Residential real estate isn’t the only over-valued market, at least according to PriceWaterhouse Cooper who issued a report Monday for the Canadian commercial real estate market:
“We’re very pessimistic, and we think there are going to be big issues in the Canadian real estate market,” Holly Allen, managing director for PwC’s real estate practice in Canada said in an interview.
“We think there are going to be foreclosures and default situations on some of the buildings.”
Allen said Alberta is particularly vulnerable, due to an oversupply of product and weak demand driven by tumbling prices for natural gas, which represents a significant portion of the province’s energy industry.
The report blames scarce money — and therefore limited buyers — for the sector’s woes. As well, it said, investors’ appetite for commercial mortgage-backed securities has dried up.
“The credit crisis and ensuing recession have dragged commercial real estate markets into very trying times, marked by value losses, rising foreclosures, and reduced property revenues,” Frank Magliocco, leader of PwC’s real estate practice in Canada, said in the report.
We seem to be facing a pessimistic outlook in many sectors, yet residential real estate here in Vancouver has defied expectation and had a mini-bounce lately. Will the commercial sector likewise defy expectation?
Full article in the Vancouver Province.
