OUT-PERFORMING IN AB

Calgary listed as an “out-performer” in Canadian real estate market
Pace predicted to be moderately lower for Canada
By Mario Toneguzzi
Calgary Herald March 11, 2013

CALGARY — Canada is expected to embark on a gradual, modest, downward housing market adjustment over the next three years with a “measly” two per cent annual price gain over the next decade, says a study released Monday by TD Economics.

But the bank has also listed Calgary as an “out-performer” in Canada for the long-run rate of return on Canadian real estate. Compared with the national picture, Edmonton, Vancouver, Victoria and Toronto were also listed as out-performers for the future.

“With the slowdown in the Canadian housing market well entrenched, many are worried about the future value of their homes. This is not surprising as real estate is the largest financial asset most Canadians have in their possession,” said TD Economics.

“The housing market is prone to cyclical ups and downs and we should embark on a gradual, modest, downward adjustment over the next three years. We project a 3.5 per cent annual rate of return on real estate to prevail beyond 2015 – this is the long-run rate of increase for home prices in Canada. However, this pace will be moderately lower than they have been historically (5.4 per cent).”

Derek Burleton, vice-president and deputy chief economist with TD Economics, said Calgary had a run-up in prices before the recession and then a sharp decline during the recession.

“I guess prices didn’t come back too much but certainly sales fell back and now you’re getting a bit of a cyclical bounce,” he said, adding a long-term forecast takes into account key economic drivers like population growth and the potential of the economy to generate income.

“Based on some of the key drivers of growth, Calgary ranks right up there at the top and that should stand the housing market good stead. At least continue to drive above average price gains over the long run.”

The average MLS sale price in Calgary was $180,420 in 2000. That climbed to a peak of $423,770 in 2007 before dipping to $394,064 in 2009. From then, it has steadily climbed, reaching an all-time record of $428,644 in 2012.

Becky Walters, president of the Calgary Real Estate Board, said the Calgary market is really strong this year due to the in-migration it has been getting over the past 12 months.

“It’s not maybe as strong this year as it was last year but it’s certainly strong,” said Walters. “We’re seeing a nice steady growth. We’re seeing prices starting to come up a little bit not tons.”

For example, according to CREB, year-to-date until March 10, there have been 3,595 MLS sales in the city, up 4.66 per cent from the same period a year ago, and the average sale price has jumped by 9.23 per cent to $451,189.

However, at the national level, TD said a string of lacklustre performances over the next few years will mean that the annual rate of return for real estate in nominal terms will be a “measly” two per cent over the next decade, meaning home price gains should simply match the pace of inflation.

“Our research at REIN Canada is showing that for the coming five years, outperforming markets will be those based not in speculation or foreign investment, they will be those markets supported by underlying economics,” said Don Campbell, senior analyst and founding partner of the Real Estate Investment Network. “The Canadian real estate market is too broad and too diverse to paint with one story or byline and will become an increasingly regional story. Supporting economics such as increasing jobs, increasing population through migration — especially those areas which are attracting a younger, working age cohort — and increasing incomes will play a larger role in market demand and value than it has in the last five years.

“Despite Calgary and Edmonton’s value moves already experienced, they are both rated in the most affordable major centres in the country because average incomes are also higher than in most other regions. This, along with the younger age of in-migrants to these cities from other parts of the country, will be strong and supporting factors for these market for the coming years.”

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said in the Calgary region the average price in 2013 is expected to reach $423,000, up 2.6 per cent from 2012.

“The rate of growth is anticipated to be higher here than in many other areas of the country as the average resale price in Canada is forecast to increase by only one per cent in 2013,” he said. “Supply of homes in Calgary’s resale market has come down from a year earlier while sales have been fairly stable. The resale price in 2014 is forecast to continuing rising in Calgary, averaging $434,000.”

WORLD'S MOST EXPENSIVE APARTMENT BUILDING

Inside the world’s most expensive apartment building
By: Julie Zeveloff
Business Insider 13/03/15

London’s One Hyde Park is one of the wealthiest and most secretive residences in the world.

Apartments in the Knightsbridge complex cost more than $11,000 a square foot, nearly three times the typical price of luxury London real estate.

