2 November 2010
The report says Canadian property owners and financial institutions are in a much better position than the ones in the U.S. markets. Moreover, the employment level is rising, the banks boast sound balance sheets – all these facts bring even more confidence that the local market can escape the problems faced in the U.S. But in the same time the respondents say a weak U.S. dollar can influence Canada, especially hurting Ontario industrial markets.
“The main difference for Canada is the sound condition of its banks,” – said Chris Potter, leader of the Real Estate Tax practice for PricewaterhouseCoopers Canada. “There are no distressed banks in Canada and just few distressed owners and sales. Today, when interest rates are increasing and banks tighten their requirements, a recent home buying spurt can fall down, particularly in Ontario and B.C., where the purchaser were in a hurry before HST implementation”.
Another important thing is that investment opportunities can become limited. The deal is that institutions dominate the major central city markets, holding on to assets instead of trading. Here Emerging Trends respondents explain the strategy: they believe it’s a good time to buy, but do not want to sell. In such environment many Canadians will join the U.S. markets, where they might find more opportunities.
Canada’s capital market is considered to be one of the world’s healthiest. On the whole, in 2011 Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital.
Holly Allen, leader of the Real Estate Deals practice for PricewaterhouseCoopers Canada, said: “Canadian real estate industry didn’t get overleveraged. Moreover, the markets never suffered any interruption of credit availability. In addition to it, Canadian banks successfully combine the typical risk aversion with relatively stringent government regulation”.