Alberta has the hottest real estate market in Canada, according to a report recently released by Price Waterhouse Coopers (PwC) and the Urban Land Institute (ULI). Emerging Trends in Real Estate describes western Canada as continuing to be the country's economic engine, with Alberta leading the way.
Alberta has the hottest real estate market in Canada, according to a report recently released by Price Waterhouse Coopers (PwC) and the Urban Land Institute (ULI).
Emerging Trends in Real Estate describes western Canada as continuing to be the country's economic engine, with Alberta leading the way.
Calgary is the top market, fueled by high employment and strong office development. More than 7 million square feet of office space has come on board in the last five years, with another 5 million in the works. Two-thirds of the future office space has already been leased.
Edmonton is the country's second strongest market, based on significant job creation and major projects underway in the urban core (office towers, condominiums and hotels, as well as the provincial museum and the new NHL arena).
One of the major trends across Canada is the move to urbanization, once considered an emerging trend and now seen as the 'new normal.'
People want to live in city cores to be close to both their work and preferred lifestyle, dumping long commutes. Companies and retailers are following them, leading to new office and commercial developments in the core.
In turn, the move to urbanization is causing commercial and residential developers to explore new opportunities resulting from the demand for mixed-use properties.
Other trends for 2015 and beyond include:
The addition of new features to office spaces in order to attract and retain the highest quality employees,
The rise of super-prime asset classes defined as those with irreplaceable locations, and
The continued demand for mixed-use properties by pension funds, insurers and REITS.
As well, there is high demand for multi-residential rental properties (everyone seems to want a rental property).
Areas of caution include:
The possibility that having such strong demand driving prices upward may lead to a bubble,
The fact that, although there is a flood of new capital, it may come from inexperienced lenders,
The reality that as young millennials get older their preferences for dense urban spaces may change,
Rising construction costs, and
Lengthy and frustrating approval processes created by municipalities.
In addition, the high demand across the board may make it difficult for small players to succeed on their own, resulting in an increased number of mergers.
Other factors influencing investment opportunities in the foreseeable future include a consensus amongst professionals in real estate that interest rates are going to increase sometime after mid-2015 (at the earliest) and that Canada's aging population means there will be more demand for senior's specific housing.
More than 1400 individuals, including a wide range of industry experts such as investors, fund managers, developers, property companies, lenders, brokers, advisors and consultants were surveyed or interviewed in the preparation of this report.
The full report Emerging Trends in Real Estate: Canada and United States 2015 can be found online.