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Colliers Residential MarketShare Q2 2011

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Colliers Residential Q2 (Second Quarter) Report on New Multi-Family Developments

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Colliers Residential MarketShare Q2 2011

  1. 1. MarketShareSECOND QUARTER 2011A COMPREHENSIVE ANALYSIS OF THE RESIDENTIALREAL ESTATE MARKET IN THE VANCOUVER LOWER MAINLANDAugust 2011
  2. 2. TABLE OFCONTENTS WELCOME TO MarketShare 1 RESEARCH METHODOLOGY 2 OVERALL – MARKET SUMMARY 3 MARKET SUMMARIES Vancouver – Downtown 4 Vancouver – West 5 Vancouver – East 6 Richmond/South Delta/Tsawwassen 7 Burnaby/New Westminster 8 North Shore: North Vancouver & West Vancouver 9 Tri-Cities: Coquitlam, Port Coquitlam & Port Moody 10 Ridge Meadows: Maple Ridge & Pitt Meadows 11 Surrey Central/North Delta 12 South Surrey/White Rock 13 Cloverdale/Langley 14 WHAT TO WATCH 15SECOND QUARTER 2011
  3. 3. WELCOME TOMarketShareAs our team worked through the process of creating the Finally, having worked in real estate most of my career I have had the privilege of working in and living in Vancouver while simultaneously beinglatest edition of MarketShare the media was buzzing involved in projects throughout the world. I appreciate the benefit ofwith stories on the US debt ceiling crisis and the global having a global perspective informed by rich and ongoing dialogue witheconomy - I think I have definitely had enough CNN for my global colleagues in the business. My colleagues continue to bethe summer. impressed with our market and offerings and continue to be proactive in promoting Vancouver projects in Asia with a strong focus in China. OurThe US is still a major global economic force and continues to draw more long term view is that this market will be sustainable for the foreseeablethan its share of attention and concern when storms occur. However, the future and we are investing in infrastructure to support this view. Wenumber of conflicting view points out there with respect to the seriousness have commenced work on a website in China that will feature Canadianof the situation and the probable impacts create a sea of confusion. What properties with an emphasis on the Vancouver and Toronto markets. Indoes seem certain is this: there are significant economic problems in the US addition, we are also developing a newsletter and electronic magazinethat will have to be addressed in the coming years. Will it affect our market? which will showcase select Vancouver properties and be distributed toIt may have a short term effect on some buyers’ confidence but overall our database as well as our immigration and banking partners. We areunless there is a complete collapse the impact on our market will be also establishing a Private Buyer’s Service abroad to coordinate theminimal. On the other hand, if there were similar challenges in Asia and interest we are generating and help funnel these prospective buyers toChina in particular we would see a negative effect on our local market. projects locally. These investments will be leveraged by our existingIn my view, there is no reason to believe Chinese immigration and buying international clients and will be offered more broadly in the future.won’t continue to influence our market for the foreseeable future. It would We are in uncertain times globally, but have a real estate market locallytake a very severe turn in government policy towards immigration to negate that is very much envied. Our long term view of this market remainsthis market trend. Since we have been producing MarketShare demand unchanged…”we wouldn’t want to be anywhere else.”from this market has continued to increase pricing in select markets.However, this demand has primarily impacted a limited number of sub I hope you are enjoying your summer and taking time to appreciate familymarkets in the Lower Mainland. There is continued demand for all product and friends. And, as always I hope this edition of MarketShare istypes in Vancouver - West, Richmond and Metrotown and for detached