But relatively little is known about the people who own homes there. Of the 76 apartments sold in the 86-unit building, 64 are registered to corporations and just 17 are listed as primary residences, according to Nicholas Shaxson, who wrote a great exposé of the building in this month’s Vanity Fair.

Even so, Shaxson and others have found out who some of One Hyde Park’s owners are. Get to know some of the sheikhs, oligarchs, and global rich who own apartments at the world’s most expensive apartment building.

One Hyde Park, located in Knightsbridge, is adjacent to Hyde Park and the Mandarin Oriental hotel.

The per-square-foot price of a unit at One Hyde Park is 10 TIMES the price of average residential real estate in London, and nearly three times more than luxury real estate in the city.

Among other perks, there’s a stainless steel ozone pool, an entertainment suite, a golf simulator, and a spa run by the Mandarin Oriental.

There are also three retailers on site: Rolex, McLaren, and Abu Dhabi Islamic Bank.

Security in the building is insane. There are panic rooms, bulletproof glass, and guards trained by British Special Forces, according to Vanity Fair.

One Hyde Park was created through a joint venture between high-end real estate developers the Candy brothers and Sheikh Hamad bin Jassim bin Jaber Al Thani, the Prime Minister of Qatar.

The owners were some of the first people to buy into the building. The Sheikh paid $64 million for his triplex, which Vanity Fair calls “the best apartment of all.”

Christian Candy reportedly has two apartments that cost $85 million. And Nick Candy owns an 11th-floor duplex penthouse.

In 2010, Ukrainian oligarch Rinat Akhmetov paid $216 million for a penthouse in the complex. It’s the most expensive home ever sold.

Two apartments worth $43.7 million are owned by Professor Wong Wen Young, likely the Taiwanese business tycoon Winston Wong Wen Young.

In April 2011, Australian pop star Kylie Minogue dropped $25 million on a three-bedroom flat in the complex.

Mohammed Saud Sultan al-Qasimi, head of finance for the government of Sharjah, part of the UAE, reportedly paid $18 million for his apartment.

At least one apartment is owned by Russian real-estate tycoon Vladislav Doronin, who is dating supermodel Naomi Campbell.

Nigerian billionaire Folorunsho Alakija is believed to have spent $123 million on several apartments there, all supposedly registered under the name Rose of Sharon.

Vladimir Kim, a copper baron and the wealthiest man in Kazakhstan with a net worth of $2.3 billion, also owns a home there.

And Rory Carvill, an insurance entrepreneur and chairman of U.K. based R.K. Carvill & Co. Ltd. reportedly paid $33.5 million for his residence and additional storage space.

Two apartments held by Irina Viktorovna Kharitonina and Viktor Kharitonin, presumed to be a co-owner of Russia’s largest domestic drugmaker, cost $49.8 million.

Want to live in One Hyde Park? You’re in luck—a 5-bedroom flat there recently came on the market. At $101 million, it’s the most expensive apartment currently for sale in London.

Photos are of apartments currently for sale at One Hyde Park; not actual residences.

BOOM BOOM POW

Alberta economy continuing its 'impressive boom'
By Mario Toneguzzi
Calgary Herald March 19, 2013

CALGARY — Any dark clouds that are currently hanging over Alberta will clear by 2014, paving the way for strong business and consumer activity, says a report by RBC Economics.

The bank’s latest Provincial Outlook, released Tuesday, said the province’s economy will continue its “impressive boom” through 2013, after leading the country’s economic growth in 2012, despite facing challenges.

RBC forecasts a provincial real GDP growth rate of three per cent due to strong crude oil production as well as high levels of capital investment, employment and population growth. This will be second in the country behind the 5.1 per cent growth expected in Newfoundland & Labrador.

RBC is predicting Alberta will lead the country in economic growth of 4.2 per cent in 2014.

In December, RBC forecast growth of 3.5 per cent this year for the province. The forecast for 2014 has remained the same.

“Even though the province recently announced a $2 billion budget deficit, Alberta is unquestionably in the midst of an impressive economic boom – particularly with capital investment fuelling manufacturing and wholesalers’ sales. Attractive employment opportunities are also bringing new migrants to the province, boosting population growth and in turn, consumer spending,” said Craig Wright, senior vice-president and chief economist at RBC. “As the economy continues to thrive across the majority of key industries, Alberta will remain at the top-end of Canada’s economic growth rankings this year.”

