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Attention Real Estate Reporters:
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Despite US housing woes Canadian real estate remains upbeat 1 m: w: M: Z$ @0 k- q
TORONTO, Nov. 5 /CNW/ - Leading real estate experts are predicting the US
4 M3 l, D. H! w' y: |1 q: T bcommercial real estate market will slow in 2008 and follow a similar pattern" @: k' N3 I6 |* ?9 b9 ~+ a4 {6 N
as the current residential market. However, according to the annual Emerging# ?9 O/ E) I0 ]% x h9 o/ Q
Trends in Real Estate 2008 report, released by PricewaterhouseCoopers (PwC)
, H' P9 p, J# @0 p3 Qand the Urban Land Institute (ULI), their Canadian counterparts are much more
4 J: ]/ ?7 v$ E) T5 s" `upbeat.
( D8 j0 i$ |* E+ ` `3 J Now in its 29th year, Emerging Trends is the oldest, most highly regarded
, b/ E& b. y7 ?' g( Q2 qannual industry outlook for the real estate industry. The report reflects
8 P4 ], P* X. k4 P5 K' n6 Kinterviews with and surveys of more than 600 of the industry's leading real" g( t( `6 Z( D: f) \; G
estate experts, including investors, developers, property company
) W" u, y7 o1 ^. P6 M, q2 srepresentatives, lenders, brokers and consultants in both Canada and the US.
) D: c9 {7 F- _4 `) s9 lOther versions of this report are conducted in countries around the world$ O" M3 Q, {1 r
including Asia Pacific and Europe.$ D, U* ~4 i% v7 e
According to Chris Potter, PwC partner and leader of the firm's Canadian& T5 V3 d7 g( |6 p9 U% U
Real Estate Tax practice, Canada benefits from a more conservative investment& ]% l9 e( z0 s$ u& n, k9 l9 B
environment than the US. "In Canada, institution-dominated markets appear to
* e7 @; x2 t( I1 f! {4 h4 U# @be avoiding 'transaction mania', but real estate values have reached record) o. w8 j7 U4 f# }! B8 C* C
highs and a strong economy has accelerated tenant demand for space."' A/ U" [( Z$ I) A# n' i/ ^ H$ c
According to American respondents, a healthy correction south of the
9 `8 j% g8 K5 v/ R0 sborder will likely bypass long-term investors but penalize late-to-the-game
, U& W! D( C! p1 t' Yspeculators and overleveraged buyers. Canadian respondents to the survey2 h( K: B: {! A0 o; n
remain positive about sidestepping any serious impacts of this possible US Q; t% @' R* I3 @$ D. x3 S. f
correction. Close to 36% view their prospects for profitability in 2008 to be
. @: U" j- q9 N' ]+ Xvery good and a further 22.4% say they're excellent.
9 p1 T! e; T" a4 f+ w$ z v The strongest areas of real estate business activity for Canadian
5 X9 o0 u1 ?) U$ W& n! Jrespondents is predicted to be within real estate services, followed by" s$ H8 }* W d7 ~2 x
commercial/multifamily development and homebuilding/residential land
% v+ I9 m6 F1 D# _" b$ Qdevelopment. All property sectors share positive prospects across the country
# Q; ^3 W6 q; W: eespecially industrial and retail with respondents, on average, stating
- s& \3 }% o. h ?) }development prospects are expected to be modestly good to good. The
; Z9 x- d' ~; s( V/ C: e* R( wresidential for-sale market is also expected to fair well, but might need to9 e9 s+ G8 ?6 Z- I C$ Y, ^8 q; {
take a breather as homebuilders cannot keep up with the current pace and
* w0 B8 Q7 @3 S) j* osingle-family housing looks overpriced.
& q0 {2 M. f n0 E, E- ?- E Office stock is seeing limited inventories and dated product fill up with* T: \% K7 p. ^0 B
tenants. Except for Montreal, where office vacancies are nearing 9%. Canadian
+ ~ x2 A/ u' m7 Z' f. r) H9 Zmetropolitan areas boast below 5% vacancies, and rents have room to push
6 g: b2 Z+ d2 a/ Z, p' j+ Thigher. The survey is also showing that costs and land scarcity is limiting
. T/ `4 P( J9 W% }8 \new development. Hotel investment and development prospects are modestly good,. f9 L: p4 O b2 O# D5 A+ h
and most respondents rate this sector either a buy or a hold. Rental7 @0 M/ t' R9 c3 `( S
apartments are doing well in major cities with high immigration flows. Primary2 Q9 E7 N, T {+ v3 h. m( X
western cities - Vancouver, Calgary, and Edmonton - are veering toward housing- F3 }0 A0 w& S% H' H
shortages as workers, attracted by a plethora of well-paying jobs, pour into
$ J! [' ~# q; s; a' ^* s" G2 I7 tthe energy zone. Apartment occupancies are soaring in these areas. Development- K0 @$ A/ c) k4 O! ]
in other regions remains difficult because of costs and land scarcity.
