What s the outlook for the real estate lawyers?

Transcription

1 What s the outlook for the real estate lawyers? 1. By Pablo Fuchs October - November 2012 Issue Five years after the world s real estate bubble burst, Canada s market continues to outshine those of most other developed economies. Photo of Mylany David, Partner, Fraser Milner Casgrain, Montreal, by Pierre-Louis Mongeau. Even so, the residential market is showing clear signs of cooling in some major cities. In September, the Toronto Real Estate Board reported a 12.5 per cent drop in sales of existing homes in the GTA from a year earlier. But the average cost of a home was still was still 6.5 per cent higher. Sales in the Greater Vancouver market have dropped further by more than 30 per cent, according to Vancouver s real estate board. Some market watchers expect residential sales to drop further following the federal government s tightening of mortgage-lending rules in June, in an effort to apply the brakes to an overheated market. And then again, judging by the unusual sight of multiple cranes in Montreal s skyline, it s clear that investors are ignoring the warnings of economists about overbuilding in Canada s second biggest city. And, as of this writing, Calgary s commercial real estate market is showing few signs of slowing down. Regional differences aside, all the activity of the past few years has kept Canada s leading real estate lawyers busy. These five experts share their views on where the market is heading and what it all means for real estate law practitioners: Mylany David Partner, Fraser Milner Casgrain, Montreal

2 - 2 - Here in Quebec, the major real estate investments have been in infrastructure, such as major roads, hospitals and private-public partnership projects. And with the deployment of Plan Nord by the provincial government, it will be all about new infrastructure and real estate being developed on Quebec s north shore. As examples, the port at Sept-Îles has been booming in the past few years, or the need for new housing in northern small cities like Chibougameau or Fermont is just huge. As a result of Plan Nord, the areas of growth will be around infrastructure, mining and energy projects, so anything related to that, such as new port facilities, new airports, new roads and access roads for mining companies as well as new housing for the workers coming up north. That s where the emphasis will be in terms of major real estate project development. Sabrina Gherbaz Partner, Torys LLP, Toronto Photo of Sabrina Gherbaz, Partner, Torys LLP, Toronto, by Paul Eekhoff. On the condominium side, the market is slowing down and there are a number of reasons why. For a long time in Toronto, the demand for condos exceeded the supply, but supply has now caught up with demand. Another factor is that in the past, there were a lot of investors who were buying into the condo market, but a lot of those investors have disappeared When you look at office developments, vacancy right now is at a low. And with all the new products coming into the market in the next three or four years, office vacancies are going to increase. As a result, there will probably be a lot less office development in the city than we ve seen in the past few years. Where we ll continue to see growth is in the senior housing area, where there s quite a lot of activity For the most part, real estate lawyers have to continue to have a diverse practice because, in order to stay busy as your clients diversify, you re going to have to have diverse knowledge of the real estate market and not in one particular niche.

3 - 3 - Gary Peddle Management committee chair, Benson Buffett, St. John s Photo of Gary Peddle, Management committee chair, Benson Buffett, St. John s, by Greg Locke. If we look at the inventory of subdivisions that are on the books at this point in time, it s incredible. There are a number of very large housing projects that are in the infancy stage that will span out for the next 10 years. In addition, the commercial real estate industry is the same. Now, in St. John s, we have two office buildings being built the first ones to be built in the last 20 to 25 years. There are also a number of other office buildings in the books ready to start within the next year or so as well as a large number of hotels and condominium projects. So, all indicators are that things are going to be this way for a while. It s an exciting time to be in real estate law in Newfoundland; and if you re not busy now, it s because you don t want to be, it s not because the business isn t there. It really is hard to keep up and we re going to be on this pace for the next five to 10 years, easily. Lisa Vogt Partner, McCarthy Tétrault, Vancouver

4 - 4 - Photo of Lisa Vogt, Partner, McCarthy Tétrault, Vancouver, by Venturi+Karpa. Vancouver gets a lot of attention because of our residential market. We have the least or second-least affordable city in the world and in the lower mainland, product is really scarce. As a result, housing is completely unaffordable for the next generation. Certainly, densification of residential real estate is a likelihood in the lower mainland. In Vancouver, the city is looking at different options for affordability and affordable housing and that will involve densification. That may involve more condos, infill houses, or row housing. As a result, one of the things we need to see in British Columbia is more purpose-built rental housing as opposed to condominiums. That s partly because the Government of Canada has reduced the mortgage amortization from 40 years to 25 years and the consequence of that is that homes are now less affordable. That means people will rent longer; and if people rent longer particularly in B.C., where the vacancy rate is close to zero there s not a lot of rental housing. So, developers need to find new ways to finance purpose-built rental buildings. Don MacKimmie Senior partner, Norton Rose, Calgary

5 - 5 - Photo of Don MacKimmie, Senior partner, Norton Rose, Calgary, by Marnie Burkhart-Jazhart Studios. Subject to huge political upheaval, it ought to be pretty steady and pretty good here. An awful lot of our business is dependent upon natural resources and what that really means is the oil and gas business. And more and more, that oil and gas business is being dominated by the oil sands. So, there s huge engineering that is done in Calgary; there are engineering firms that have 350,000 square feet or more of office space. That will continue absent the Keystone Pipeline being stopped or the Gateway Pipeline never going ahead, or incremental growth in the oil sands prohibiting future development. If you get by those clouds, then the future is very good for Calgary and for Alberta, and that will manifest itself in steady real estate development across the province. Calgary will dominate the private sector oil business, so we will continue to have large developments. Furthermore, there are some studies that say we will have two million people in about 20 years; we re at about 1.2 million now, so if that happens, there s going to be tons of development.