Amid intensified construction activity, Vancouver’s industrial
real estate market is steadily magnetizing foreign investors, a
trend that might pose a major challenge for the domestic buyer
Numbers from Colliers International indicated that nearly 4.9
million square feet of industrial space was under development
across Metro Vancouver as of the end of 2018.Almost half (45%) of
this activity is in Surrey, Richmond, and Delta.
According to Avison Young, Burnaby and Coquitlam were the
region’s stand-outs, with transactions involving industrial
property in these locales being rapidly snapped up in a frenzy of
“While Burnaby and Coquitlam remain highly sought after by
owner-occupiers, tenants and investors, sales and leasing activity
will likely slow in 2019 due to a lack of such opportunities in
those markets,” Avison Young stated, as quoted by Business in
commercial investment to intensify this year
“With very limited new supply in the development pipeline and
ongoing strong demand, vacancy in both markets – already at or near
record lows – is expected to remain extraordinarily tight for the
next 18 months,” the brokerage added.
This is also expected to feed into a virtuous cycle of rising
rates and strong cash flow for owners, with net lease rates in
Burnaby and Coquitlam hovering between
With more than 10 months still remaining in the calendar year,
one of the most valuable commercial real estate transactions in
Canada so far in 2019 has already taken place in Richmond, B.C.
Fiera Properties, an affiliate of a Montreal-based independent
asset management firm with approximately $136.7 billion in assets
under management, has announced last week the closing of a deal
involving Richmond’s 13-building Airport Executive Park.
The 707,809-square-foot property was purchased from Sun Life
Financial for $208 million.
The deal dovetailed with the predictions of Avison Young Canada
Inc., which forecast last month that demand for the country’s
commercial properties will keep surging for much of 2019 amid
scarce supply and a 4-decade low in unemployment.
industrial segment rushes headlong into 2019
Industrial buildings and parcels would especially benefit, as
nationwide vacancies in the sector are projected to fall to a
record low of 2.9%.
The Airport Executive Park deal magnetized multiple interested
parties including major domestic and international buyers,
according to CBRE, which brokered the deal.
“There has been a good job of attracting tenants to that market,
it’s close to the city,” CBRE’s Tony Quattrin told CoStar
News.“People do tell you, we would like to be in Vancouver but
Student housing is known as a lucrative investment, but when a
deficient heating system cut into veteran investor Lee Strauss’s
North Bay property, where students’ rents fetched $500 a room, he
was at wit’s end.
“A student rental is going to be a bit higher on utilities
because of usage, but there was no gas to the house;it was all
hydro and it was costing me about $1,000 a month during the colder
months,” said the owner of Strauss Investments.“The price of the
home was $200,000 so cash flow worked out well during the warmer
months, but winter was the killer.”
Strauss ultimately sold the property and broke even, but not
before looking into remedies.Ultimately, installing a gas furnace
would have cost up to $12,000 over a decade, so Strauss cut his
Situations like Strauss’s are all too common, says Vahid Azari,
a registered home inspector, certified energy advisor and owner of
All Season.Worse still, poor insulation and excess energy use
actually devalue a home by up to a tenth of its value.
“It also decreases the value of the house by the extra money you
pay for energy consumption,” said Azari.“If the heating system is
poor in an old house is poor, it means you have 60% efficiency,
As the cost of living soars, Canadians have begun to wonder
whether the surest path to comfortable retirement is through a
Registered Retirement Savings Plan or homeownership.
A report from Sotheby’s International Realty Canada and Mustel
Group determined that 20% of young urban family homeowners deferred
RRSPs in favour of purchasing a home.Sotheby’s President and CEO
Brad Henderson reckons that’s the sapient path to retirement.
“Owning a home is one of the few tax-efficient purchases someone
can make,” said Henderson.“When you buy a home as a principal
residence and you sell it, it’s a tax-free event.With a Registered
Retirement Savings Plans, the money goes in and you get the benefit
of tax reduction up front;you get the benefit of money compounding
on a tax-free basis all the way through, but you pay tax on the
money when it comes out down the road.”
The “Modern Family Home Ownership Trends PART 2:Financing the
Canadian Dream” report surveyed 1,743 families in Toronto,
Montreal, Vancouver and Calgary, 19% of whom secured more
remunerative work to fund a down payment on their home
purchase.Fourteen percent found auxiliary work, while 12% delayed
parenthood and 9% moved in with family.