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+ I. g. r3 @% i* ] Canadian Markets to Watch
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The report comments on how Canadians like to live and work in central2 u: O4 Q: E) C) H3 a
cities, as long as they can afford it. If housing is too pricey in 24-hour7 M2 B" ]( \: n3 ]
neighbourhoods, people move to inner-ring suburbs or beyond and commute back
" M, y9 ?4 O4 M! K5 h, finto the cores. Investors, especially the institutions, are concentrated in
0 _ M8 a. h ddowntown areas too. Planners and developers focus on infill and more vertical
6 Z* h# ~1 P2 D, u2 i; E' G# nprojects, which reinforce the urban cores. The hot-growth energy cities out& P% B$ c- ?/ ], e0 s& h, o
west - Calgary and Edmonton - score the highest ratings for investment
5 e) E/ ?6 ], A/ R2 u$ U! ?prospects, development, and for-sale housing, although it is not certain L& K( f$ _% K* B0 A+ g, y3 {
whether the recent announcements on royalties will have any effect on this.
$ {5 p8 w7 x! A9 J% Y& eToronto, Canada's premier global pathway city, and Vancouver also have high8 |4 r) E( n& k- ?, W
ratings. Ottawa and Montreal follow, with Halifax lagging.
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0 S K! ~9 h5 @ Calgary/Edmonton U) v9 E2 a$ T" Q
' B0 p# _/ F4 ] Calgary is the Canada's "resource" capital and North America's number-one
1 i/ i' L5 P! j8 uboomtown. Survey respondents foresee strong buys for all sectors: 53.5% give a; S$ ^7 h1 O& b$ F Q N" t0 O" J
buy recommendation for Hotel Property, 52.8% for Industrial/Distribution,
7 x: X; q- F! [7 h3 t& ~48.1% for Retail and Apartment Residential and 44.6% for Office Property.# E7 X3 _3 }; _) X6 l
Furthermore, on average the majority of respondents see Calgary For-Sale
* q* f" y8 r" K& M4 F, v/ WHomebuilding prospects as very good. Edmonton is closely mimicking the
4 P6 e# m* G& M) b, I) g* cCalgary-style growth wave and as long as demand for energy resources stays
. F/ S+ i, K5 R% M; }1 A: {strong, this market will continue to do well." r' t, u7 g& B
# N3 P2 L1 J- S7 K+ g( b7 d8 i
Vancouver
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Vancouver's diversified economy is roaring, the mining industry is S3 e9 U/ ~. o
booming and the city provides a large port and a high-tech center. Outrageous- d# _' e0 H% T
real estate prices frustrate homebuyers and commercial investors and the$ u+ {( ?7 n: R" Y, {9 h/ c" J
market is extremely hard to crack. The 2010 Winter Olympic Games is also a l; Z2 L. F) t6 ]% f; G
growth driver and accordingly 44.7% of respondents give Vancouver a buy. x1 m6 W/ `$ ?" M
recommendation for Hotel Property. A further 43.5% give a buy Retail, 41.3%
' p8 `* H' z( x- r: J8 b4 qfor Industrial/Distribution and 36.7% for Office Property followed by 34.1%( d7 q# T3 U9 p' Q: I
for Apartment Residential property. Vancouver also ranks in the good to very! P! K! M1 G: w4 n: O: B8 o
good mark for for-sale homebuilding prospects.
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s! d4 Y# `2 Q# o% o) K1 N) k Toronto) a( N+ ~# t+ Y& ] {. y
' G$ u2 s% \1 W$ K- P- m: M/ t Toronto ranks as a major global pathway destination, 24-hour city, and( T z( W$ m# w8 B6 r( L0 }0 ~
manufacturing hub. Compared with other national financial centers, the city is' b& F6 n( b$ {; f9 L
relatively inexpensive. However, the rising loonie is hurting manufacturing
3 ^. w6 A6 A) w/ v8 t7 F" l7 }industries, and clouds over the US economy threaten to stall out momentum.
