Derrick Penner
Sun
Vancouver scores strongly for its real-estate investment potential among industry experts who are generally bullish about prospects for Canadian markets compared with those in the United States, according to a recent report.
Vancouver does not rank as highly as Calgary, “North America‘s No. 1 boomtown,” or Edmonton, which is also caught in Alberta‘s energy glow, according to Emerging Trends in Real Estate, compiled by the Urban Land Institute and Pricewaterhouse-Coopers.
However, the city does have a diversified economy “that operates on all cylinders,” although it’s “outrageous real estate prices frustrate homebuyers and commercial investors.”
Demand for housing still outstrips supply in Vancouver, said Neil Atchison, director of real estate advisory and transaction services for Pricewaterhouse-Coopers in Vancouver.
Atchison added that indications are that housing construction in the city is easing toward “a more orderly market,” people are still moving to Vancouver, which is making developable land harder to find, and raises one of the region’s biggest concerns.
The lack of land pushes up industrial and office rents as well as housing prices.
Atchison said, affordability, particularly on the housing side, is the problem.
“Are we just about maxed out in terms of people’s incomes to afford more housing?” he asked. “That, if anything, is going to slow down the price increases.”
Atchison said the region’s economic fundamentals are strong enough to support the market, and he doesn’t believe real estate markets have peaked since prices continue to rise.
As long as Canada isn’t “caught up by events beyond our control,” such as a U.S. recession or the high Canadian dollar “pricing out some of our industries,” Atchison said Canadian markets shouldn’t see a downturn.
The report, compiled from interviews and surveys with 600 industry professionals ranging from investors to lenders, developers and brokers, found Canadian respondents to be “more positive” about 2008 than American participants in the survey.
The report measures corporate-level investment sentiment among big investors and big developers.
In the report, the authors said that Canadian economies, particularly in the West, are performing well and Canadian investors feel more insulated from the turmoil in U.S. markets by a more conservative investment environment.
Atchison said there have been some changes since the survey was conducted in the summer. Most notably, the American subprime mortgage situation has heated up. “Our lending practices [in Canada] have been more stable, so we don’t have the subprime issue,” Atchison added.
“The impact for us is more [among] the people investing in Canada who need to get mortgages. It is a little more difficult, a little more expensive to do.”
Overall, Atchison said Canada‘s real estate markets have a better balance of supply and demand.
The report found that while American real estate markets are plagued by tightening credit and fears of a recession, the report found Canadians more optimistic.
Canadian respondents believed that, with pension funds still flush and eager to increase the size of their real estate holdings, “[capital] flows can be sustained where in the United States they may decline.”
© The Vancouver Sun 2007