In addition to 71% of “modern family” homeowners surveyed using
personal savings to fund a down payment, just
Corporations account for much of the non-individual owners of
residential property in Canada, according to a new analysis by
StatsCan and CMHC.
“Corporation ownership [is] concentrated among real estate,
rental, and leasing industry and construction industry sectors,”
the study noted.“In both Ontario and British Columbia, the real
estate, rental, and leasing industry sector makes up the largest
proportion of corporations owning residential properties at 31.1%
and 23.4%, respectively.”
On the other hand, in Nova Scotia, the largest non-individual
owner is the construction segment at 28.8%, followed by real
estate, rental, and leasing at 25.2%.
“In all three provinces, the combination of construction and
real estate, rental, and leasing sectors represented approximately
half of corporations that owned residential property,” the study
Read more:Red tape
is a major influence in Vancouver’s housing scarcity
All in all, B.C.has the largest proportion of non-individual
ownership of residential property.Around 9.8% of the territory’s
residential properties were owned by non-individuals, and this
ratio is even higher in locales outside the census metropolitan
The rates in the province’s CMA’s showed considerable variance,
with Vancouver’s 5.6%, Victoria’s 5.2%, and Kelowna’s 7.6%.
Meanwhile, Ontario and Nova Scotia’s non-individual ownership
rates were at 7.4% and 7.9%, respectively.As for their largest
cities, Toronto’s rate was 4.2%, and Halifax
Amid accelerated price growth, many hopeful home buyers in
Ottawa are either cooperating with friends or seeking help from the
“Bank of Mom and Dad” for assistance on the payment, according to
observers on the ground.
The B-20 regulations that have introduced much stricter mortgage
stress testing have been blamed for the province’s fevered price
growth, with an average rate of nearly 15% from 2016 to 2018.These
increases have placed the city’s average home price at $433,500 as
of December 2018.
Ottawa broker Chris Allard said that he has seen a “significant”
increase in the number of cases involving would-be buyers who have
received funds from relatives, or co-signed applications with
“If there’s an option at all for parents or family members to
gift funds or to co-sign, they will take that option before
choosing to pay a higher mortgage interest rate,” Allard told the
Ottawa Business Journal.
pace of home price growth accelerates
B-20 inadvertently pushed a significant proportion of
prospective buyers out of the market, despite some observable
cooling down in Toronto and Vancouver prices.
Traditional lenders have also ended up with a larger number of
rejections, paving the way for alternative mortgage sources like
the Ottawa-based firm Advanced Mortgage Investment Corp.
According to a REMAX report, ski resort properties have strong
cash flow potential, however, interest among western Canadians is
“The ‘Airbnb phenomenon,’ for lack of a better description,
provides the opportunity for some return when [owners] are not
using the property themselves, and that’s where four-season
amenities become important,” said Elton Ash, REMAX’s regional
executive vice president.“The properties cash flow through winter
and summer months.”
But, according to a survey conducted by Leger Marketing on
REMAX’s behalf, 67% of western Canadian respondents believe the
price of a resort property is proscriptive.Ash, on the other hand,
says that they’re relatively affordable.
“We know a large proportion of Canadians want to buy
properties,” he said.“Seventy-one percent of western Canadians
interested in purchasing ski properties want four-season amenities,
but that number drops down to 23% who believe they could afford
it.It’s interesting because with recreation properties in general,
Canadians love the outdoors.”
In the last 20 years, resort properties have diversified and now
boast year-round amenities like golf courses.The report also
revealed that all-season resort capabilities trumped snow level,
snow quality level, mountain elevation, and proximity to
restaurants and retail as respondents’ interest in resort
“What we noticed with this report is more and more Canadians are
looking at ski resorts as recreational properties, as opposed
Bureaucratic roadblocks continue to have a major influence on
Metro Vancouver’s housing supply, as these intricacies have led to
massively overdue project approvals, according to the recently
released Market Intel real estate report by MLA Canada.
