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Increasing Finds
(August 2006)
Proposed legislation covering real estate transactions in Ontario, Canada is aimed at strengthening consumer protection by increasing fines for agents and brokers convicted of wrong-doing under the new Real Estate and Business Brokers Act.
Robust Demand For Housing
(September 2006)
The strength of Canada’s economy, coupled with strong consumer confidence and rising but moderate interest rates, continues to drive robust demand for housing across the country, says Royal LePage.
Resale
(October 2006)
Resale home sales activity in Canada’s major markets continued to soar in May, with sales activity breaking all previous records, and average price surpassing $300,000 for the first time ever, CREA says.
Existing Home Sales
(November 2006)
Existing-home sales were down in July, while home prices in many areas are slightly below year-ago levels, according to the National Association of REALTORS
Canadian Real-Estate Market: A good investement
(February 2007)
The Canadian real estate market continued to give investors good value for their money in 2006, with the total return of 18.6 per cent nearly double the 20-year-average of 9.1 per cent, according to the Canadian Property Index.
The index, which is published by Investment Property Databank (IPD) in the U.K. and the Institute of Canadian Real Estate Investment Managers (ICREIM), was just slightly below the record set in 2005 of 18.7 per cent.
"Yet again the 2006 story was an East vs. West affair," said IPD senior analyst Doug Rowlands. "Exceptional capital value growth in Alberta powered returns to near record highs."
Edmonton saw the highest property returns of the six major markets at 35.2 per cent, followed closely by Calgary which had 30.4-per-cent returns. Ottawa's returns in 2006 were lower at 12.6 per cent.
The office segment saw the strongest returns last year for the first time in nine years, with a total return of 21.4 per cent. Residential rental properties posted an improvement in returns but fell behind the other three categories with a total return of 14.9 per cent.
The industrial sector saw returns of 18.2 per cent, while the retail segment fell to 16.5 per cent after leading the index in the previous four years.
The ICREIM/IPD Canadian Property Index is based on data from pension funds, life insurance companies and real estate manager on more than 2,000 properties with a capital value of approximately $73 billion.
Ottawa Commercial Real-Estate
(March 2007)
The local commercial real estate industry honoured prime properties across Ottawa in the Building Owners and Managers Association of Ottawa's (BOMA) annual awards ceremony, with winner in most geographic areas in the city.
Sakto Corporation's building on 2745 Iris St., which houses Nortel's local microelectronics group and several government departments, won the Office Building of the Year (TOBY) award in the under 100,000 square feet category, while Minto Corporation's Enterprise Building on Laurier Avenue West won in the 100,000 square feet to 249,999 square feet category.
Bentall Real Estate Services LP won two TOBYs for the Clarica Centre in the 500,000 square feet to one million square feet category and for its Carling Executive Park property in the mid-rise suburban office park category.
SNC Lavalin ProFac Inc. and Public Works and Government Services Canada received the TOBY Earth Award for the Portage IV building in Gatineau.
Meanwhile, the Hurley Corporation won the association's Pinnacle Award for customer service, and Richard Doucette of SNC Lavalin ProFac Inc. was honoured as Volunteer of the Year.
Brookfield Properties's Guy Latremouille received the association's M. Patrick Gillin President's Award for his many years of service on the association's board of directors and in various BOMA Ottawa committees.
"These recipients are representative of the continued excellence in the field of commercial real estate, which is one of our region's largest industries," said BOMA president Ian Fisher in a statement. "The TOBY and Pinnacle Awards serve to highlight our members' outstanding efforts in the areas of teamwork, customer service and dedication to providing safe, comfortable workplaces for clients."
The TOBYs recognize "excellence in property management, operations, resource conservation, environmental awareness, leasing and building design, customer service and innovation."
The awards were given out in a ceremony on Friday at the Brookstreet Hotel.
Local Home Sales Pick Up
(March 2007)
Local home sales picked up in February, signalling the start of spring shopping, with 1,032 houses being sold by the Ottawa Real Estate Board last month.
That's month's figure for Ottawa compares with 764 homes sold in January and 982 homes in February 2006.
"The average number of days a home spent on the market dropped significantly from January to February, indicating that after the usual winter lull, the Ottawa housing market is picking up again nicely," said the board president Diane Hatfield.
Ms. Hatfield noted that the pick-up is likely because housing prices remain affordable in Ottawa despite rising average sale prices.
