Market Update

MLS® home sales activity forecast revised upward.
National activity to rise 8.1% over last year.

OTTAWA - August 20, 2007

Fueled by record activity levels in the first half of the year, national MLS® home sales activity is expected to reach record levels again in 2007, according to a new residential forecast prepared by The Canadian Real Estate Association.

National home sales are forecast to rise by 8.1 per cent to 523,100 units in 2007, and will set new annual records in most provinces. Activity is forecast to edge slightly lower in 2008, but will reach the second highest annual level on record in almost all provinces. Prices are forecast to set new records in every province this year and in 2008, but price increases will be smaller next year.

Resale housing markets will continue to become more balanced in British Columbia and Alberta. Even so, markets will remain tightest in the Western provinces where annual price increases will be greatest. In other provinces, the resale housing market is forecast to be tighter in 2007 than it was last year, but it will become more balanced as housing prices increase and higher interest rates further impact affordability.

The MLS® residential average price is forecast to set new records over the next two years in all provinces. Price increases are forecast to become smaller as the resale housing market becomes more balanced in 2008.
Resale housing activity is projected to ease gradually in all provinces. New listings are forecast to rise further in all provinces except Alberta, where they are projected to retreat after spiking in the second quarter.

“Resale housing activity was a juggernaut in the second quarter of 2007,” said CREA Chief Economist Gregory Klump. “Record breaking sales activity in the first and second quarters forced The Canadian Real Estate Association to revise its forecast upward.”

“Home buying sentiment remains upbeat in all regions and mortgage financing is still within reach for many potential home buyers,” Klump said. “The resale housing market will become more balanced as rising prices and higher mortgage interest rates gradually impact affordability. Strong employment numbers will keep sales activity strong, even as prices and interest rates continue to rise.”

“Consumers continue to have strong confidence in Canada’s resale housing market, and activity is on track to set a new annual record in 2007,” said Ann Bosley, President of The Canadian Real Estate Association. Bosley notes the Canadian market has shrugged off the subprime problems that have been affecting the housing market in the United States, and a number of investment funds. According to CREA’s forecast, the resale housing market will become more balanced next year, but negotiations will continue favoring the seller in most provinces.

“For local market expertise and sound advice, consumers should consult their REALTOR®,” added Bosley.

Commercial Real Estate

New office tower to adjoin
GM Place.

Bruce Constantineau
Vancouver Sun
Saturday, August 18, 2007

GM Place owners plan to build a 22-storey office tower that will connect to the arena's northwest corner, Vancouver Arena Limited Partnership announced Friday. A formal application has been submitted to the City of Vancouver for permission to build a 312,000-square-foot building designed by architect Peter Busby.

Busby said the building will become a signature Vancouver office tower because of its design and plans to make it among the most energy-efficient commercial buildings in North America. Sustainable features will include using "energy synergies" between GM Place and the connecting office tower. Heating and cooling systems between the two buildings will work together so waste heat from one building will be used to heat the other.

Part of GM Place's underground parking, which is used mostly at night, will be used for the new office tower.
Vancouver Canucks chief executive officer Chris Zimmerman, who was uncertain about the project's cost and potential opening date, said the new building will enhance the fan experience by providing new amenities like restaurants and retail shops. He noted office tower tenants will be able to walk from their lobby straight onto the concourse level of GM Place for hockey games or concerts."We always want to have more concourse space because it gives us the opportunity to create more food and beverage options," Zimmerman said in an interview. "It will allow for better flow throughout the arena."

He expects the new tower will attract a lot of potential new tenants who will enjoy the unique opportunity to be directly linked with an NHL venue. "In a highly competitive job market, I think it gives the primary tenants some wonderful recruiting tools," Zimmerman said. "We'll be able to provide some unique benefits around utilization of the building, the ice surface and probably some inside access to certain team events. It will be a great way for companies to differentiate themselves."

He said the current high demand for Vancouver office space makes it an ideal time to build the new tower. The downtown Vancouver office space vacancy rate is currently at an all-time low of 3.5 per cent, according to CB Richard Ellis Ltd.

Market Update

Downtown eyesore to be site of Ritz-Carlton.