enjoyable and informative. We welcome your thoughts and opinions.homes and townhome product in South Surrey.From an overall market perspective the lower mainland market continues toimpress. I must admit upon reading the data collected on the past quarter’ssales performance my first instinct was to check it again. The pace of sales Greg Ashleywas simply astounding. To date nearly 80 percent of last years total volume PRESIDENT AND MANAGING PARTNER,has been achieved. Congratulations to all the developers who enjoyed this COLLIERS INTERNATIONAL RESIDENTIAL MARKETINGsuccess. We know full well the countless hours that go into making a projecta success. Incidentally, the impact of these successes in many areas likeMetrotown warrant additional study independent of the broader market areathey encompass, i.e. Burnaby/New Westminister. As development evolves inthese “micro” communities the gap in pricing and product offering mayvastly change in contrast to the surrounding areas. This trend may alterhow we need to view the market and produce this report.SECOND QUARTER 2011 1
  4. 4. RESEARCHMethodologyUrban Analytics (UAI) is the source for analytical CONTEMPLATED MULTI-FAMILY PROJECT DATA UAI also continuously monitors new multi-family developments beinginterpretation of relevant real estate market data, trends contemplated in the various markets in the Lower Mainland to determineand strategic recommendations. Our client-focused the level of potential new supply in each area. For the purposes of theservice model determines the information required, MarketShare publications, UAI contacts various municipal planningthen collects and interprets the data in a timely manner departments along with developers (and/or their representatives) ofenabling clients to make informed strategic decisions. proposed new developments to determine the anticipated timing of their approval and marketing launch.Urban Analytics Inc. (UAI) was engaged by Colliers to provide aggregatedata on the multi-family residential real estate market in the Vancouver MULTI-FAMILY PROJECT DATA – RESALELower Mainland. The resale market provides an important barometer from which to assess demand and determine pricing for new home projects. Accordingly, UAIThe methodology used to collect the data was as follows: closely monitors the resale market for multi-family homes in order to identify trends that are relevant to the new home sector. However, theGENERAL PARAMETERS breadth and depth of product for sale can create findings that are lessVancouver Lower Mainland refers to the area from West Vancouver to than helpful to the new home developer. As a result, UAI recommendsAldergrove. At the present time, we have excluded Abbotsford, Chilliwack, studying only product that is aged ten years or newer and valued at lessand Mission. And, given the focus on the multi-family market we have than $1.2 million. While it could be argued that limiting the analysis toexcluded single family home sales from our data collection efforts newer product (i.e. five years or newer) would be more relevant to theMULTI-FAMILY PROJECT DATA – NEW HOME SALES new home sector, we believe this would limit the sample size andUAI takes a dynamic approach to collecting multi-family new home sales potentially skew the data towards a specific type of product available in adata. The primary method used to collect information is a personal visit to small number of specific buildings/projects. In all instances active saleseach project being actively marketed. In addition to collecting current sales range quoted in tables is defined as “The active sales range in which 75information, UAI representatives engage on-site sales staff to determine percent of sales of this product type occurred”.additional relevant information such as incentive offerings, traffic trends andactive buyer profiles. In all instances active sales range quoted in tables is We hope you find this aggregate data combined with Colliers’defined as “The per square foot sales range in which 75 percent of sales of this analysis, observations and opinions thought provoking.product type occurred”. Michael Ferreira PRINCIPAL, URBAN ANALYTICS INC.SECOND QUARTER 2011 2