"The average sale price of a home in Ottawa continues to rise, but the inventory of housing available below the average price remains strong, allowing plenty of opportunities for first-time buyers to enter the market and take advantage of still-low interest rates," she said.
The average price of homes sold in February rose 6.6 per cent from a year earlier to $264,566. However, most of the gains came from the increase in price of single-family homes, which saw an average rise of 8.7 per cent to $288,273. Condominium prices saw an increase of only 1.2 per cent to $188,002.
Meanwhile, the slower growth in condo prices is spurring Ottawans to buy multi-family homes, with the number of condos being sold by the Board in February 2007 rising 15.1 per cent to 244 units. Single-family home sales only picked up by 2.3 per cent compared to the same month last year, to 788 units.
Local Home Sales up in first quarter
(April 2007)
Home sales in Ottawa in March stayed relatively flat from a year ago at 1,306 units, although month-over-month sales saw a 26.6-per-cent leap as spring sales started to pick up.
Members of the Ottawa Real Estate Board sold 0.9 per cent fewer houses from March 2006, when 1,318 sales were made.
However, there was a 5.3-per-cent increase in the total number of homes sold in the first quarter of 2007 as a whole, rising to 3,102 units from the same quarter last year.
"The traditionally brisk spring market got off to a great start in March, with the number of days a property spent on the market down significantly from February, coupled with an increase in inventory in the residential property class," said board president Diane Hatfield in a statement. "More people are selling, and consumers are buying those homes more quickly."
Condo sales rose 8.7 per cent to 274 units compared to March 2006, but the numbers weren't quite enough to offset the 3.2-per-cent drop in residential-class units to 1,032 from 1,066. Year-to-date condo sales jumped 10.8 per cent to 655 units, while single-family home sales increased 3.9 per cent to 2,447 units in the first quarter of 2007.
Meanwhile, the average home sale price rose 7.6 per cent from a year ago to $273,898. Both the prices of residential-class homes and condominiums jumped in March, with average condominium sale prices increasing 11 per cent to $199,384 and single-family home sale prices rising 7.9 per cent to $293,682.
Local Home Sales jump 8% in April
(May 2007)
Home sales rose by nearly eight per cent year-over-year in April as homebuyers benefited from below-average prices and condominium sales dominated the market, according to new monthly date from the Ottawa Real Estate Board.
The number of homes sold in April 2007 through the Board's Multiple Listing Service rose to 1,554 from 1,439 a year earlier. Home sales were boosted by a jump in multiple-unit home purchases in April, to 302 from 268 a year earlier, as well as by a 6.9-per-cent gain to 1,252 in single-family unit sales.
"Condo sales continue to lead the way in the Ottawa resale housing market," said Board president Diane Hatfield in a release. "Sales in that sector are up by more than 12 per cent over last April, proving that they are still a very popular choice with Ottawa homebuyers."
Meanwhile, the average home price rose by 5.9 per cent to $276,440. Average condo prices saw a steeper increase than single-family units, rising 10.6 per cent to $202,457. The average sale price of a single-family unit rose 5.6 per cent to $294,286.
"More home purchases made in April were priced below the average than above it, showing that consumers have plenty of affordable housing choices in the Ottawa area," said Ms. Hatfield.
Activity was stronger in the first third of this year than it was in the same period last year, with total home sales rising 6.1 per cent to 4,654 units. Condo sales from January to April 2007 jumped 11.3 per cent to 956 units, while single-family unit sales in the four months rose by a more modest 4.8 per cent to 3,698.
The average sale price for the four months rose by 6.6 per cent to $270,534 from last year, with the percentage gain in single-family homes only slightly higher than for condos.
Single-family homes sold for an average of $289,637 in the first four months of the year, up seven per cent from the same period last year, while average condo prices rose 6.7 per cent to $196,640.
Exec Homes
(May 2007)
Three million dollars an acre - or more!
That's the dizzying height to which land values have soared in the most sought-after residential neighbourhoods of Ottawa.
Rockcliffe Park is where Ottawa's most expensive homes are concentrated. But the most expensive piece of land for a private home is believed to be in the Glebe. That is, when the land cost is measured by the square foot or the square metre.
Cost of the land for the recently-built Glebe home was in the range of $4 million an acre. The buyers purchased much less than an acre. The lot measured 60 feet by 100 feet, which is about one-seventh of an acre. The buyers got 6,000 square feet of land at a price of more than $550,000.
The house, at 89 Glebe Ave., is owned by Larry Roueche and Claire Bennett. He runs DEW Engineering, an Ottawa firm that makes airport security and defence systems. The house is a very large, three-storey property that was recently assessed to be worth about $3.08 million.