Bruce Constantineau
Vancouver Sun
Friday, August 17, 2007

The world-renowned Ritz-Carlton hotel brand will touch down in Vancouver by 2011.
A 127-room Ritz-Carlton hotel will occupy the first 20 floors of a new 58-storey, Arthur Erickson-designed twisting tower to be built at 1133 West Georgia.
The $500-million-plus Holborn Group project will also contain 123 luxury condos on the top 38 floors - at prices ranging from $1.4 million to $13 million.

"We've been talking to the developer about Vancouver for over four years," Ritz-Carlton Hotel Company senior vice-president Michael Beckley said in an interview. "Toronto and Vancouver have been in our sights for quite a long time, so we're very happy to have such a great location."
U.S.-based Ritz-Carlton operates 63 hotels in 21 countries, but none in Canada. A Ritz-Carlton hotel in Montreal is not officially part of the chain, but it's expected to join the group after its new owners complete a renovation.

A new Ritz-Carlton hotel in Toronto is expected to open in 2009. Beckley said there are just a few cities in Canada where a high-end Ritz-Carlton hotel will thrive, and Vancouver is clearly one of them. He also said it was important to join forces with a quality developer like Holborn, controlled by Vancouver entrepreneur Simon Lim.
"That's very important to us because we can't put our name on a building and have it fail," Beckley said. "We just can't have that."

The Georgia Street location, between Thurlow and Bute, has been a vacant and derelict Vancouver eyesore for more than a decade. It was originally to be a private members' club and then a strata-title office building in the 1990s, but both projects failed and it has remained a concrete shell ever since.

Holborn Group bought the property from Cadillac Fairview about three years ago. Demolition of the site is under way, and construction of the hotel/condo tower is set to begin early next year, with an early-2011 opening.The condo portion of the project will be called Residences at Ritz-Carlton, and the entire building will be managed by Ritz-Carlton. Condo owners will have access to hotel amenities such as 24-hour room service, a concierge, housekeeping service, and staffing for special entertainment events.

The 1100-block West Georgia area has become a hotbed of upscale boutique hotel projects, with the 77-room Loden planning to open its new property near Melville and Bute this fall, while the 119-room Shangri-La Hotel is scheduled to open near Georgia and Thurlow in September 2008. Beckley knows there will be a lot of competition in the area, and said that's a big reason why Ritz-Carlton chose to operate a relatively small hotel in Vancouver.

"Wherever we put a Ritz-Carlton, we shoot to be No. 1, and it will be possible to achieve that because the hotel isn't that large," he said. Beckley said bigger hotels require meeting and convention space, which can lead to convention attendees wandering around all over the place. "That can make it hard to get to the level of sophistication you want," he said.

Beckley said the new hotel will target high-end global business and leisure travelers, and notes the chain has a large database of clients who like to stay at Ritz-Carlton hotels all over the world. He said the company originally wanted to open the hotel in time for the 2010 Olympics. "But rather than rush it, we're content to come in behind the event. The Olympics will put Vancouver on the global map, and we'll be out there marketing ourselves during the Olympic year."

Shangri-La Hotel general manager Stephen Darling welcomes the entry of the Ritz-Carlton brand to the Vancouver market. "We're very respectful of Ritz-Carlton and see them as one of our primary competitors in North America," he said. "When a top-end brand comes to Vancouver, it's going to have a tremendously positive effect on the overall market."

Vancouver realtor Bob Rennie, who is marketing the project, said he's not surprised the western portion of the downtown core has attracted so many new hotel/condo developments. "It's the only land left in the city," he said. "You just can't find major downtown sites any more. We've been undersupplied in the luxury hotel market so hoteliers have been wanting in."

Rennie said condos in the "hyper luxury" development will range from 1,000 to 4,000 square feet and expects to attract many downsizing local buyers from "signature" neighbourhoods such as Point Grey, Shaughnessy, Kerrisdale and West Vancouver.

Preview events are expected to begin later this month, with sales beginning in October or November.

Market Review

Record July for BC Home Sales

Vancouver, BC – August 16, 2007.

British Columbia Real Estate Association (BCREA) reports that residential sales volume on the Multiple Listing Service® (MLS®) in BC climbed 44 per cent to $4.66 billion in July, compared to the same month last year. Residential unit sales increased 25 per cent to 10,447 units during the same period, a record number of July transactions. The average MLS® residential price hit $446,386, up 15.2 per cent from July 2006.

