Welcome to 2017! 2016 is now behind us and we look forward to wiping the slate clean and beginning anew.
I hope you and your families enjoyed some quality time over the holidays. Thank you for your continued support of PAL Real Estate and we look forward to helping you achieve your real estate goal. All the best for our new year. Happy New Year Everyone.
Emerging Trends in Canadian Real Estate 2017
Building communities for the future
Frank Magliocco, Partner, National Real Estate Leader, PwC Canada
Investors, developers, and property owners are cautiously optimistic about the Canadian real estate market’s outlook for the year ahead. While the rest of Canada's faces challenges unique to individual regions, Toronto and Vancouver’s markets continue to experience high demand due to a lack of supply. This has driven up prices and caused affordability concerns. But the main message is that every regional market offers opportunities for savvy developers and investors—as long as they embrace technology and anticipate their future buyers’ needs.
1. It’s about building communities
Canada’s urban populations are set to continue to grow and their needs are evolving. There’s a growing consensus that developers have responded by continuing to rethink their approach to mixed-use projects.
2. Affordability on the decline
Housing affordability has become a point of concern in Canada. Significant increases in immigration over the next five years will continue to keep demand high and put even more pressure on affordability unless more supply is made available. As well, a common issue in nearly all regions was municipal red tape and lengthy approval processes, which are also limiting supply and driving up costs.
3. Technology disruptors
Technology is changing expectations and how they interact with potential tenants. As one respondent said, “We’re getting to the point where if people don’t recognize technologies are existing and, moreover, how to integrate them, opportunities are being missed.”
Markets to watch in 2017
The sharp drop in oil prices pushed Calgary’s economy into recession last year, and further contraction is expected this year. GDP growth in 2017 is forecast at 2.1%, with less than 1% employment growth.
Despite this, owners are not in any hurry to sell. Calgary’s real estate market has seen booms and busts before, so respondents believe that developers and investors aren’t in a hurry to sell existing assets or exit the market. As national banks pull back on their investment in the region, regional banks familiar with Alberta’s market understands the opportunities and are getting more involved.
Calgarians continue to resist condominium living, as comparatively affordable house prices attract prospective buyers to suburban residential homes. But signs exist that this attitude may be changing. Millenials, in particular, are prioritizing value, quality, and maintenance-free living over square footage and yard sizes – a shift that is driving interest in smaller residential properties and upscale townhouses.
Expected best bets for 2017
Given the state of the markets across Canada, where should developers and investors focus their attention? Our survey and conversations suggest the most promising moves can be made in the following areas.
1. Industrial property
2. Purpose-built multifamily rentals
3. Urban mixed-use developments
4. Seniors’ housing/retirement homes
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