Canadian real estate: Gains made, but are they sustainable?

Residential, commercial, industrial, retail – every aspect of Canadian real estate showed tentative signs of recovery in the past year. But even as bidding wars break out for the priciest homes in Vancouver, and Toronto office buildings change hands at prices that would suggest the recession is a distant memory, some experts are concerned that continued weakness in the United States will prevent any gains from being sustainable.

Here are thoughts from the industry:

"In the industrial market, you're basically talking about Toronto and Montreal. One thing to watch is what the big American companies do – they came in and paid top dollar for available land and built big logistics centres. But now they are retrenching and moving out of Canada – and are leaving their buildings."
Stefan Ciotlos
President, CB Richard Ellis

"The residential market has been good since April, really quite different than in the United States. But there are a number of thing to keep your eyes on, and the most important is unemployment. Hopefully as the economy improves we'll see a decline. And there's no ignoring that the market in a place like Ontario is very dependent on what happens in the United States, and they continue to have a lot of problems."
Jim Murphy
Chief executive officer,
Canadian Association of Accredited Mortgage Professionals

"Where mortgage rates will go is anyone's guess – but I'd think most people would assume that over time interest rates would move up. We've gone through an extended period of time where people could obtain mortgage financing for reasonable prices. I think we can assume rates will remain reasonable for Canadian home buyers for some time to come."
Phil Soper,
Chief executive officer,
Royal LePage Real Estate Services

"Aside from Toronto and Calgary, where new space is coming online, the office sector is pretty solid. Supply is in check with demand. Prices could start making up ground in the middle of next year, but commercial real estate investors could do better with properties in the U.S. and Europe, where values fell further and could provide greater returns through a recovery."
Frank Magliocco
Partner, PricewaterhouseCoopers

"What you are going to see next year isn't business as usual, but it also isn't business unusual. The bigger guys in the retail space like RioCan are going to be able to launch very big acquisition programs on the back of being able to raise capital. They can be far more entrepreneurial, and look for their window in the U.S. This all is built on the confidence we've seen increasing since mid-year."
John O'Bryan,
Vice-chairman, CB Richard Ellis

(prepared by Steve Ladurantaye/Globe & Mail)