“Housing demand is currently broad-based and reaches across the entire province,” said Cameron Muir, BCREA Chief Economist. “BC’s strongest markets are now those noted for recreation and retirement living. The Okanagan, Kootenay, and Vancouver Island markets are all experiencing an influx of buyers originating from outside their traditional market boundaries.”

Over the next ten years, the number of people in the province aged 65 or over is estimated to increase by 40 per cent, or more than 250,000 individuals. “We are seeing the tip of the iceberg when it comes to housing demand by retirees,” noted Muir. “Many empty nesters are now getting a head start by buying recreation properties that will serve as their retirement homes in the future.”

Year to date, MLS® residential sales volume climbed 16.6 per cent to $28.3 billion, compared to the first seven months of 2006. MLS® home sales climbed 3.6 per cent to 65,103 units, while the average MLS® residential price increased 12.5 per cent to $434,381.

Pre - Sale Contracts

Province cautions pre-sale buyers to beware. Regulatory body issues warning after condo contracts cancelled by developers.

Derrick Penner
Vancouver Sun

A flurry of problems in the pre-sale marketing of condominium projects has prompted the British Columbia Financial Institutions Commission (FICOM) to issue a buyer-beware reminder to consumers.

The Riverbend condominium project in Coquitlam, where the developer CB Development 2000 Ltd. cancelled 34 pre-sale contracts is a recent high-profile case. FICOM stepped in to issue a stop-marketing order against that project.

However, Ken Fraser, FICOM's executive director for enforcement, said his staff is reviewing at least one other case where a developer cancelled pre-sale contracts. They have recently issued two other cease marketing orders and one refrain from marketing order and has sought voluntary actions to stop marketing on three other projects. "We want to make sure that purchasers do their due diligence and know what they're getting themselves into," Fraser said of the bulletin.

FICOM is the provincial regulator responsible for enforcing B.C.'s real estate legislation.
Its bulletin notes that pre-selling homes prior to construction is common, but buyers have to be aware that projects may be delayed or not proceed.

Developers might also terminate pre-sale contracts if construction of their project is delayed beyond the contract's completion date, unless both buyer and builder agree to an extension.
Every development project that makes presales must prepare a disclosure statement about the project that is filed with the provincial superintendent of real estate.

Fraser said buyers need to read the disclosure and seek the advice of a lawyer to make sure they understand it.
"What we've found in the past is that a number of purchasers have a tendency not to read the disclosure, or don't understand the disclosure and rely primarily on information being given to them by the sellers or by developers or realtors," Fraser said.

"The purchaser should enter into some independent type of review to ensure they know what risks are involved going into the presale agreement."

To see the full text of the bulletin go to FICOM's website: www.fic.gov.bc.ca/index.htm.

Power Smart

Study saves money and power.
Participants in electricity conservation experiment cut consumption by 11.5% during peak times.

Scott Simpson
Vancouver Sun

BC Hydro customers broke some of their bad habits and saved money this winter in a pilot study on electricity conservation, The Vancouver Sun has learned.

Hydro will announce today that about 1,850 residential customers participating in a conservation study collectively lowered their electricity consumption 11.5 per cent during peak hours last winter.

The results have very favourable implications for Hydro, which has been instructed by the provincial government to make B.C. "energy self-sufficient" by 2016, and will need a strong conservation effort by British Columbians to meet that target.

There was a strong inducement for the study participants to cut back - in the peak evening hours between 4 p.m. and 9 p.m., they were voluntarily paying electricity rates two to five times higher than the standard 6.9 cents-per-kilowatt-hour residential rate. According to a summary of the pilot data, some of the savings came in the form of deferred consumption - dishwasher use dropped to nine per cent from 31 per cent during peak times, for example.Other savings were outright cuts in consumption - such as a conscious effort to turn off unnecessary lights and minor appliances.

Hydro wants to run the program again this winter and proposes to introduce an additional pricing scheme that beggars even last winter's top peak rate of 36 cents per kilowatt hour - a "critical peak pricing" rate of 50 cents per kilowatt hour that would apply during "extreme" winter cold snaps.

