Kelowna, B.C./Sept. 24, 2015 – In much of Western Canada, the fall in oil prices led to slower activity in the commercial property markets in the first half of 2015. In Greater Vancouver, however, the first half of the year saw a 14 per cent increase in total sales over the same period in 2014. The second quarter of the year, in which there were 591 sales, was the busiest quarter for commercial sales in the past five years.
“While commercial real estate activity in most of Western Canada has been dampened by the drop in oil prices, investor confidence has remained high in Greater Vancouver,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Land is in highest demand from local companies looking at long term opportunities.”
Continued low interest rates and high investor confidence drive demand in the Vancouver commercial property market, where land is the most in-demand property type. Most investors are local with some foreign investment as well. Long-term investors, primarily smaller developers, are driving demand for raw land in the suburbs. With the current low interest rates, developers view these purchases as safe long-term investments.
The impact of the drop in oil prices was felt most strongly in Edmonton and Calgary. In Edmonton, the total number of commercial and land sales was down nine per cent year-over-year in the first half of 2015. The overall value of those sales was down 13 per cent, dipping below $1 billion at half-year for the first time in three years. In Calgary, the downtown office market experienced the greatest impact from downsizing in the energy sector. Average net rents decreased approximately 19 per cent year-over-year; the average vacancy rate of all classes was approximately 13 per cent.
“Until oil rebounds, the markets in Alberta’s largest cities are expected to remain in a down cycle,” said Ash. “However, there is still demand for good investment properties in these markets. Significant development is currently underway in Edmonton, and Calgary continues to attract foreign and domestic buyers, prompting optimism for long-term growth and stability.”
In Regina and Saskatoon, while the drop in oil prices has affected the commercial property market, the impact hasn’t been as significant as in Calgary and Edmonton. The diversity of Saskatchewan’s economy, in which agriculture, potash, trucking and government are all significant employers, has mitigated the overall impact of falling oil prices.
In Winnipeg, a limited number of commercial properties for sale resulted in greater activity on properties that would typically be viewed as less desirable. Not until there is a significant interest rate hike is it expected that a healthier balance of supply and demand will come to the market.
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Forward-Looking Statements:
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding the future performance of the housing market, the Company’s financial and operational outlook, the Company’s belief that business fundamentals remain strong, as well as other statements regarding the Company’s strategic and operational plans.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward looking statements. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real
estate market, including changes due to interest rates and availability of financing, (3) the Company’s ability to attract and retain quality franchisees, (4) the Company’s franchisees’ ability to recruit and retain agents, (5) changes in laws and regulations that may affect the Company’s business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX brand (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in the most recent Form 10-K filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
