Canadian property market tide shows sign of turning
Canadian developers look to well-heeled Asians to aid recovering economy
A vacation home in one of the world's most coveted recreational playgrounds is fun to have during good times, but one of the first things to go - along with the yacht and the fancy weekend wheels - when the economy goes pear-shaped. Even the mighty Canadian Rockies, for all their rugged beauty and appeal, did not escape the global downturn.
Alberta and British Columbia, the states straddled by the famed alpine ranges, are not alone. Across Canada, prices have contracted in many of the popular winter and summer resort areas, according to a new report.
But data from the RE/MAX Recreational Property Report suggests the tide is turning again. Affordability factors have spurred greater demand for vacation homes this year, with sales ahead of last year in 70 per cent of 33 markets surveyed nationally. Sales were on par with 2011 in only 6 per cent of the surveyed markets.
"Canadian recreational property markets have been reinvigorated, with softer values, increased selection and a rebound in consumer confidence," the report says.
Noting that greater affordability was due in large part to rising inventory and low interest rates, downward trending in starter prices was reported in 49 per cent of markets, while 33 per cent experienced no change. Nineteen per cent posted a rise in starter values year over year.
In Canmore, the region in the RE/MAX report covering the Rockies, recreational areas are "still feeling the pinch". On the upside, inventory is "ample", and quality product is "beginning to move". It notes that starting prices are down marginally year on year, making today's climate "one of the most affordable in recent years". Buyers are beginning to take note, cherry-picking well-priced condominiums near the ski hills, according to the report.
"While buyers are still cautious, they're motivated," says Elton Ash, regional executive vice-president of RE/MAX Western Canada. "Current market conditions have placed them firmly in the driver's seat. While the more favourable climate has factored in, activity has also been fuelled by pent-up demand that's been building since 2008, when many began waiting it out on the sidelines. Opportunity does exist. Canadians love a good deal, and there's no question that there are still some to be had across the country."
Michael Polzler, executive vice-president of RE/MAX Ontario-Atlantic Canada, says there are subtle differences on the recreational property front this year. "The gains are more widespread, affecting more markets and regions. Affordability has provided some serious stimulus, but renewed consumer confidence is the true driver. Buyers will simply not move forward if any doubts exist - economic or otherwise. So the demonstration of confidence we see today bodes well for the future."
The RE/MAX report shows values in Canmore recreational property have fallen 34 per cent since the downturn. Julian Sedgwick, director and head of business development at Savills, says the drop is more like 15 to 20 per cent in Alberta, "but has come back to pre-recession levels according to our information". Particularly in the Canmore area, "property values are rising".
"The market took a hit during the financial crisis, but we have seen positive growth for new homes in the area and we have been advised the residential market will rise over the next five years by 25 per cent, if not higher," Sedgwick says. Alberta is a cash-rich area with its resources, he adds, and this is pushing the residential market.
Amid these green shoots of recovery, a new five-star recreation resort at the gateway to the Canadian Rockies was launched in Hong Kong in June. The Residences at Silvertip Village are part of a master-planned, 223-hectre mountain resort near Banff National Park in Canmore. As far as recreation for the well-heeled goes, it has all the bells and whistles: championship golf courses; tennis courts; swimming pools; an ice rink; and easy access to Canada's most popular ski resorts and outdoor destinations.
Targeting Asian investors, Guy Turcotte, CEO of Stone Creek Resorts, developer of the project, says Canada "is ripe for investment by today's Asian elite". "The Residences at Silvertip Village offer all the luxury and appeal of the most exclusive North American and European mountain villages, but with the added security of the sound Canadian and energy-backed affluent Alberta economy and a location known for its pristine, untouched beauty."
Sedgwick expects local interest will be strong among Asian investors looking to diversify their portfolio. "Alberta is a secure and fundamentally solid Canadian real estate market. Property values are rising, with positive cash flow potential exceeding normal market returns."
The real beauty of Canmore is the "awesome scenic amenities". "For investors there are two potential tenants' streams - the vacationers and long-term renters. This market has a lot to offer Asian investors as their economy continues to boom."
Featuring traditional architecture, The Residences at Silvertip Village have 360-degree views towards Mt Lady Macdonald and across the valley to the Three Sisters and Rundle mountain peaks.
Owners can use the Stone Creek Resorts concierge service for arranging wilderness adventures in the region ranging from fishing to helicopter skiing.
Scheduled for completion in 2015, the initial launch comprises 41 studio, one-, two- and three-bedroom suites in The Lancaster Residences Building, and 47 units in The Sienna Residences Building. Units range in size from 500 to 2,000 sq ft and prices start at C$550,000 (HK$4.2 million). The village is located 75 minutes west of Calgary International Airport. Details: [email protected]
RE/MAX offers a luxurious half duplex whose impressive entertainment areas include a solarium with fireplace, and a sunken patio offering spectacular views of mountains and the wildlife reserve adjoining the home. The master bedroom with en suite has its own fireplace, and a hot tub on the balcony. The property at 1089 Wilson Way, Canmore, is listed for C$987,000. Details: [email protected]