Improving economy, job growth and higher wages drive demand
Derrick Penner
Sun
British Columbia experienced a record year for real estate sales even before the beginning of December, with realtors around the province booking a staggering 100,586 sales worth some $33.3 billion. Those figures eclipsed the 96,314 transactions worth $27.8 billion made in all of 2004, B.C. Real Estate Association statistics show.
“[That result] is not a surprise,” Cameron Muir, a housing market analyst with Canada Mortgage and Housing Corp. said, “because when we look at housing demand throughout the province it’s quite broad based.”
The demand, Muir added, continues to be driven by B.C.’s improving economy, job growth, increasing wages, and immigration to the province both from Canadian and international sources.
B.C. saw unemployment dip to 4.9 per cent in November, its lowest rate in 30 years, and Muir said the province will have seen 40,000 new residents move in by the end of this year.
“[It’s] not huge growth, but it’s trending upward,” he added, noting that projections are for 44,000 people to move to B.C. in 2006.
At the lower end, developer Jung Development broke ground on the first of five condo towers in its $350-million Infinity project in Surrey.
At the high end, B.C. saw a record price of $7.75 million paid for the penthouse of Two Harbour Green on Vancouver’s Coal Harbour. That project, brokered by Platinum Project Marketing, sold out with an average price of $2.5 million per unit.
Lynn Hsu, CEO of Vancouver-based Macdonald Realty Group, said by early December her firm had booked a record $2.5 billion in sales in 2005.
“It was definitely a phenomenal year,” Hsu said.
She expects 2006 to be much like 2005, largely because of low inventories and continued strong demand.
“Vancouver is increasingly becoming more and more visible worldwide,” Hsu said. While not yet on par with the reputations of cities such as Hong Kong or New York, Hsu added that the awareness of Vancouver as a livable metropolitan centre has “certainly elevated our status as a world-class city.”
Elton Ash, executive vice-president of Re/Max realty in Western Canada, said 2005 should end with single-home prices around Greater Vancouver having spiked by 12 per cent, with an average price of about $420,000.
Ash added that homeowners can expect to see gains of up to 10 per cent again in 2006, because “British Columbia is enjoying a tremendously positive economy at this point.”
“Several factors will contribute to that. . . . The [2010] Olympics, and beyond that, China’s growth is driving a tremendous amount of economic activity in British Columbia.”
The year also proved to be a blockbuster one for commercial real estate in Greater Vancouver.
The year’s landmark transaction was September’s sale by Colliers International of the HSBC bank building in Vancouver for some $140 million to Cadillac Fairview Corp.
Colliers also brokered the $85-million sale of the Riverport entertainment complex in Richmond to Ontario-based TransGlobe Property Management Services Ltd. Earlier in the year, the Canada Pension Plan board bought into three Vancouver buildings after acquiring a $1-billion stake in properties owned by Oxford Properties Group.
The historic Hotel Georgia also sold for around $65 million to a Seattle-based developer, and a Westbank Projects-Peterson Investment Group partnership scooped up the last vacant Coal Harbour lot for $68 million to turn it into the Fairmont Pacific Rim, a luxury condominium and hotel tower.
“This is unchartered waters,” said Avtar Bains, senior vice-president of Colliers International in Vancouver. “We’ve never been in this territory before [with] such an insatiable appetite for commercial real estate.”
The market, Bains added, is being dominated by institutional capital such as pension funds, which increasingly see real estate as a suitable long-term investment. The result, he said, is a market where landlords are seeing security of income, increasing capital values and unprecedented levels of liquidity in their assets.
“Quite frankly, I don’t see that dissipating in the near or medium term,” Bains said. “There is just so much interest in commercial real estate.”