Rental apartments and retail developments seen as attractive choices for
TORONTO, Nov. 12, 2013 /CNW/ - The Canadian real estate market will
maintain its strength next year, according to the Emerging Trends in Real Estate report, released by PwC and the Urban Land Institute (ULI) today.
The report notes that while the outlook for development of all property
types is good, continuing urbanization and reverse migration trends are
expected to be especially important considerations for developers and
investors. In particular, live/work/play development offerings along or
near mass transit lines will be essential.
With challenging infrastructure in all major Canadian centres coupled
with the urbanization trend, there will be a continued demand for
retail, office and residential space in our urban centres where there
is easy access to mass transit," Lori-Ann Beausoleil, Partner and National Real Estate Leader at PwC. "Competition for these
sites and uses will continue to place pressure on developers to
reformat their product offerings to optimize space as these locations
Rental market not derailed by condos
The report also states that condominium developments in major urban
centres have not hindered the market for rental apartments—in fact,
rental apartments are considered a very attractive investment in
Canada's largest cities, particularly as condominiums are often
purchased and then rented out at premium rates. Tighter mortgage rules
- which have made buying a home more difficult - together with
continued immigration and lifestyle-choice renters, could significantly
improve the economic landscape for purpose-built rental apartments in
Canada's major centres.
"Condo development is still a popular real estate investment, as it
serves a different segment of the market than most existing rental
apartments, and as such the two can work in tandem," says Mark
Noskiewicz, ULI Toronto Chair. "As home prices in the major cities stay
high, renting is a reality for many Canadians and real estate investors
are happy to capitalize on this need. However, the report confirms that
common to any accommodation segment is the importance of integrated
land use development and planning, and that higher valuation is
supported by desirable livability indices such as connectivity, amenity
Strong economy part of real estate success
Canada's economic strength has played a significant role in keeping real
estate prospects strong, according to the report. Canada's resilient
performance in the wake of the 2008 recession has made it an appealing
place for investors to develop and in turn, Canadian investors are also
able to be active in the US and overseas markets. Perhaps most telling
is the fact that Canadians are now the United States' largest
non-domestic real estate investors, with $10.7 billion invested into US
properties over the past 12 months.
And, building on Canada's prosperity, American and European retailers -
including Nordstrom, Zara Home, Marshall's, Tanger Outlets,
Bloomingdale's and J Crew-- recognize the strength of the Canadian
consumer as the trend to find Canadian locations for their stores
"The forecasts show that Canadian real estate players are able to both
invest and attract investors. With the US economy on the upswing, we
are likely to see even more activity between the two countries, says
Beausoleil. "Over the last several years, Canada has been the
interesting real estate story while the US markets were in distress,
but now, we expect that the continuing US recovery will be the real
story. Still, Canada's strong market and the spending power of our
consumers will continue to position us well in the international
community as we head into 2014."
Other highlights from the report include:
Developments will remain well funded, as capital is expected to remain
available for high quality projects that meet more stringent lender
requirements. The best projects managed by the best borrowers will be
funded, leaving those that do not meet these criteria to seek
alternative capital sources that typically have higher costs.
As cap rates stabilize or move slightly higher, cost and energy
optimization programs will help to maintain assets and increase yield
opportunities. Programs that build on the profile, attractiveness and
cash flow of assets will likely offset the erosion of rising cap rates
on property yields.
Calgary ranks number one among major Canadian cities to watch for the
second year in a row, followed by Edmonton, Saskatoon, Vancouver,
Toronto, Winnipeg, Ottawa, Halifax and Montreal.
About PwC Canada
PwC Canada helps organizations and individuals create the value they're
looking for. More than 5,700 partners and staff in offices across the
country are committed to delivering quality in assurance, tax,
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network of firms with more than 180,000 people in 158 countries. Find
out more by visiting us at www.pwc.com/ca.
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© 2013 PricewaterhouseCoopers LLP, an Ontario limited liability
partnership. All rights reserved.
PwC refers to the Canadian member firm, and may sometimes refer to the
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About the Urban Land Institute (ULI) and ULI Toronto
The Urban Land Institute (www.uli.org) is a non-profit education and research institute supported by its
members. Its mission is to provide leadership in the responsible use of
land and in sustaining and creating thriving communities worldwide.
Established in 1936, the Institute has more than 30,000 members
representing all aspects of land use and development disciplines. The
Urban Land Institute is an active and growing organization in Canada.
With over 1000 members across the country, Canada's first ULI District
Council ULI Toronto (toronto.uli.org) was established in 2005, with a second District Council in British
Columbia and another one being created in Calgary. ULI Toronto has over
SOURCE: PwC (PricewaterhouseCoopers)
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