  5. 5. OVERALL – SUMMARYVANCOUVER LOWER MAINLANDSales of multi-family residential real estate rapidly accelerated in the Second overall compared to the First Quarter of 2011. However in comparison to theQuarter of 2011. A total of 4,839 units were sold in the Second Quarter of 2011 Second Quarter of 2010 active listings are down approximately 13 percenta dramatic 85 percent increase from the same period in 2010 and surpassing on aggregate even with a 9 percent increase in townhome listings taken intothe most active quarter in 2010 by a whopping 78 percent. When compared account. Overall the first quarter sales were distributed across all productwith results in the First Quarter of 2011 sales were up 91 percent. To date, types accordingly:7,366 new units have been sold or 82 percent of last year’s total volume. HIGH RISE LOW RISE TOWNHOME TOTALSNew high profile projects in Vancouver - Downtown, Vancouver - West, Total Sales 1,009 644 872 2,525Vancouver - East, Richmond, Metrotown, Coquitlam and New Westminster Total Active Listings 1,929 1,466 1,404 4,799drove the pace supported by steady absorptions of inventory in most areas.Even with the number of launches inventory only increased approximately 12 THE QUARTER AHEAD:percent over the First Quarter of 2011 to 7,752 units. This is approximately 36 Local and Asian investors were active at all high rise successes in thepercent more inventory than was on the market in the First Quarter of 2010. Second Quarter of 2011. End users were very active at new low rise and townhome offerings in more suburban areas such as New Westminster,NEW HOME MARKET: Burquitlam and South Surrey. This trend is expected to continue in the fall.As indicated in the table below, in the Second Quarter of 2011, 56 percent ofsales occurred at high rise projects which is a 13 percent increase compared Towards the end of the Second Quarter concerns about the market emergedto the First Quarter of 2011 but a 7 percent decrease compared to the Second based on launch results that were less than market expectations in a limitedQuarter of 2010. Low rise sales represented 27 percent of sales which is number of locations, However, significant successes in the later portion ofdown 2 percent from the previous quarter. Townhome sales formed the June somewhat eased these concerns. That being said, recent economicremaining 17 percent of total sales which decreased 11 per cent from the First events in Europe and the US has resulted in a resurgence of “bubble” talkQuarter of 2011 but only 1.5 percent less than Second Quarter 2010. and developer sentiment seems more cautious than it otherwise might be on the heels of such a strong quarter.For the fifth consecutive quarter inventory has increased as developersshowed confidence and continued to bring new offerings to market. And, The quarter ahead is typically the slowest quarter of the year as itactive projects increased again this quarter albeit by a moderate 9 percent to a encompasses summer, a season during which investors tend to be lesstotal of 279. active locally and with sales centre traffic slowing due to summer vacations. That said, we do expect sales to meet or modestly exceed absorptionsOverall the second quarter performance was astounding across all product achieved in the Third Quarter of 2010 - 1,649 new multi-family sales weretypes as indicated in the following table: generated in that period. HIGH RISE LOW RISE TOWNHOME TOTALS Total Second Quarter Sales 2,729 1,313 797 4,839 Total Inventory 3,998 2,521 1,233 7,752 Total No. Of Projects 90 94 95 279 W. Scott Brown SENIOR VICE PRESIDENT, WESTERN CANADARESALE MARKET: COLLIERS INTERNATIONAL RESIDENTIAL MARKETINGIn the Second Quarter of 2011, an estimated 2,525 resale multi-family homeswere sold which represents a 61 percent increase over the First Quarter of Note To Reader - At the end of this report we have included a commentary on ‘What to Watch’ and invite you to read our thoughts on the future of the Lower Mainland market. In coming2011 and a 51 percent increase over the Second Quarter of 2010. More editions, we will provide additional insight to the market through our ‘What to Watch’specifically high rise sales were up 30 percent, low rise sales were up 76 commentary, critiquing our earlier assumptions and sharing your views.percent and townhomes sales were up a whopping 80 percent. Active listingsfor all product types were moderately up resulting in a 15 percent increaseSECOND QUARTER 2011 3
