Foreign buyer tax on Greater Vancouver homes encouraging investors to look to commercial market
KELOWNA, BC, Sept. 28, 2016 /CNW/ - Much of Western Canada continued to experience slower market activity in the first half of the year as regional economies continued to recover from the downturn in the oil sector. In B.C.'s Lower Mainland, by contrast, activity was brisk and prices continued to increase significantly in the commercial property market. The total dollar value of commercial real estate sales in the Lower Mainland in the first half of the year was $7.135 billion, an increase of 94 per cent over 2015, with land the most in-demand property type.
"Demand for commercial property in the Vancouver area remains very high and continues to be driven mainly by local investors," said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "Over the next several months, we may start to see more interest from foreign investors. As a result of the recent foreign buyer tax on residential properties, buyers who are interested in investing in Greater Vancouver may start to shift their focus to commercial properties."
The commercial real estate markets in Calgary and Edmonton continued to feel the impact of lower oil prices. In Calgary, the number of commercial properties sold during the first two quarters of the year was down 12 per cent from the same period in 2015. The most significant impact has been seen in office space; at the end of July 2016, the office vacancy rate was approaching 25 per cent.
In Edmonton, the number of commercial building and land sales was down eight per cent year-over-year while the value of those sales was down five per cent. This marks the second consecutive year that total sales were valued at less than $1 billion by mid-year. Land sales declined by 40 per cent year-over-year, indicative of a slowing economy; however, the total dollar value of building sales was up 13 per cent compared with the first half of 2015.
"There continues to be demand for good quality product in the Calgary and Edmonton markets, though a full recovery is not expected until oil prices rebound," said Ash. "For investors, there will likely be some good opportunities coming on to the market later this year and next year as owners start to sell off assets."
The commercial real estate markets in Saskatoon and Regina have remained fairly active despite a somewhat softer market caused by the downturn in the resource sector. In both cities, the first half of 2016 saw increased investor interest from Real Estate Investment Trusts (REITs). A well-diversified economy and positive year for the agricultural sector are keeping confidence high in these markets.
In Winnipeg, demand for commercial properties has continued to outpace supply, with investors primarily interested in retail investment properties, industrial properties and vacant land. The market is expected to stay fairly stable and demand is expected to remain strong heading into 2017.
For more information, please visit the 2016 RE/MAX Commercial Investor report.
2016 RE/MAX Commercial Investor Report:
The 2016 RE/MAX Commercial Investor Report includes data from local boards and brokerages. Brokers and agents are surveyed on trends, local development and features.
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SOURCE RE/MAX of Western Canada
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