Today, PWC released its annual report of emerging trends within the real estate sector.
Here’s a summary of their findings:
Trends by Property Type
The condo sector is poised for success in 2018, with steady demand in most Canadian markets. Condo units appeal to young professionals in the downtown core, who prioritize proximity to the business center over square footage. Retired boomers and empty nesters also enjoy carefree condo living, close to urban amenities.
Single family homes are expected to yield a modest growth in 2018, according to the Conference Board of Canada. The county’s economy is only forecasted to grow by 2% this coming year, which will inhibited Canadians’ ability to buy larger, detached homes. The single family home industry is also expected to make a move towards multi family construction.
In Montreal, rental properties are performing well, because of Quebec’s low homeownership rate. Montrealers are more eager to move into centrally located rentals. In fact, the rental market is so strong in Quebec that many industrial and commercial developers are considering entering the market from other provinces.
Canada’s office market is expected to remain healthy in 2018. The national vacancy rate of office spaces dropped by 12% last year, with fewer new office constructions keeping the rates low.
Looking ahead, certain major markets in the Canadian industrial space are poised for growth, developed to meet the needs of an e-commerce driven world. Canada has seen a tremendous expansion in the logistics and distribution sector. Across the country, high ceilings and multi level industrial properties were reportedly sought after by interviewees. High wired facilities are also in demand, supporting increasingly automated distribution centres and warehouses.
With the growth of online shopping, the Canadian retail sector continues to grow. Retail centres are expected to transformed into destinations that cater to more needs than just shopping- rather, they will incorporate public spaces, services, cultural programming, events, and more.
Trends in Montreal
With a health economic momentum and a strong GDP growth, Montreal’s real estate market is expected to do well over the coming year.
As with other metropolitan areas, young professional Montrealers prefer central city living, where they can benefit from new amenities, and a small commute time. While living in the city, they are able to participate more easily in car-sharing facilities, cultural events, and professional networking.
Other than attracting millennials, institutional players are divesting older stock properties to focus on the senior market. Senior needs are putting pressure on owners of older buildings to compete by improving accessibility.
The Montreal office market is performing well, especially for Class A properties which cater to technological needs. One factor that will help commercial developers deliver technology demands, is Bell Canada’s investment of $854 million to expand its broadband network across Montreal. Owners of older commercial properties will need to refit and upgrade older properties to suit modern needs.
- Survey respondents rank Montreal the No. 3 market to watch in Canada for investment prospects, after Vancouver and Toronto.
- Montreal’s economy is expected to grow by 1.9% in 2018.
- Young Montrealers prefer condo living in the downtown core, where they can enjoy the benefits of a live-work lifestyle.
- The office market is performing well.
Best bets for 2018
Where should developers and investors focus their attention in 2018? PWC’s survey and interviews suggest the best bets can be made in the following areas:
With the scarcity of land, industry players see increased opportunity in redeveloping existing spaces for new mixed use real estate developments. Multi family residential in major cities are seen as promising opportunities, since demand is expected to stay strong.
With an increased focus on a centralized lifestyle, condo developers should focus on planning complete residential centres which include wellness, retail, entertainment, office spaces, and more.
Aging populations create more demand for senior housing and senior living facilities. More than half of all survey interviewees recommended investing into the “age-restricted housing” sub-sector.