Economic growth in the province in 2011 was 5.1 per cent followed by 3.5 per cent last year.

Todd Hirsch, senior economist with ATB Financial, said Alberta’s economy is moderating somewhat.

“So I think we will see probably a slower year for growth than what we saw in 2011 or 2012,” said Hirsch. “A lot of that of course prompted by those softer energy prices and maybe a little bit of pullback by the provincial government. But I think we’re still going to see kind of a nice moderate healthy level of growth of around 2.5 to three per cent.

“Going forward beyond that it gets trickier and we don’t really do forecasts beyond 2013 but I would still see 2014 as a pretty good year ... It’s not going to feel quite like the boom years of 2006, 2007 either. We’re just going to have nice healthy moderate growth.”

RBC said there are a few weak spots in Alberta’s economic outlook. Investment intentions in the oil and gas sector are essentially flat for 2013. RBC said Alberta’s energy developers’ plans are being weighed down by rapidly rising energy production in the U.S., pipeline bottlenecks and the ‘bitumen bubble’, all of which contributed to lower crude oil prices in Canada relative to global benchmarks late in 2012.

“Weaker than expected oil prices put a multibillion dollar hole in Alberta government’s revenues, and led to a 2013 provincial budget that detailed renewed public sector spending restraint,” said Wright. “Still, any pullback in capital spending will be short-lived as pipeline issues are addressed and crude oil price relationships normalize.”

RBC trimmed its real GDP growth forecast for Canada to 1.8 per cent through 2013, following softer-than-expected growth in 2012. For 2014, it is forecasting 2.9 per cent growth across the country. In December, it forecast growth of 2.4 per cent this year and 2.8 per cent in 2014.

“After boasting a relatively strong economic performance over the past several years, Canada’s economy hit a speed bump in late 2012,” said Wright. “That said, financial conditions continue to support growth. As confidence recovers, business spending should accelerate, albeit at a less rapid pace than we saw in the early days of expansion.”

Resale pace rises for condos

February marked significant year-over-year gains in resale Calgary condo apartment sales, rising by 13.4 per cent.

Figures from the Calgary Real Estate Board show resale condo apartment sales marked 279 deals last month compared to 246 in February 2012.

Condo townhomes also saw an 8.7 per cent rise in sales, with 223 sales in February compared to 205 during the same time last year.

Sales may have been helped by a tighter single-family housing market.

“With less selection in the single family market, particularly at the lower price ranges, more consumers are turning to the condominium market,” says CREB chief economist Ann-Marie Lurie in a news release. “Throughout the downturn there were more single-family homes priced under $400,000.”

However, over the past few years the number of new single family listings in this range represents a declining share of the market, leaving consumers looking for more affordable products.

Condo prices have grown as sales grow and total inventory shrinks. The condo apartment benchmark price was $252,900 in February, a six per cent increase over the previous year of $238,700.

The benchmark price is based on a formula that uses various factors to ensure accurate comparisons.

Townhouse condo benchmark prices grew as well by 4.6 per cent year over year to $283,000 in February from $270,500 the year before.

“While the current price gains are a sign of recovery, the unadjusted condominium apartment and townhome benchmark prices still remain 14 per cent below the peak levels,” says Lurie.

Such prices have not been adjusted to take into account seasonal factors.

The area of Calgary that saw the most sales activity last month was Zone C, roughly Calgary’s southwest, with 269 sales averaging $327,521 and 45 days on market.

Within this zone, Connaught was the hottest neighbourhood for sales, with 27 transactions at an average of $313,514.

Last month, Zone A in the northwest had 135 sales, averaging $322,645, while Zone B in the northeast had 32 sales averaging $178,939. Zone D, in the southeast, had 66 sales averaging $271,767.

DID YOU KNOW?

One resale apartment condo priced at more than $1 million wassold in February, down from two such units during the same month last year., says the Calgary Real Estate Board.

Sales of townhomes in this price range increased compared to 2012, with four sales in Feburary compared to one during the same month last year.

Visit creb.com for more information.