Part two of a two-part series examining the landscape facing real estate lenders going into 2024. The first part can be found here.
If lenders could draft a fantasy real estate portfolio, industrial properties and purpose-built rentals would be among their top picks.
Older Class B office properties, though, aren’t getting snapped up nearly as high in a fantasy draft.
“Something like the Bentall Centre [in downtown Vancouver] would be considered of high value, high desirability and if it was coming up for renewal, lenders would look at that on a positive base,” said Carmin Di Fiore, an executive vice-president at CBRE Canada.
“Where you’re seeing the real issues … is in the B, B-minus and the C buildings. Older assets that don’t have the type of amenities and the quality that you get in a Bentall setup are where lenders are going to sit there and say, ‘I’m not sure I want to be able to renew this’ or they’re saying, ‘We need significant reduction in the loan to get it to where we’re comfortable with.’”
Shifting sentiments around office space and the “fog of work from home” mean this asset class is less popular compared with purpose-built rental or industrial properties, according to Di Fiore, who works in CBRE’s debt and structured finance team.
The hope is that local and federal incentives to build purpose-built rentals and multifamily housing will spur more development, according to a Nov. 27 report from CBRE Canada.
The majority of lenders surveyed in the firm’s new report said they intend to increase their budgets and expand exposures for purpose-built rental properties, while half the respondents said they will do so for industrial properties.
Fewer than half (42) per cent of lenders expect rent growth for industrial properties to return to historic levels within the next year, while 55 per cent of respondents reported low or no appetite to finance speculative construction in 2024.
Environmental, social and governance (ESG) strategies will also have an impact on lender activity in 2024.
Half of respondents said that they expect ESG to either significantly or moderately impact both debt availability and mortgage pricing. In addition, 23 per cent of lenders said they declined to bid on a real estate loan this past year due to the underlying asset’s ESG profile.
Sixty-eight per cent of lenders said they expect a property’s carbon footprint to impact the ability to secure a mortgage with competitive terms within the next one to five years, with 11 per cent of lenders reporting it is already happening and having an influence today.
“Banks and regulators are also picking up on this and basically are saying, ‘We’re going to adjust capital requirements and what you’re allowed to lend on based on your ESG performance,’” Di Fiore said.
“Now, having said that, we are slower off the mark compared to Europe but we’re going to get there. Lenders think that in the next 36 months-plus it’ll be far more significant in terms of how they evaluate loans or how they look at things.”
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