Hydro also provided so-called "smart meters" to consumers, who got minute-by-minute meter readings on portable hand-held devices inside their homes. The meters do not actually regulate consumption, but conventional wisdom among utilities is that ratepayers using them tend to use less electricity because they serve as reminders to conserve.

Along with critical pricing, Hydro wants to expand the study to include what it calls "load control."

Some pilot participants would have their home thermostats and electric water heaters wired into a BC Hydro-controlled system, and cede control of those devices to Hydro during peak winter demand days in order to conserve electricity. They would have the ability to override the controls, but would have to take active measures - such as a phone call to Hydro or a visit to the Hydro website - in order to have the final say on the temperature in their homes.

Utilities in Florida and California are already introducing load control systems, while Ontario is planning to install smart meters in homes throughout the province.

Hydro must always have on hand enough generating capacity to meet peak demand, so a reduction in consumption means it can delay the addition of new power supply to the provincial grid and save money for customers.
Hydro estimates that if every residential customer reduced consumption by 7.6 per cent during the four winter months, enough energy could be saved to power 44,000 homes.

Hydro president and CEO Bob Elton said in a prepared statement that time-of-use electricity rates and smart meters "will help lead British Columbia towards energy self-sufficiency" and curtail its dependence on imported energy during winter. "Smart meters allow customers to track their electricity use, and by making a few lifestyle changes, make a big difference in energy savings," Elton said.

Hydro media relations advisor Gillian Robinson said Hydro was pleased that a majority of participants - 63 per cent - met the conservation challenge. "Habits are hard to break. At the end of the day, 63 per cent were able to change their usage and conserve enough to actually save money." She noted that there will be a settling-up of accounts for all participants later this year. Hydro covers costs for anyone paying more than they would have under the standard residential rate.

Since the peak period ended in February, participants have been paying a full-time rate one-third lower than the standard residential rate - and those who managed to keep consumption down during winter are now, in effect, creating savings they will be allowed to keep.

Guy Dauncey, executive director of the B.C. Sustainable Energy Association, described the reduction as "a very beneficial result." "It shows that if we can reduce our peak demand across the board in British Columbia by 10 per cent, that actually enables our peak power production to be lowered by 10 per cent," Dauncey said. "So this has major significance. It also shows a good opportunity for people on lower incomes to save money by being flexible in their behaviours."

Market Update

July housing sales approach record as summer market begins to boil.

Vancouver, B.C. August 2, 2007

The Real Estate Board of Greater Vancouver (REBGV) reports that total residential sales reached 3,873 units in July 2007, a thermometer-breaking 41.8 per cent increase when compared to 2,732 sales in July 2006 and an increase of 5.0 per cent when compared to 3,687 sales in July 2005.

This figure represents the second highest number of sales during the month of July in the Board’s history. The highest number of sales for that month was recorded in June 2003, when 4,023 sales were reported.

“At the beginning of the year, most experts predicted a slower market than what we’ve experienced for the past five years in the Greater Vancouver area,” says REBGV president Brian Naphtali. “To date, REALTORS® are reporting the exact opposite as the housing market continues to exceed market forecasts.”

During this period, new listings for detached, attached and apartment properties increased by 12.7 per cent to 4,924 units compared to the 4,370 units listed in July 2006. The total number of active listings increased by 7.6 per cent to 11,215 units when compared to July 2006’s 10,424 units.

“We saw a lot of movement this July in the sales of detached and apartment properties in almost every area of our Board. Some of this movement could be the result of the recent increase in interest rates as consumers who are locked into mortgages at a good rate move up in the market,” explains Naphtali. “With the average amount of days a property stays on the market holding steady at a brisk 38 days, consumers should contact their REALTOR® to find out how this will affect the sale or purchase of a home.”

According to Multiple Listings Service® (MLS®) data, sales of apartment properties increased by 40.9 per cent to 1,674 sales in June 2007 compared to 1,188 sales in June 2006. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $364,510, up 10.8 per cent from one year ago.

Sales of attached properties increased by 39.6 per cent in July 2007 to 716 sales, compared to 513 sales in July 2006. The benchmark price of an attached unit is $448,383, up 10.8 per cent from a year ago. Sales of detached properties increased by 43.8 per cent in July 2007 to 1,483 sales, compared to 1,031 sales in July 2006.

