RECESSION-resistant Vancouver, apparently one of the most liquid real estate investment markets in North America, is regaining its popularity with Hong Kong investors. While the last few years have seen the territory's investors look for opportunities closer to home, the apparent overheating of the Chinese market is luring Hong Kong dollars back to Canada, widely regarded as a ''safe haven'' for real estate. Although Vancouver has not escaped a general correction in real estate values, which accompanied slowed economic growth, prices have tended to remain steady. A key reason is that, during the building surge of the late 1980s, most of Vancouver's sub-markets were restrained. Where supply and demand were in balance, activity had been high. Technically part of the Pacific Rim, Vancouver has been a magnet for overseas Asian money, which has poured into the high-end institution-dominated property market. While local investors are the most frequent buyers, the flow of immigrants into the province of British Columbia has heightened retail spending and increased the demand for new housing. In addition to the injection of immigrants' incomes and overseas money into the Vancouver economy, strong exports have buoyed the region and held employment positive throughout the recession. Vancouver's residential market has shown strength and security with investment yields at a steady eight per cent for the last three years. Although initial returns may not be high, the possibility of capital gain, together with expected rises in rental income, more than compensate. Demand depends on price level, and exceeds supply for properties under C$5 million (HK$29 million). The opposite is true at the top end of the market. Fewer high-priced buildings have been purchased, because of the large equity requirements and the need for domestic investors to be widely diversified. As a result, many quality buildings are competitively priced. Prices for apartment units are about C$135,000 in west Vancouver, and C$85,000 in the north, with the most expensive, C$170,000, in the Kitsilano area. Despite strong demand, owners are unwilling to sell because of the negative tax implications and absence of comparable alternative investments. The condominium market is the best-supplied sector as high land values have not made building other forms of housing feasible. New developments in this segment will increase supply in the medium term, and eventually push up average rentals, because condominums are generally at the high end of the market. The rental market in greater Vancouver remains one of Canada's healthiest, with only two per cent vacancy rates. Demand has been sustained by high immigration and high house prices, which force many to rent. Growing at five per cent per year on average since 1987, rentals are among the country's highest, averaging C$600 per month for one bedroom units. Outperforming all other markets and, second only to Victoria, Vancouver office space activity has been particularly strong in the suburbs. Many companies have relocated away from the city centre and closer to employees. This movement has softened vacancy rates to about 8.3 per cent and, in some sub-markets, less than six per cent. Absorption has been positive in Richmond, Burnaby and Surrey since there is only moderate new supply and effective rates are above the same as those in Vancouver's centre: investment here remains a stable source of income. Information supplied by Colliers Jardine In the city centre, slow leasing caused moderate absorption, on track for just over 400,000 by the end of the year. Vacancy rates have risen, forcing landlords to drop rentals. The retail investment market has continued to trade well, with prices holding near pre-recession levels and low vacancy rates of 4.1 per cent. But traditional investors have been cautious as retailing patterns are changing. Huge warehouse and discount stores are becoming popular, but the high land prices and unsuitable topography in Vancouver have so far constrained the development of these outlets. Growth is in areas of more affordable land and rising population, such as Richmond, where new specialist shopping centres have been successfully targeted to Asians. In general, the limited number of new retail outlets has meant higher demand for existing buildings.