The real estate in Canada market was not hit as badly as in the neighboring United States during the recent bear market. Though the market plummeted to a certain extent, real estate business in some locations in Canada endured severe beating and this may make the resurgence sluggish. According to a new report, the main reason behind the slow recovery of the market is that the investors are still apprehensive regarding one more probable economic slump.
According to a study undertaken by the international audit firm PricewaterhouseCoopers and the Urban Land Institute, the total losses suffered by the real estate market in Canada in terms of value will be around 10 per cent to 20 per cent in comparison to the buoyancy witnessed two years back. However, a number of localities experienced even more drastic falls and losses. The finding of the study that was made public recently envisages a slow revival that is likely to commence around the end of the following year.
Chris Potter of PricewaterhouseCoopers said that for the year 2010 they were ranking only reasonable investment attitudes for the majority types of property and in general forecast limp situations for growth. Sluggish demands for real estate warn of reduced real estate cash flows virtually in every segment as well in almost all markets, he added.
The 'Emerging Trends in Real Estate 2009', an annual report prepared by PricewaterhouseCoopers and the Urban Land Institute on the basis of reviews of over 900 real estate investors, developers, lenders, brokers as well as consultants in the United States and Canada. The report confirms that the real estate investors in Canada are even now apprehensive regarding further political economic shake ups, especially from the economic system in the United States. Such apprehension prevails among the Canadian real estate investors in spite of the conformist banking methods followed in Canada as well as stringent rules that protected several Canadian investors from carrying too much debt all through the recent housing downturn.
The 'Emerging Trends in Real Estate 2009' report envisages a moderately steady market for developing constructions like condominiums, hotels and other constructions that will actually support the buyers over the sellers. The report further stated that the potential for investments in apartment buildings have been rated just above a reasonable ranking at 5.44 out of 10. This is followed by ranking of the investment prospects in office buildings at 5.04, retail at 5.0, industrial or distribution at 4.68 and hotels at a mere 3.69.
According to Lori-Ann Beausoleil of PricewaterhouseCoopers, they are expecting to witness real estate developers restrain their business in view of the reduced demand because the bankers have already held back sanctioning loans on construction projects. Beausoleil further said that some condominium projects may perhaps be brought to a standstill till the prices of residential real estate strengthen in Vancouver and Toronto. According to her, the performance of the office markets in Canada was healthier compared to what was anticipated and the vacancies stood at round just 8 per cent.
However, the vacancy percentages of the office markets were much more in cities like Calgary, which has received a severe financial beating owing to the effect of the economic slump on the oil and gas sector. It may be mentioned that as far as investment potential is concerned, Calgary suffered the steepest plunge in entire North America obtaining a rating of just 4.75 out of 10, while the development prospects stood even below at a mere 3.58.
According to the report prepared by PricewaterhouseCoopers and Urban Land Institute, Calgary has not only built office spaces in excess, but even the construction of condos and housing projects surpass the demand. On the other hand, the report ranked Toronto third highest with investment potential being ranked at 5.63 out of 10 and growth potential at 3.83.
The report states that condominium super structures or skyscrapers and office tower developments now beautifying the picturesque streets of the metropolitan areas are giving rise to apprehensions regarding an excessive construction in a difficult financial system. According to the survey, the performance of Vancouver was the best though it received a ranking of only 5.75 out of 10 for investment potentials and even less at 4.68 for growth prospects. The report further puts a question mark saying that many people have begun speculating about the scenario in the post-Olympic period when there will be more vacancies.
The 'Emerging Trends in Real Estate 2009' report comes in the wake of a different information titled the Avison Young report released earlier, which shows that the price of industrial land in Metro Vancouver declined to the extent of 30 per cent during the past one year. This is said to be a fall-out of the entrepreneurs trying to sell their real estate assets that were purchased around the time when the real estate market was at its high.
According to the Avison Young report, typically the mean prices of land went up twofold between the period 2003 and 2008 eventually touching a price around $600,000 for every acre in Abbotsford, B.C. During the same period, land prices in Vancouver reached $2 million per acre in Vancouver and even touched the highest ever price of $4 million for every acre in some places. This report further stated that during the last one year, the prices of land have by and large declined by 20 per cent to 25 per cent and, in some areas; the fall has been even steep - over 30 per cent!
Meanwhile, the percentage of vacant real estate constructions went up to 4.4. per cent in Metro Vancouver during the third quarter of the 2009 fiscal from a mere 2.4 per cent during the fall of 2008.