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After a relatively sedate 2018, Toronto is heating up again

After exhibiting relatively modest performance for most of 2018 with the advent of stricter mortgage qualification rules, Toronto is seeing a resurgence in market competition once again.

The latest numbers from the city’s real estate professionals’ association indicated that the total number of active for-sale listings in the GTA saw a 9.8% year-over-year decrease in November, down to 16,420 units.

During the same time frame, the volume of new for-sale listings in the region shrank by 26.1%.

“New listings were actually down more than sales on a year-over-year basis in November,” TREB President Garry Bhaura said, as quoted by Bloomberg.

Read more: Toronto apartment inventory having trouble catching up with demand

“This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” Bhaura added.

Average home sales price last month was $788,345, growing by 3.5% from the same time last year.

Meanwhile, total sales in November stood at at 6,251 completed deals, representing a 14.5% annual decline.

TREB stressed, however, that any year-over-year comparison should take into account that November 2017’s performance is “distorted” due to a large number of buyers rushing to beat the implementation of B-20 in January 2018.

www.canadianrealestatemagazine.ca
by Ephraim Vecina07 Dec 2018

New small-space flex offices push $1,000 a square foot

Metro’s high-tech sector driving demand for new office-industrial strata projects

New light industrial/office strata projects springing up from Mount Pleasant to East Vancouver may have tapped into a profitable path, despite per-square-foot prices ranging from $800 to $1,000.

The most recent manifestations include a four-storey project on Yukon Street at West 6th Avenue – formerly the 3 Vets outdoor store – by Chard Development, which bought the site last year for $20.4 million.

Now under development, the 49,000-square-foot Yukon project will feature a high-ceiling ground floor for light industrial, with bay access for trucks, capped by three floors of stylish office space.

Chard recognized a demand for smaller office sizes from the area’s tech, finance and retail services industries. As a result, Yukon will feature smaller unit sizes (1,000 to 5,000 square feet) to adapt to this new Vancouver real estate reality, according to Byron Chard, Chard’s principal and CFO.

A similar Chard project at 34 West 7th Avenue sold out all 48,000 square feet while still under construction.

Nothing has pre-sold yet at the Yukon, where strata space starts at $1,000 per square foot.

The building will include a freight elevator, bike lockers, showers and 83 parking stalls, and it could prove popular, according to the type of high-tech tenant Chard is targeting. Completion is expected in 2020.

“I can definitely see the demand,” said Dogu Taskiran, a partner and founder at Stambol Studios, a virtual-reality startup that concentrates on the real estate market.

Taskiran said the Mount Pleasant location and ample parking would be among the draws.

Stambol is currently splitting 2,000 square feet of space in False Creek Flats, where the total monthly rent is $3,000, which Taskiran described as “a very good deal, very cheap.”

Chard noted that a startup could buy office or industrial space at Yukon and lease out part of it until it expands, but he expects most of the buyers will be sole owner-occupiers.

“Our goal is to make the space as flexible as possible,” he said.

Alliance Partners is trying the same concept in East Vancouver with a five-storey, 55,000-square-foot light industrial/office strata project on Clark Drive at Adanac Street.

Kevin Kassautzki, vice-president at Avison Young, which is handling sales of the project, expects per-square-foot prices to be in the $700 range for industrial space and $800 for offices.

“I think this area is on its way to becoming the next Mount Pleasant,” Kassautzki said.

There is an appetite for buying strata office space from larger players in the tech community, Taskiran said, but he added that Stambol and other startups often prefer to lease. A common theme, he said, is to stay out of the downtown, where higher lease rates and a lack of parking are considered obstacles.

Frank O’Brien | Western Investor
November 21, 2018

Mortgage stress test could become election issue

The Conservative Party of Canada plans to make the mortgage stress test a hot button issue in time for next year’s election, but explaining such a convoluted issue to Canadians could pose a challenge.

The party’s Deputy Shadow Minister for Finance tabled two motions this year to study the impact of the stress test, known as B-20, but they were both rejected by the Liberals. Nevertheless, MP Tom Kmiec has vowed to put the mortgage stress test on the agenda in time for the Oct. 2019 federal election.

“It will be an election issue, absolutely,” said Kmiec. “I’m willing to use procedural tools to get this study done. I’m not necessarily saying to get rid of B-20 completely; I’m saying take a look at the data and then make a decision on it. I’m asking the Liberals to provide any internal documents they have showing why the mortgage rules were introduced in the first place.”

