's home ownership costs are well above other cities and close to their record highs.

In Toronto, it is currently more expensive to own a home than it has been on average, historically, and housing prices have stayed steady in most cases, despite decreasing sales.

Fewer people bought houses in Ottawa during the second quarter, to a point where sales were even lower than at the start of the recession. Despite the sales downturn, RBC says the cost of owning a home is increasing in Ottawa, a situation that may dampen buyer activity in the near future.

Montreal is also getting pricey for homeowners, despite a historic trend of being more affordable than other big cities in Canada. In particular the cost of owning a two-storey home "is closing in on the all-time high," the report says.

Hogue told CTV News Channel that ownership costs in Montreal and Ottawa are both near their record highs, though compared to the national average, they are "still not at worrisome levels, but certainly we want to keep an eye on those markets."

Overall, the Ontario and British Columbia markets saw the greatest drop in housing affordability -- mainly because their high-priced properties carry heavy mortgages that are sensitive to interest rate increases.

Alberta and Saskatchewan were two markets that saw some improvement in affordability, the report says, though only for Alberta condominiums and Saskatchewan townhouses.

All other provinces saw modest declines in affordability, the report says.

Looking ahead to the near future, RBC predicts that housing prices will stay relatively stable, though increasing interest rates will push up the cost of carrying a mortgage.

It was a long, dry summer for Vancouver real estate, especially when compared to the halcyon days of the summer before.

Vancouver real estate sales were down 36 per cent from August 2009, according to the latest monthly report for August from the Real Estate Board of Greater Vancouver.

Prices, however, have stayed strong despite the fact that people aren't buying like they were just a few months ago. Over the last year, the benchmark price for all Vancouver housing increased from $539,600 to $576,597.

Homeowners may have been reluctant to get with the times and lower their prices, even though the average house currently takes 59 days to sell, according to the Real Estate Board figures. They might have been stuck on the 2007 mindset, when houses sold in mere days, amid bidding wars. Whatever their incentive, there are signs that home sellers are adjusting.

"One of the reasons we believe inventory levels are dropping now is because some of those sellers that were holding out for high prices couldn't get them anymore, and those listings have basically run out," says Board president Jake Moldowan.

It's called a buyers' market, and Moldowan says it's a healthy one when homes sell in less than two months.

House prices, however, have barely budged, with only a 2.8-per-cent price decrease since the historically high spring peak.

That should change, says Helmut Pastrick, chief economist for Central 1 Credit Union, the umbrella organization for credit unions in B.C. and Ontario. He predicts prices will start to drop more over the next few months. Those lower prices combined with low mortgage rates should boost sales.

Already, he's seeing signs of that scenario playing out. Canadian Real Estate Association figures show a 10-per-cent increase in Vancouver sales from July to August, he says. It may be a sign of what's to come in future months.

"There's still a large imbalance between sales and listings on the market, so more downward pressure should be evident through the next few months," Pastrick says of prices. "With mortgage rates coming down -- they are at almost their lowest point in quite some time -- that combination of low mortgage rates and lower housing prices should mean an increase in sales at some point in the not-too-distant future.

"I would expect prices to tail off for probably another three months or so, but not too much longer -- as long as sales continue to firm up, to rise. That's key."