Limp demand threatening market growth

The real estate market didn’t fall as hard or as fast in Canada as it did in the U.S., but some spots did suffer steep losses and a recovery will be slow as investors worry about another potential economic dip, a new report suggests.

The real estate market didn’t fall as hard or as fast in Canada as it did in the U.S., but some spots did suffer steep losses and a recovery will be slow as investors worry about another potential economic dip, a new report suggests.

Total losses in value across Canada will average between 10 to 20 per cent compared to the highs of two years ago, according to the study by PricewaterhouseCoopers and the Urban Land Institute.

But some areas saw a much deeper drop. The report released Wednesday predicts a slow recovery to begin by the end of next year.

“For 2010, we are rating only fair investment outlooks for most property types and predict generally weak conditions for development,” said Chris Potter of PricewaterhouseCoopers.

“Limp demand threatens to soften property cash flows across all sectors and most markets.”

The annual Emerging Trends in Real Estate 2009 report is based on surveys of more than 900 real estate investors developers, lenders, brokers and consultants in both Canada and the U.S. It shows Canadian real estate investors are still worried about more potential economic shocks, particularly from the U.S. financial system.

That is despite conservative banking practices in Canada and stricter regulation that saved many Canadian investors from overleveraging during the recent housing recession.

The report forecasts a stable market for condos, hotels and other developments that favour buyers over sellers.

It said prospects for apartment investments rank barely above a fair rating at 5.44 out of 10, followed by office at 5.04, retail at five, industrial/distribution at 4.68 and hotels at 3.69.

“We expect to see developers curbing their activity in light of softened demand as bankers rein in construction loans,” said Lori-Ann Beausoleil, also of PricewaterhouseCoopers.

She said certain condo projects will likely “stall out” until residential prices firm up in Vancouver and Toronto.

Beausoleil said Canadian office markets performed better than expected, with vacancies averaging about eight per cent.

Vacancy rates were much higher in cities such as Calgary, which has been hit hard by the impact of the recession on the oil and gas sector.

Calgary had the biggest decline in North America, coming in at 4.75 out of 10 for investment prospect and 3.58 for development. The city has overbuilt not just office space, but condos and housing as well, the report states.

Toronto ranked third highest in the report, with investment prospects ranked 5.63 out of 10 and development prospects at 3.83.

“New condominium high rises and office tower projects adorn downtown streetscapes, raising concerns about too much construction in a problematic economy,” the report states.

Vancouver was the best performer in the survey, although with a ranking of just 5.75 out of 10 for investment prospects and 4.68 for development prospects.

“Many wonder what will happen after the Olympics,” the report says.

The report follows another released this week showing the value of industrial land in Metro Vancouver fell by as much as 30 per cent in the last year, driven down by speculators trying to sell their property bought near the market’s peak.

Average land prices doubled between 2003 and 2008, reaching approximately $600,000 per acre in Abbotsford, B.C. to $2 million per acre in Vancouver — and a record $4 million per acre in some locations — said the Avison Young report.

It said land values have generally fallen 20 to 25 per cent, and in some cases more than 30 per cent in the area.

Meantime, vacancy rates rose to 4.4 per cent in Metro Vancouver in the third quarter of 2009, up from 2.4 per cent in fall 2008.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

If you're heading out to the West Country have a plan in case things go wrong, says Clearwater Regional Fire Rescue Services fire chief Steve Debienne.
(Photo from CRFRS Facebook)
West Country visitors should have an emergency plan: regional fire chief

Cellphones can’t be relied on in many back country areas

Rode
Sarcevic leads an impressive list of additions to RDC Kings soccer

In 2019 the RDC Kings soccer program took a major step forward… Continue reading

The Red Deer PCN Women's Fun Run will take on a different look this weekend with rising COVID-19 numbers.
Women’s Fun Run goes ahead this weekend in Red Deer

With new public health measures in place because of rising COVID-19 case… Continue reading

Alberta’s chief medical officer of health Dr. Deena Hinshaw asked Albertans to limit travel throughout the province as COVID-19 cases continue to rise. (Photo by Chris Schwarz/Government of Alberta)
Red Deer nears 900 active COVID-19 cases

Province reports additional 2,211 COVID-19 cases

David Eggen, the NDP’s advanced education critic, said the UCP government has been focused on cutting funding to post-secondary institutions across Alberta. (Contributed photo)
NDP worry new status for Red Deer College doesn’t mean more funding

This week the province announced that RDC will become a polytechnic institute

Alberta Health Services locked the Whistle Stop Cafe in Mirror on Wednesday morning after owner Christopher Scott refused to comply with health orders. (Photo by Paul Cowley/Advocate staff)
UPDATED: AHS shuts down Whistle Stop Cafe for defying health orders

Justice minister promises to get tough with those ignoring public health orders

‘Uniquely reprehensible’: No parole for 35 years for Calgary man in triple murder

‘Uniquely reprehensible’: No parole for 35 years for Calgary man in triple murder

A sign is seen at a walk-in COVID-19 in Montreal on Wednesday, April 21, 2021. THE CANADIAN PRESS/Paul Chiasson
NACI chair says advice not meant to give AstraZeneca recipients vaccine remorse

NACI chair says advice not meant to give AstraZeneca recipients vaccine remorse

People in Peel region line up outside the University of Toronto Mississauga campus for the COVID-19 vaccination clinic in Mississauga, Ont., on Thursday, May 6, 2020. THE CANADIAN PRESS/Tijana Martin
Promising pandemic signs in Ontario, Quebec as urgency shifts to N.S., Alberta

Promising pandemic signs in Ontario, Quebec as urgency shifts to N.S., Alberta

U.S. Secretary of State Antony Blinken waves upon departure from Boryspil International airport outside Kyiv, Ukraine, Thursday, May 6, 2021. U.S. Secretary of State Antony Blinken has met with top Ukrainian officials in Kyiv and reaffirmed Washington's support for the country in the wake of heightened tensions with Russia. (AP Photo/Efrem Lukatsky, Pool)
US says fate of nuclear pact up to Iran as talks resume

US says fate of nuclear pact up to Iran as talks resume

People embrace after a school shooting at Rigby Middle School in Rigby, Idaho on Thursday, May 6, 2021. Authorities say a shooting at the eastern Idaho middle school has injured two students and a custodian, and a male student has been taken into custody. (John Roark /The Idaho Post-Register via AP)
Sheriff: Girl shoots 3 at Idaho school; teacher disarms her

Sheriff: Girl shoots 3 at Idaho school; teacher disarms her

The Cineplex Odeon Theatre at Yonge and Eglinton in Toronto is shown on December 16, 2019.THE CANADIAN PRESS/Aaron Vincent Elkaim
Cineplex hopes for brighter summer blockbuster season as it reports quarterly loss

Cineplex hopes for brighter summer blockbuster season as it reports quarterly loss

FILE - David Oyelowo posing for a portrait in New York on April 8, 2019. Oyelowo makes his directorial debut in “The Water Man," which arrives in theaters Friday. (Photo by Taylor Jewell/Invision/AP, File)
David Oyelowo fulfills new directing passion in ‘Water Man’

David Oyelowo fulfills new directing passion in ‘Water Man’

Can COVID-19 vaccines affect my period?

Can COVID-19 vaccines affect my period?

Most Read