Kmiec has started a website to pressure the Liberals into studying B-20’s effects. He claims that he was initially told B-20 wouldn’t be examined in the absence of more data, however, much has since come to light about Canadians being shut out of the housing market.

Kmiec is dogged, to be sure. He participated in the electoral reform committee’s filibuster.

“If it comes down to it, I’m happy to use up every two-hour time limit on every single committee until we agree to do a mortgage study,” said Kmiec. “I’m not asking for the moon, either. All I want are a few meetings in Ottawa where we can invite people with data who can then tell us what’s happening with the market.”

But communicating the message will doubtless be challenging for the Conservatives. Ron Butler of Butler Mortgage can attest to how difficult buying homes has become this year, but too few Canadians have born that brunt for the impact to truly be understood.

However, given that mortgage renewals are subject to the same stringent B-20 qualification rules, Butler believes it is still possible to make Canadians understand how detrimental the stress test is.

“It won’t be hot button, but if it’s messaged right, it could be,” he said. “If it’s presented properly as a group of themes about the incompetence, in terms of the ability to handle the file—why has Mexico settled NAFTA already and Canada hasn’t? Why did we buy a pipeline that got shut down? It’s a good thing to add to the general list of incompetence. On its own, it isn’t a hot button issue, but if you want to weave it into a tapestry of every day, practical fiscal management, it could work.”

 

by Neil Sharma01 Oct 2018, www.canadianrealestatemagazine.ca

Commercial sales volumes down – except in multi-family market

Multi-family assets continue to be crowd favourite among investors, while sales in office and industrial properties slow due to limited supply

 

Sales volumes in nearly every commercial real estate sectors have declined in the second quarter of 2018 – though not for a lack of demand, according to a new report. 

The growing disconnect between supply and demand in Canadian real estate has lead to a decrease in sales velocity and an acceleration of lease rates, according to research by the Morguard Corporation

"A drop in transaction volume in the second quarter is very much a function of low product availability rather than a drop in demand," said Keith Reading, director of research at Morguard. "With quality office and industrial space at a premium, apartments are a crowd favourite as investors search for yield."

Office sales have dropped nearly 50 per cent across Canada year-over-year, while industrial volume has plunged 17.8 per cent. Meanwhile, multi-family sales increased 17.5 per cent.

Average sale prices for multi-family properties also increased year-over-year, from $8.5 million in the first half of 2017 to $13 million during the same period of 2018. 

Morguard expects investor sentiment in residential rental properties to remain strong into next term. 

 


 

 Tanya Commisso | Western Investor | July 18, 2018

Major impact to B.C. real estate market expected from proposed taxes

New tax policies put pressure on Canadians to sell their secondary properties within the province

Albertans anticipated to look within their own province and to the United States for secondary properties

TORONTO, March 29, 2018 /CNW/ - According to a Royal LePage advisor survey, which consolidated the views of 535 real estate professionals in British Columbia and Alberta, the implementation of new housing taxes outlined in British Columbia's 2018 budget have the potential to significantly impact the province's residential real estate market. While previous provincial measures have targeted foreign homebuyers, the implications of the new tax policies will be much more widespread, primarily affecting domestic homeowners located in B.C., Alberta and other parts of Canada who have made the tourist-focused region their second home.

British Columbia's tax policies within its 2018 budget include the introduction of a speculation tax on qualifying secondary homes, an increase to the foreign buyer tax as well as an expanded list of affected regions and an increase to the property-related school taxes and land transfer taxes on homes worth over $3 million.  

When asked, 85.0 per cent of advisors operating in British Columbia said that the new tax policies have hurt consumer confidence in residential real estate across the province. A further 78.0 per cent of respondents believe that home sales will decrease within the first three months of the announcement of the new policies, while the majority (57.3 per cent) stated that prices will also decrease during the same period of time.

"The expected impact of the proposed housing taxes announced in British Columbia should not be taken lightly," said Phil Soper, President and CEO, Royal LePage. "Homeowners across the province will feel the effects as major policy changes like this are also amplified by a drop in consumer confidence. We saw this happen in 2016 when the previous government launched a tax on foreign investors. A small number of international purchasers withdrew from the market – along with a huge cohort of domestic homebuyers.