That's the amount on which property taxes will be calculated this year. This year's taxes will be about $38,500.
The assessment makes it by far the most valuable home in the Glebe, and the 12th-highest assessed private home in the city.
The house is Ottawa's most spectacular example of building new homes in old residential neighbourhoods by using some of the land from existing homes.
The City of Ottawa encourages this practice, since it brings in more revenue from property taxes without any need to build new roads, sewers and schools. Stan Wilder, a senior city planner, described the house as "truly remarkable."
The land on which the house was built was severed from the lot of its next door neighbour, 85 Glebe Ave., a neighbourhood landmark built in the Spanish style. That house is now the residence of the Vietnamese ambassador.
Clarence Sheahan, a real estate agent with RE/MAX Metro-City Realty, is son of the former owner, Margaret Sheahan. He said land for the new property was about $95 a square foot - compared with a typical price in Rockcliffe of about $75 a square foot.
"You pay what you have to pay" for a piece of land on which to build a new home in Ottawa's most prized old neighbourhoods, Mr. Sheahan said.
Brent McElheran, an agent with Royal LePage Team Realty, said of the spiralling cost of land for new homes in the Glebe and Rockcliffe: "If people want it, they will pay. It's market-driven."
Very little land is available for new homes in Rockcliffe, Mr. McElheran said. He cited the recent example of a lot in Rockcliffe. It measured about one-quarter of an acre and was for sale for about $800,000.
Provincial property assessors are now putting a value of $3 million an acre on prime land in the old village of Rockcliffe. Technology multi-millionaire Michael Potter will pay taxes on an assessed value of $3.05 million on an extra acre of grounds he acquired in a deal he made to expand his Rockcliffe estate.
Philip Garel-Jones, another technology multi-millionaire, has been assessed at about $3 million an acre on two vacant lots he owns on Cloverdale Road in Rockcliffe.
This may explain why the likes of Terry Matthews and Leighton Powell - two others who became super-rich through technology - prefer to live on the outskirts of the city.
Mr. Matthews' 11-acre estate in Kanata is assessed at $5.27 million. Mr. Powell's 103-acre estate overlooking the Ottawa River in Cumberland is assessed at about $2.66 million.
Put another way, Mr. Powell is paying about $26,500 an acre for privacy while Mr. Potter is paying $3 million.
Changes in store for the core
(May 2007)
Tight and very stable for years, Ottawa's downtown real estate market may be in store for change in the coming months and years, some analysts suggest.
With two new buildings coming on stream soon, and a few existing anchor tenants moving to the suburbs or buildings of their own, vacancy could rise dramatically, with some office towers already dropping rates to attract new tenants.
However, it's possible that newly-announced buildings - such as Minto's new office tower being built entirely on spec - is simply a sign of confidence from developers in downtown Ottawa's growing real estate market.
Before that happens, however, landlords may have to brush up on their sales techniques following years of low vacancies for class-A office space.
"For years, (vacancy) has been in the low, single digits," said Bruce Wolfgram, a vice-president with the Ottawa office of J.J. Barnicke. "And in the class-A (offices), it was down the two to three per cent vacancy rates. That's very, very, low, and definitely a landlord's game."
Downtown, unlike Kanata which has recovered from vacancy rates that were near 30 per cent, remained a poster child of stability and the home of happy landlords through the worst of the tech wreck. But that could be about to change:
o The World Exchange Plaza, already scrambling to fill space vacated with EDS's departure for the Clarica Centre, must also soon fill two floors Telus will vacate once it departs for its own building, perhaps as early as the fall.
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o Manulife Place, at 55 Metcalfe St., dropped its rates per square foot to the mid teens earlier this year from "normal" rates near $30, raising eyebrows among competing landlords.
o The third and final phase of Oxford's Constitution Square complex, scheduled to open soon, still needs tenants to occupy about 25 per cent of it.
o Minto Developments' groundbreaking for its building at 180 Kent St. took place two weeks ago despite not having a single square foot pre-leased. The building is designed to the LEED Gold environmental standard.
"You put this all together, and you wonder if there's going to be all this new vacancy downtown," said Mr. Wolfgram. "Is downtown going to be in rougher shape?"
Perhaps, the landlords countered, it's simply a strong display of faith in Ottawa's marketplace.
Many insiders who spoke to the OBJ think Ottawa's property market will remain as hot as ever. Some are counting on the federal government to fill any voids, at least for the short term, as swing space once it begins refurbishing many of its existing properties.
