This PWC report summary on emerging Canadian real estate trends describes a market almost unscathed by the recession, but some interviewees are concerned that the Canadian market may not be home free yet.
Visit PwC Global Real Estate website to download the entire Emerging Trends in Real Estate 2011® report.
While Canada’s real estate markets largely avoided the recession’s impact, Canadian respondents to the Emerging Trends in Real Estate 2011® survey remain worried about economic forces that could stunt the country’s growth. Interviewees cited the discouraging market forecast for their southern neighbour as the chief reason for their concerns. A sputtering US economy and weak greenback could impinge on Canada’s growth, especially for industrial markets that service US Midwest manufacturing centres, and hotel investments.
However “relieved” property owners and financial institutions who responded to the survey couldn’t help but compare their relatively healthy condition with the US outlook. “The domestic consumer has been pushing the economy, and jobs levels bounced back to prerecession levels. It’s been phenomenal compared to the US,” summed up one interviewee.
Canada’s conservative outlook results in limited domestic investment opportunities
Access to capital may have improved but investment opportunities remain limited. Overall, Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital which may result in pent-up investors seeking market-bottom plays and foreclosed assets in the US. Foreign investors also struggle with finding good acquisition opportunities on Canadian soil. The same can’t be said for insurers and pension funds. They continue to command ownership of Canada’s trophy commercial assets: downtown office space and regional malls.
Toronto and Vancouver remain two of North America’s most favoured investment gateways
Toronto ejected Vancouver from the top ranking in the Emerging Trends report. Toronto’s metropolitan area stands as the critical economic engine with Bay Street’s impenetrable financial sector and diverse manufacturing industries along with immigration flows supporting growth and intensifying tenant demand. However, some interviewees worry about flattening apartment rents as more condo investors lease out units.
Vancouver’s office and condo markets remain “red hot” while international visitors bought apartments after the 2010 Olympic Games. The city’s water and mountain vistas may control development and attract investors however, some interviewees are uneasy of the potent combination: “The market is artificially inflated; it’s been hot for too long.” In addition, the HST has cooled demand for mid-tier housing in some areas outside of Vancouver’s core. Calgary aims to recuperate from diminishing demand and a smattering of development bingeing.
Now in its 32nd year, Emerging Trends in Real Estate ® 2011 is one of the most highly regarded annual industry forecast reports for the real estate and land use industry. The report features interviews and survey responses from more than 875 leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants. PwC and ULI researchers personally interviewed more than 275 individuals, and received survey responses from 600 individuals.
For more information on our interviewees’ 2011 investment suggestions, geographic markets to watch and to download the entire report, fill out a form on our PwC Global Real Estate website.