Burnaby, Vancouver, and the District of North Vancouver are the
areas hit the hardest by these delays, with development approval
timelines being among the longest (at nearly 2 years) in the
In addition, construction costs have increased by almost 50% on
average over the past 5 years.This burden is almost always absorbed
by the end consumer, the MLA study noted.
“2019 is expected to be highly competitive, but an overall
balanced market with nominal price escalation will provide
purchasers with choice and value,” MLA Canada chief advisory
officer and partner Suzana Goncalves said.
Read more:Vancouver’s empty homes tax visibly improved
vacancy rates, supply
One bit of good news is an increased volume of new stock
incoming.MLA Intel is expecting 13,975 pre-sale units to be
released this year, considerably above the 11,584 in 2018.
However, the study quickly added that B.C.’s population will
experience consistent growth for the next several years, with
roughly 50,000 new residents in 2019 alone.
“With job opportunities remaining high compared to other
provinces, interprovincial migration will
A modest pace of sales characterized Regina as of the beginning
of 2019, although the city remains predominantly a buyers’
New numbers from the Association of Regina Realtors indicated
that during the first month of the year, sales grew by 1.2%
annually.The total volume actually ended noticeably above the
5-year average, however.
“The number of sales that took place in January exceeded our
expectations,” Association CEO Gord Archibald said, as quoted by
The Canada Mortgage and Housing Corporation’s latest report
categorized Regina as a buyers’ market, with a moderate level of
“In Regina we’ve continued to see slower demand for housing
units whether it in the resale or new home market,” according to
CMHC senior market analyst Goodson Mwale.
Read more:Saskatchewan affordable housing gets
“We’ve continued to see elevated supply and that has continued
to put downward pressure on prices.Both in Regina and in Saskatoon
we’re seeing a buyers’ market conditions persist over the past
As of the fourth quarter of 2018, Regina’s supply exhibited
considerable abundance, which the CMHC attributed to overbuilding
during the past few years.This has also led to vacancy levels
seeing a marked increase, from 7% in 2017 up to the 7.7% rate in
Homeownership is becoming increasingly difficult to attain in
Calgary, but the city’s rental market is on fire.
In fact, the vacancy rate in the Calgary rental market decreased
from 6.3% in 2017 to 3.9% last year.
“The way this is connected to the rental market is a function of
these affordability challenges we’re seeing in the market, and
given the pressures put on an individual’s affordability—and we
know interest rates are higher—they are renting longer,” said James
Cuddy, a senior analyst with the Canada Mortgage and Housing
Another reason for the buoyant rental market is that
interprovincial migration was positive through the first three
quarters of 2018—a stark contrast to the previous 2.5 years of
negative growth—and that has also done its part to push the vacancy
“We’ve also seen some steady growth in terms of international
migration, so it’s contributing to higher demand for rentals in
Calgary,” added Cuddy.
The outlook for ownership, according to CMHC, isn’t as
rosy.Inventory levels are high in the city and builders have
started scaling back production.One reason for languid sales is
high unemployment and low disposable income.
“The general economic recovery we’ve seen since the last
recession has been relatively slow;unemployment rates remain
elevated and a lack of personal growth in
The value of Montreal’s residential property is seeing sustained
growth thanks to a booming economy attracting hopeful home buyers
from all over Canada, according to the latest figures from the
Quebec Professional Association of Real Estate Brokers (QPAREB)
The market’s benchmark price for single-family homes increased
by 3% year-over-year in January, reaching $316,000.Meanwhile,
condos had 2% growth to arrive at $248,271.Plexes had a 4% rise
during the same period, settling at $515,000.
The numbers supported the observations of professional services
firm Shupilov Real Estate, which reported recently that Montreal
has become a highly sought after sellers’ market.Aside from the
price growth, galvanized competition was a significant factor that
leads country’s metro areas in price growth
“This is especially true in the single family home segment,
where bidding wars are increasingly common and offers are more
likely to be accepted above the original asking price,” Shupilov’s
This level of demand has steadily eaten up the market’s
inventory, with the number of active residential listings in the
CMA falling by 16% year-over-year last month (down to 20,873
properties for sale).
Montreal’s sales enjoyed its 47th straight month of sales growth
in January, with activity increasing by 15% annually, the QPAREB
This is despite plexes
The ratio of unoccupied residential properties in Vancouver
noticeably fell by 15% in just one year, and half of previously
empty homes have been moved to the rental market, according to the
initial returns of the city’s 2018 empty homes tax.