The benchmark price of a detached unit is $714,810, up 10.9 per cent from last year.

Bright spots in Greater Vancouver in July 2007 compared to July 2006:

DETACHED:
Richmond up 80.4% .........................175 units sold, up from 97)

West Van/Howe Sound up 88.6%...... (83 units sold, up from 44)

Vancouver East up 72.0%..............(227 units sold, up from 132)

Sunshine Coast up 70.2%..................(80 units sold, up from 47)

Port Coquitlam up 55.0%...................(62 units sold, up from 40)

Burnaby up 47.2%...........................(131 units sold, up from 89)

APARTMENTS:

Port Moody/Belcarra up 152.9%........(43 units sold, up from 17)

New Wesminster up 69.0%............... (98 units sold, up from 58)

Port Coquitlam up 60.6%...................(53 units sold, up from 33)

Burnaby up 43.6%........................ (237 units sold, up from 165)

Richmond up 52.6% ..................... (203 units sold, up from 133)

Vancouver West up 27.9%.............(578 units sold, up from 452)

ATTACHED:
Port Moody/Belcarra up 158.8%....... (44 units sold, up from 17)

Port Coquitlam up 125.0%.................(45 units sold, up from 20)

Burnaby up 68.2%. ......................... (106 units sold, up from 63)

North Vancouver up 39.4%................(46 units sold, up from 33)

Whistler/Pemberton up 340.0%.......... (22 units sold, up from 5)

Commercial Real Estate

Central City sells for $246 million.
Once ridiculed ICBC property development nets profit of $39 million.

Michael Kane
Vancouver Sun
Thursday, August 02, 2007

Surrey's award-winning Central City development has been sold for $245.75 million in what is believed to be British Columbia's biggest real estate deal in history for a single property.
Once dismissed as a monument to the incompetence of the province's last NDP government, the development has been bought by a consortium of unidentified pension funds.

The sale dwarfs last year's biggest transaction, the $150-million sale of the Telus headquarters on Kingsway in Burnaby, and the sale of Burrard Street's Park Place office tower in the $160-million range a few years ago.
"It is certainly one of the largest sales ever in British Columbia history," Central City's realtor Kevin Meikle, a vice-president of Cushman & Wakefield LePage, said in an interview Wednesday.

The deal brings a net profit of about $39 million to the sellers, the Insurance Corp. of B.C., which had previously written off $141 million of the property's value due to loss of tenants and poor market conditions.
Today the development's 1.5 million square feet of offices and shops are virtually fully let to long-term tenants and Surrey is acknowledged as one of the fastest growing municipalities in Canada.

"Certainly buyers bought into the wave of Surrey growth and the successful rebranding of Whalley as its city centre," Meikle said."There are lots of young families moving into the area, which is especially good for retail, and from an office point of view, it's a strong A-class building just 35 minutes from downtown Vancouver by SkyTrain."

The property attracted more than 10 purchase offers from around the world. In 2004, it was the winner of an international real estate association's special jury award as the world's best overall new development for its combination of stunning architecture and building innovation.
The sale is the culmination of a remarkable turnaround story for ICBC which spent $182 million to build Surrey Central's 25-storey office tower atop an existing mall which it purchased for $49 million in 1999.

ICBC had intended to occupy the tower, along with Tech BC, a new university planned by the previous government, but when ICBC downsized by about 1,000 people, and the Liberals pulled the plug on Tech BC, the tower was left vacant in a slow market.

In 2001, an independent appraisal prompted a writedown of $100 million, followed by a further $41 million.
The NDP-initiated development was described by former provincial finance minister Gary Collins as a scandal on the same scale as the fast ferry fiasco.

"No cost was spared," Collins scoffed. "The only difference between this and the fast ferries is that this one doesn't move." But two years later the Liberals were back at the same location to shell out $70 million to acquire 305,000 square feet of the property as the Surrey campus of Simon Fraser University.

ICBC decided to offload the rest of the development, including 570,000 square feet of office tower and podium space, and 490,000 square feet of retail mall space, because it represented too much money tied up in a single investment, said Doug McClelland, media relations manager.

He said the proceeds will be reinvested to help keep ICBC's rates low and stable.