  6. 6. MARKET SUMMARYVANCOUVER – DOWNTOWN The ‘green light’ rating for the Vancouver - Downtown market is a tentative one. As the two most recent project launches illustrated, success in this market area is largely dependent on whether a project appeals to the local investor and Chinese buyer group. While Concert sold nearly 80 percent of its SALT project at Hornby and Drake, Cressey achieved more modest absorptions at Maddox.NEW DEVELOPMENTS - Q2 2011MARKET HIGHLIGHTS: Q2 NEW RELEASES AND PROJECTED Q3 NEW RELEASES t ll S nS we* The success of Concert’s SALT illustrates nm a Bid De Me CANADA St PLACE that there is demand for condo units without ero W lvi lle St Ge ard Projected Q3 C St org parking as long as they are priced ola ia Q2 release Nic St St Du ns Co appropriately relative to comparable units Ha Bute mu W rd ov rw ir S Ha a oo Ne W sti St Water dS t t t Pe t olaS nS lso n ng with parking. Nic ug hto Pe Co mo nS t de rS sS t o t t Br sS n dra xS rvi ll S t Je t t* There are now six completed projects with a teS HIGH RISE Bu St St St rn by rds K combined 76 units of standing inventory. Pa low Ho St St ha St cifi ur we vil le Ric t Th me r nS Be cS St Ho ran ilto d Ho ac t d G t Blv The anticipated completion of Jameson LOW RISE rar am ie S hA ur H po B mb y St Ex ve GM Ca t at BC PLACE PLA House and The Beasley buildings could add to Be St Da STADIUM TOWNHOME DS T ur vie RAR mo St lvd this total. BUR GE y cB BRID Se cifi Pa T L ES VIL* Launch timing for a number of contemplated AN E GR RIDG Maps for illustrative purposes B new projects is uncertain. These include only. Locations are approximate. Townline’s 999 Seymour and Concord’s NEW PROJECT MARKET STATUS Panorama. Q2 ACTIVE Q2 Q2 ACTIVE SALES PRODUCT PROJECTS SALES SUPPLY RANGE ($ PSF)* The Residences at Hotel Georgia is expected to High Rise 18 232 569 $690 - 710 have completed and merchandised display Low Rise n/a n/a n/a n/a suites ready for viewing by early 2012. Townhome n/a n/a n/a n/aMLS RESALE - Q2 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* Sales have increased by 49 percent MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE compared to the Second Quarter of 2010. PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) High Rise 554 4.6 361 100 $709 37 $370,000 - 855,000* Listings have decreased by 36 percent compared to the Second Quarter of 2010. Low Rise n/a n/a n/a n/a n/a n/a n/a* Prices for both one and two bedroom Townhome n/a n/a n/a n/a n/a n/a n/a condominiums have increased by 4 percent Change over the last quarter: Increase, Decrease, No Change * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category compared to the Second Quarter of 2010.* Anticipate potential price increases due to MLS RESALE BY UNIT TYPE lower inventory levels. AVG. PRICE $ PSF AVG. PRICE $ PSF PRODUCT 1 BEDROOM 2 BEDROOM High Rise $437,441 $686 $711,842 $722 Low Rise n/a n/a n/a n/a PRODUCT 2 BEDROOM 3 BEDROOM Townhome n/a n/a n/a n/aSECOND QUARTER 2011 4
  7. 7. MARKET SUMMARYVANCOUVER – WEST Vancouver - West retains its ‘green light’ rating in spite of the increase in unsold inventory and months of supply in the high rise and townhome sectors, which can be attributed to the launch of new projects. Sales activity at various projects illustrated the importance of being appropriately positioned relative to comparable and competing product in Vancouver - West and Vancouver - Downtown. The projects that were appropriately positioned outsold projects that weren’t by a significant margin. NEW DEVELOPMENTS - Q2 2011MARKET HIGHLIGHTS: Q2 NEW RELEASES AND PROJECTED Q3 NEW RELEASES Point G rey Rd Cornwall St* Sales at The Village at False Creek remained We 4th Ave W Gr sb University of e at Nor the r oo steady, which should result in more product British Columbia 10th Ave W BROADWAY W kM Projected Q3 all being released during the Third Quarter. 