" w0 E- H% G- |0 ^Three new office towers are under construction, adding 3 million new square, y' v3 `' T5 L6 x+ X8 ]
feet of office space. Notably, Office (49.1%), Industrial (46.2%) and+ D w. f$ I; h5 K1 h) l
Apartments (40.8%) are given solid buys.# a- F3 Q$ i+ Q2 H" _
: E0 V5 B2 X1 ^$ W) ? Montreal
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) h& B1 T1 v4 Q% R3 C" @ Montreal continues to face concerns about market stability and overall
) g$ B. Q/ ]" h R0 ~5 }- V" dgrowth prospects as major companies no longer choose it as a place to set up( R2 ]6 ?4 h* F5 u3 R; B. {
shop. But, plenty of government offices fill space. Of the larger cities in
4 f5 G/ O8 G4 G9 ]* uCanada, Montreal ranks lowest as a "buy" recommendation in all real estate
, ]( m9 V" f. i" O; Y3 l* Isectors. However, respondents generally rated all Montreal real estate sectors
' [7 O z/ V% s, M; H3 T! i$ r$ xhigher as a "hold" recommendation.( Q0 B. p7 a) z
( F/ d1 z* R4 c. v" q% @( Q The report notes that best bets for investors for the coming years* r! t( z! j0 d: J0 J! ^; n
include a focus on all property sectors in the high-growth western energy
$ \3 B" Q1 a7 p# B; B1 amarkets, hold on central business district office space, develop infill condos$ c6 ]; L" [; C2 ] U/ k, X& e4 J
near subways stops in Toronto, buy infill sites wherever you can and invest. v$ H" l% w! i9 c5 ` T
overseas. Potter concludes, "Domestic opportunities are too limited at current
. ?0 F6 M0 f2 q& dprices."
6 Z5 ~. |+ G* l# X8 H# @$ O7 B A copy of Emerging Trends in Real Estate(R) 2008 is available at9 g3 J7 O8 O0 m) _* k) M$ B
www.uli.org or www.pwc.com/imre.
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( [0 T6 f$ E$ X P" @0 V6 M! `6 ~ About PricewaterhouseCoopers; k1 l) E% x/ d. F6 z
: N- q6 s7 ^/ A. r) A( r- p PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance,3 w0 h5 ^+ M& g( Q6 Q
tax and advisory services to build public trust and enhance value for its- o2 A5 f0 F( C# Z* i. ?& E
clients and their stakeholders. More than 140,000 people in 149 countries
3 O, H+ z" E% x6 {7 z0 o" }. A, Lacross our network share their thinking, experience and solutions to develop
7 R$ G+ ]7 v& Bfresh perspectives and practical advice. Now celebrating 100 years of
' c. x" S/ v7 Iexcellence in Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its6 q% f' j% l4 o
related entities have more than 5,200 partners and staff in offices across the, j: K' c; m) f9 ? q- U! }
country.( ~: y7 w- u+ a4 Y
"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
" G( X, D( c1 H; `! b7 z9 N0 plimited liability partnership, or, as the context requires, the$ Z: J2 J* l- M4 H
PricewaterhouseCoopers global network or other member firms of the network,8 K3 Y' Q2 g" e6 A$ |
each of which is a separate and independent legal entity.6 i5 b; {+ {7 L" ^) @% A0 x
5 |0 K' y( A6 q* ]6 S! ?# U0 I0 \
About the Urban Land Institute% Q: J( M! m1 U6 q% ]& I8 |
+ J/ Z, \2 E- p0 }8 @, b The Urban Land Institute (www.uli.org) is a nonprofit education and7 M/ W! E; T0 _, y* ]2 ^
research institute supported by its members. Its mission is to provide
6 \/ S% v$ k9 m9 v% S# X" ileadership in the responsible use of land and in sustaining and creating
) s' a9 @) Z9 K- @thriving communities worldwide. Established in 1936, the Institute has more' h e0 x- `3 Q5 T8 a3 `
than 38,000 members representing all aspects of land use and development; ?1 Y) `" `& c
disciplines.
, k4 a* u8 N: J1 J* U& u% _: f The Urban Land Institute is an active and growing organization in Canada.
: E7 ]# `8 |0 I6 RWith nearly 700 members across the country, Canada's first ULI District1 ^- P% @/ @% R6 R0 `
Council was established in Toronto in 2005 and a second District Council is
; n- V) G" ^8 e* t( I W, ?5 lnow being formed in British Columbia. The Toronto District Council will be, @ F! r: m/ z- _6 C3 ^
hosting a special event on Emerging Trends in Real Estate on November 20th,
/ U/ A. D) I/ Y" V0 e- M2007, featuring Jonathan Miller, the principal author of the report, Blake
& y* H! s* [2 S# T' c8 q/ R7 lHutcheson, President of CB Richard Ellis Canada Ltd., and George Carras,
2 a. M8 f6 f5 P# W; e, E! p- R% @9 BPresident of RealNet Canada Inc. For more information on this event, please
, b x- I' z) g9 Y" ~call the Toronto District Council Coordinator at (647) 258-0017, or look on( l* ~4 n, B, V$ ^% g' e# r
the web at www.uli.org/events/index.cfm?id=3066.% f3 W$ }; ?& S; `7 f( D' D
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For further information: Carolyn Forest, PricewaterhouseCoopers LLP,, N; Z7 ?& C8 F- c1 }+ c
(416) 814-5730, carolyn.forest@ca.pwc.com
9 m9 U+ _6 [+ c6 z3 t" s Phttp://www.newswire.ca/en/releas ... r2007/05/c4080.html
+ N+ {) y n6 M! H h3 r( R% ?3 q6 k" W$ p7 r0 [* a4 b
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