"Canadian homebuyers from coast-to-coast were already struggling with new federal restrictions on access to mortgage financing," continued Soper. "We expect the impact of the new government's housing tax policies to be even more pronounced as they will force Canadians, Americans and potential buyers from elsewhere in the world out of the market."

While 77.0 per cent of advisors stated that the provincial regulations will cause interest from international purchasers to decrease, this demographic was ranked last when respondents identified the group that was most impacted by the new policies. When asked, 44.8 per cent of advisors stated that the new housing policies most impacted residents of British Columbia, followed by 43.5 per cent who believed it was Canadians who own or are looking to buy property in British Columbia, but predominantly live in other provinces. Only 11.3 per cent of real estate professionals forecast that the policies would impact international purchasers the most.

"We expect that the new taxes will materially impact communities that rely on recreational property markets for the health of their local economy," said Soper. "There will be some Canadians in British Columbia and across the country that will choose to sell their properties in the province as the new taxes add to the cost of homeownership.

"There are further unintended consequences from these kinds of policy changes," Soper concluded. "If property values decline, property tax revenues decline. Local municipalities will have to deal with this added burden."

When asked, 81.5 per cent of advisors said the new tax policies within British Columbia's 2018 budget have already caused interest from Canadians living outside of the province to decrease, with 73.8 per cent believing that the move will lead the group to sell their property. This is predominantly led by the impending speculation tax, which 90.8 per cent of respondents believe will impact sales in the province from prospective homeowners located in other areas of Canada, like Alberta.

These sentiments were verified by advisors in Alberta, with 80.7 per cent believing that Alberta-based interest in B.C. recreational properties will decrease, and a further 75.6 per cent stating that Albertans who currently own recreational property in British Columbia would likely sell their secondary homes. Instead, it is believed that Albertans will now increasingly look within their own province (72.6 per cent) or south of the border (46.7 per cent) for secondary properties.

Survey Methodology

Royal LePage's advisor survey was conducted online between March 14, 2018 and March 20, 2018, polling a total of 400 Royal LePage real estate advisors from British Columbia and a further 135 from Alberta. Responses were anonymously recorded and analyzed independently.

On March 26th, 2018, British Columbia announced amendments to its speculation tax. These amendments do not change the opinion of Royal LePage and its network of real estate professionals. While the size of the new taxes has been reduced modestly in one of the categories, the entire scope of the new tax regime remains in place. The results of the Royal LePage advisor survey are reflective of current expert opinion on real estate in the region.

 

NEWS PROVIDED BY

Royal LePage

06:00 ET

BC commercial market set new record in 2017

The commercial real estate market in British Columbia surpassed previous highs for activity and dollar volume in 2017.

Dispositions of 230 office, industrial and retail properties achieved a total of $7.5 billion according to a new report from Avison Young. That almost doubled the previous record set a year earlier ($4.1bn).

Large pools of investor capital helped achieve the record year but that was not the only reason for the strong market.

The low interest environment, mindset of market participants, and a shortage of available development land, all played their part.

Interestingly, while many property owners decided to sell in the belief that significant peaks had been achieved, buyers were happy to pay higher prices believing that the peak is still to come.

"Ongoing price appreciation in all asset classes is being driven almost exclusively by land value and redevelopment potential," comments Avison Young Principal Bob Levine. "The acquisition of retail assets has morphed in many cases into land deals with lesser consideration or interest for the income in place or the retail asset itself. This approach has spread to office and even industrial properties as investors seek to secure land in hopes of redevelopment."

By asset class:

  • Office investment sales activity achieved record levels in 2017 with 46 transactions valued at $2.7 billion, representing 36% of overall record dollar volume of $7.5 billion.
  • Retail assets achieved blockbuster heights in 2017 with 96 transactions valued at $3.63 billion – surpassing the previous record of 59 retail details worth $1.22 billion set in 2015.
  • Robust demand for industrial assets pushed deal and dollar to record levels in 2017 with 88 deals valued at more than $1.2 billion, capturing just 16% of total 2017 investment proceeds of $7.5 billion but claiming 38% of the total number of deals.
  • Multi-family investment activity surpassed the billion-dollar mark for only the second time in BC history after registering more than $1.275 billion in 89 sale transactions in 2017.

Private purchasers remained the most dominant buyer group in 2017, accounting for 87% of transactions but just 46% of dollar value.


by Steve Randall | 22 Mar 2018 | canadianrealestatemagazine.ca