12th Ave W Q2 release 12 16th Ave W Arbutus St Dunbar St Crown St Macdonald St Blenheim St* It will be interesting to gauge buyer response SW M King Edward Ave ar to upcoming project releases and the higher in Dr e average sale values they are anticipated to 33rd Ave W 33rd Ave HIGH RISE seek. W Boulevard 41st Ave W GRANVILLE STREET 41st Ave* The land prices being attained for land LOW RISE Main St Cambie St Fraser St 49th Ave W assemblies along the Cambie Corridor is TOWNHOME Oak St raising some concern as to the end sale values 57th Ave W 57th A that will be required and how consumers will C.P.R respond to these values. Maps for illustrative purposes . SE Marine only. Locations are approximate. 70th Ave W Kent Ave N O NEW PROJECT MARKET STATUS Q2 ACTIVE Q2 Q2 ACTIVE SALES PRODUCT PROJECTS SALES SUPPLY RANGE ($ PSF) High Rise 17 235 1,066 $740 - 790 Low Rise 3 10 20 $675 - 725 Townhome 5 21 53 $730 - 780 MLS RESALE - Q2 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* For high rise product, sales increased by 13 MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE percent and active listings were down 35 PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) percent compared to the same period last High Rise 161 5.4 90 44 $719 38 $415,000 - 860,000 year. Low Rise 127 5.3 72 35 $700 34 $442,000 - 850,000* Low rise product experienced similar supply Townhome 64 4.4 44 21 $642 42 $590,000 - 1,075,000 and demand characteristics as the Second Change over the last quarter: Increase, Decrease, No Change Quarter of 2010 (5.3 months of supply). * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category* Townhomes are currently under supplied in MLS RESALE BY UNIT TYPE this market (4.4 months of supply). AVG. PRICE $ PSF AVG. PRICE $ PSF* Overall prices for all product types increased PRODUCT 1 BEDROOM 2 BEDROOM by 2 percent compared to the Second High Rise $448,124 $669 $741,619 $741 Quarter 2010. Low Rise $441,189 $658 $662,113 $713 PRODUCT 2 BEDROOM 3 BEDROOM Townhome $830,305 $652 $913,953 $629SECOND QUARTER 2011 5
  8. 8. MARKET SUMMARYVANCOUVER – EAST As in the First Quarter of 2011, Vancouver - East is considered a ‘green light’ market. This market continues to benefit from the gentrification of Vancouver as more young professionals are priced out of the Vancouver - West market. It is anticipated that demand for new product in this market will remain strong for the remainder of 2011. NEW DEVELOPMENTS - Q2 2011MARKET HIGHLIGHTS: Q2 NEW RELEASES AND PROJECTED Q3 NEW RELEASES morial Bridge* Although townhome product in the market St an nm McGill St showed a higher month of supply figure than De Eton St Da cific Projected Q3 Dundas St vie low rise and high rise product, most of the Pa Q2 release St HASTINGS STREET E St Willingdon Ave actively selling townhome projects are Parker St Gilmore Ave Venables St Holdom St nearing the end of their respective sales Clark Dr Gr 1st Ave e at Nor programs. These developers are comfortable thern Wy accepting lower absorptions in order to HIGH RISE BROADWAY E 12th Ave W 12th Ave E Grandview Hwy maximize revenues on their remaining units. LOW RISE Nanaimo St KIN Canada Wy Renfrew St GS Rupert St WA Wayburne Dr King Edward Ave Y* Onni enjoyed a very positive reception to its Kincaid St Spro TOWNHOME Collingwood Central project on Quebec Street. Investor Moscrop St 33rd Ave W 33rd Ave E Deer Lake Pk and end user buyers responded to the Burke St Maps for illustrative purposes 41st Ave W unique architectural design and the TREET 41st Ave E Gran only. Locations are approximate. ge S t appropriate positioning of the project. NEW PROJECT MARKET STATUS* Polygon’s successful launch at its New Water Q2 ACTIVE Q2 Q2 ACTIVE SALES PRODUCT low rise project has brought much attention PROJECTS SALES SUPPLY RANGE ($ PSF) and interest to this area, High Rise 5 196 147 $625 - 675 Low