The Vancouver government stated that these figures point to the
effectiveness of the levy, with a tangible impact on both vacancy
rates and rental supply.
Overall, the number of the city’s vacant homes went down from
1,085 homes in 2017, to just 922 in 2018.
However, a markets observer warned that it might be too early to
celebrate the empty homes tax as a victory, since Vancouver is not
yet seeing an equitable distribution of relief.
Andy Yan, the director of the City Program at Simon Fraser
University, cautioned late last year that price declines have taken
place only in the top tier of the market, while the middle and
lower price brackets remained all but unchanged.
gov’t should do more to address shortages – mayors
“The softening of the market and cooling of the market is
something that is definitely happening,” Yan admitted, but quickly
added that it’s “a little bit premature to know whether the
policies are a success or failure.”
What if condo investing were as easy as owning a mutual
fund?Well, it can be.
Connect Asset Management will be at the Investor Forum on March
2 to explain how it helps
its clients turn one property into several and build portfolios
that cash flow millions of dollars.One of the ways in which Connect
Asset Management does that is by helping investor clients access to
some of the most exclusive real estate developments in Ontario.
“We help investors plan, invest and retire wealthy with cash
flow in condos,” said real estate broker and founder of Connect
Asset Management Ryan Coyle.“It’s completely hands-off for our
clients;we make investing in real estate as easy as owning a mutual
Connect Asset Management builds a strategy for its clients
predicated on timing—that is, strategically choosing when to
purchase a property.
“From acquisition to completion, there’s a tremendous amount of
growth on capital appreciation and rental appreciation, so when the
condo is built they have all this appreciation that gives them the
ability to refinance, pull out the equity and buy more property,”
said Coyle.“We help our clients identify the optimal time to flow
that capital into more properties.”
The strategy, which Connect Asset Management will decode at the
Investor Forum, is called
After a tumultuous 2018, the Toronto residential market is
expected to encounter notable improvements in activity and housing
value this year, according to the Toronto Real Estate Board’s 4th
annual Market Year in Review and Outlook report.
“Although we won’t experience record levels, we do expect to see
a better year in 2019 for sales and selling prices,” TREB president
Garry Bhaura stated.
A large part of the predicted upticks will stem from the
increased number of consumers intending to buy homes in
“Many buyers who moved to the sidelines over the past year due
to various government policies, including the OSFI-mandated
mortgage stress test, have re-evaluated their positioning in the
marketplace vis-à-vis home type, location and price point,” Bhaura
Total sales volume is forecast to increase from last year’s
77,375 transactions to 83,000 deals completed in 2019.Aside from
increased home-buying intentions, the growth will also be impelled
by healthy employment numbers, lower average fixed-rate borrowing
costs, and sustained population growth.
Read more:Toronto’s condo market can expect much
volatility this year
Prices are predicted to continue the moderate growth trend
established in the second half of 2018, the TREB said.The median
sales price in the GTA will reach $820,000, up from the average of
$787,195 in 2018 and
Intensified demand brought about by an influx of tech companies
has pushed Toronto’s office market towards becoming one of Canada’s
premier investment destinations, according to a CBRE Group
The vacancy rate of the office sector fell to 2.7% during the
fourth quarter of 2018, leading to commercial rental rates reaching
an average of $35.37 per square foot.
This far outstripped Montreal’s figures, which posted a median
rental rate of $22.76/sf on a 9.4% vacancy rate during the same
quarter.And Vancouver, while having a higher average at $37.20/sf,
did not command the level of Toronto’s demand, with a 3.8%
Even intensified development offered only the most minimal of
respites for the overheated market.As of the end of 2018,
approximately 14.2 million square feet of new commercial space was
under construction nationwide, with most of this situated in
Toronto, Vancouver, and Montreal.
This was the strongest development activity since the first
quarter of 2016, the CBRE noted.
commercial investment to intensify this year
CBRE added that despite the 7.3 million sf of space still under
development in Toronto, “chronic shortage” will continue to
characterize the market for the foreseeable future.
For perspective, this greatly exceeds Vancouver’s 2.86 million
sf and Montreal’s 954,510 sf.This also continues the