"The business climate and real estate climate continue to be very vibrant," agreed Mr. Wolfgram. "Those (federal) buildings have to be (modernized), which hasn't been done in decades, which means those civil servants have to go somewhere while the buildings get renovated, regardless of who owns them."
Most property managers are oozing confidence, at least publicly.
"It's fair to say that there's a fair number of inventory coming on board in the next 12 months," said Dean Karakasis of the Building Owners and Managers Association (BOMA) of Ottawa. "From our perspective, it's always great that they have confidence in the market."
After all, he said, most of the space coming on stream is already spoken for.
Mr. Karakasis said if Minto was confident enough to proceed with construction without tenants, then clearly the market can support it.
"Minto is a large company, and they have good resources in analysing the market," he said. "If they're moving ahead, it's probably because they're comfortable that there's enough demand out there."
Greg Rogers, executive vice-president for commercial properties at Minto, agreed.
"We're that confident in the Ottawa market and in the business model," he said about plans for the 370,000-square-foot tower.
"Ottawa needs a new office building, that's the bottom line," he continued. Also, the federal government is growing and needs offices that meet Public Works' requirements."
With the environmental certification, Minto said it will meet strict environmental certifications, including relatively low power usage for utilities and using building materials from within 800 kilometres.
"Those together translate into what we believe is a need for a new building in the downtown," he said. "Ottawa is the second tightest class A office market in the country."
Minto, which doesn't state a preference in renting to either government or the private sector, does not anticipate problems leasing out all 19 storeys. Lower utility costs will translate into lower rents for tenants, Mr. Rogers said, unique rectangular floor plates will allow for higher density and more sunlight, and better building materials will lead to fewer fumes, less employee absenteeism and higher productivity.
Besides, he said, building without pre-leasing is not unheard of in Ottawa.
"(Constitution Square) had a similar plan to ours, in terms of going on spec," said Mr. Rogers. "They only have two floors left. And they're not even courting the government."
Angela Taggart, property manager for the World Exchange Plaza on O'Connor Street, also said she's not worried, even though two large tenants - EDS and Telus - have or will leave their premises.
Part of EDS's space has already be re-let to Oracle, Ms. Taggart said, and she expressed confidence that Telus's two floors will be rented out soon after it moves out.
"While new supply can affect the number of opportunities available in the marketplace, timing is the key," she said. "Just the idea of Minto building on spec would suggest that Ottawa's leasing market is healthy."
Over at Oxford Properties Group, part owners of Albert Street's Constitution Square, officials are getting ready for the third phase's grand opening at the end of the month.
"We are, at this point . . . almost 75 per cent leased, and we're pretty optimistic about the balance," executive vice-president Paul Brundage said about the $90-million building.
"The issue about downtown Ottawa has always been the scale of the marketplace: it's a relatively small market in comparison to other markets in the country. When you overlay on that the federal government . . . that is an even smaller aggregate tenant base.
"The (tech market) had a long run, came falling down quite dramatically following the tech meltdown, yet we're seeing that market having a strong resurgence. So that's a positive sign."
House prices still rising in most markets: CREA
(October 30, 2008)
The Canadian Real Estate Association says the falling average sale price nationally is a reflection of a decline in sales in high-priced markets and notes prices are still rising in a majority of markets.
The Ottawa-based group, which represents more than 100 boards across the country, said the average sale price of an existing home fell 5.4% in September to $289,916 from $306,347 a year ago. But it noted prices are actually up in 65% of the boards it represents.
"The recent price declines in the Canadian housing market reflect lower activity in some of Canada's priciest housing markets that had posted large price increases. Price declines in the U.S. reflect a massive oversupply of housing due to soaring foreclosures and overbuilding," said Calvin Lindberg, the president of CREA.
Vancouver, the most expensive market in the country, has had year-over-year sales declines in the 40% range and many real estate analysts suggest the results are skewing the national number.
CREA said the supply of new homes reaching the market is also shrinking. It said there were 230,107 new listings in the third quarter on a seasonally adjusted basis, down 3.1% from the previous quarter which was the highest on record.
Despite the drop in supply, CREA is forecasting the national number for home prices will continue to decline.
"Price declines in some of Canada's more expensive housing markets will outweigh further price gains in other markets and continue pulling the national average price lower the rest of year and into 2009," said Gregory Klump, chief economist with CREA.
Garry Marr, Financial Post
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