Rise 13 181 217 $475 - 525 Townhome 4 16 35 $450 - 500 MLS RESALE - Q2 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* High rise product is currently under supplied in MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE this market (4.1 months of supply). PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) High Rise 91 4.1 66 50 $549 22 $296,000 - 515,000* Overall sales figures for all product types increased by 33 percent compared to the Low Rise 121 9.1 40 30 $473 42 $273,000 - 454,000 Second Quarter of 2010. Townhome 48 5.3 27 20 $482 19 $488,000 - 697,000* Very low days on the market average for Change over the last quarter: Increase, Decrease, No Change * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category townhomes in this market (19 days on average). MLS RESALE BY UNIT TYPE AVG. PRICE $ PSF AVG. PRICE $ PSF PRODUCT 1 BEDROOM 2 BEDROOM High Rise $380,755 $553 $486,773 $544 Low Rise $297,394 $504 $405,936 $455 PRODUCT 2 BEDROOM 3 BEDROOM Townhome $580,685 $521 $612,986 $424SECOND QUARTER 2011 6
  9. 9. MARKET SUMMARYRICHMOND/SOUTH DELTA/TSAWWASSEN Strong demand across all product types continues to match the supply brought to market. Townhome and low rise absorption continues to be strong especially in the Alexandra neighbourhood of West Cambie. While values for concrete condominiums in this market have risen over the same period last year, it should be noted that demand for larger product with higher price points is still modest. While many pre-sale developments in the this market are currently experiencing sales success, future developments are recommended to proceed with conservative pricing expectations. NEW DEVELOPMENTS - Q2 2011MARKET HIGHLIGHTS: Q2 NEW RELEASES AND PROJECTED Q3 NEW RELEASES y W Vulcan er* Price increases for townhomes in Richmond Russ Bak Alderbridge Wy RICHMOND ANNACIS HIGHW can be attributed to the increased pricing of River Rd Projected Q3 single family homes. Westminster Hwy Q2 release C.N.R. No 8 Rd No. 7 Rd* Polygon’s Mayfair Place continues to show Granville Ave THRUWAY strong absorptions as purchasers seek a Blundell Rd more affordable alternative to concrete No. 1 Rd Gilbert Rd No. 3 Rd No. 4 Rd No. 5 Rd No. 6 Rd Railway Ave Garden City Rd HIGH RISE Francis Rd FRASER - DELTA construction in Richmond. T LOW RISE Williams Rd I H* Townline is expected to commence sales at its site at the former Fantasy Gardens in the TOWNHOME Steveston Hwy r Rd No. 2 Rd Rive Third Quarter. Steveston Shell Rd Moncton St* Quintet successfully launched its second and Maps for illustrative purposes Ge or only. Locations are approximate. ge final phases in the Second Quarter. M t a NEW PROJECT MARKET STATUS Q2 ACTIVE Q2 Q2 ACTIVE SALES PRODUCT PROJECTS SALES SUPPLY RANGE ($ PSF) High Rise 9 510 425 $550 - 600 Low Rise 7 103 149 $425 - 475 Townhome 19 93 138 $375 - 425 MLS RESALE - Q2 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* High rise sales are up slightly and active MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE listings are down considerably compared to PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) the Second Quarter of 2010. High Rise 289 7.5 115 37 $526 50 $338,800 - 598,000* Low rise sales and listings totals are similar Low Rise 122 6 61 20 $447 45 $335,000 - 491,000 to the Second Quarter of 2010. Townhome 257 5.9 131 43 $423 34 $523,000 - 712,000* Lower sales for low rise product can be Change over the last quarter: Increase, Decrease, No Change explained by the large volumes occurring on * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category the pre-sale front (i.e. Mayfair Place).* Both sales and listings for townhomes have MLS RESALE BY UNIT TYPE AVG. PRICE $ PSF AVG. PRICE $ PSF increased compared to the Second Quarter of 2010. PRODUCT 1 BEDROOM 2 BEDROOM* Townhomes have increased by 7 percent in High Rise $354,720 $522 $486,845 $526 price compared to the Second Quarter of Low Rise $323,367 $473 $424,186 $440 2010. 2 BEDROOM 3 BEDROOM PRODUCT Townhome $529,515 $426 $608,100 $423SECOND QUARTER 2011 7

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