34 BCBusiness March 2015 ben oliver
To stock market investors,
the phrase "wall of worry" refers to the
negative factors that a market must sur-
mount if it is to keep ascending. The wall
can sometimes prevent other people
from making sound decisions, possibly
to the benefit of the investor.
Well, the wall of worry also pertains
to the purchase of four walls, especially
just now. For example, here are two ques-
tions, identical except for the preamble:
With property valuations high and
returns on investment low, and this at a
time when resource industries are stum-
bling, is 2015 the right time to invest in
B.C. real estate? Alternatively, the ques-
tion could be: With bonds, equities and
virtually every other investment option
currently looking so risky, is 2015 the
right time to invest in B.C. real estate?
Worries either way, but with different
twists. On one hand: clear risks to local
property markets. On the other: the kind
of relative security that has turned B.C.
and its real estate into something of a
global safe haven.
It's a tie that economists don't seem
willing to break. For residential real
estate, the
CMHC predicts lower starts
and a mild price uptick in 2015, while a
brace of bank and industry economists
lean toward more of the same, even as
many worry that housing is overpriced
and unaffordable. Mentions of contin-
ued strong immigration inflows and the
phrase "soft landing" echo through their
myriad forecasts, but so do concerns
about an inevitable increase to interest
rates, toughened lending standards and
economic uncertainties.
In the case of commercial and indus-
trial property, the landscape is especially
complicated, with some sectors and loca-
tions shining even as others dim. Overall,
though, forecasters such as
PwC point out
that cities like Vancouver are only now
being discovered by global investors,
even as domestic
REITs and pension
funds continue to show a strong appetite.
So, uncertainties and contradic-
tions—and that's even before diving into
prospects for northern B.C., which mere
months ago looked so bright. If anything
can be said about B.C.'s real estate mar-
There are plenty of questions surrounding b.c.'s real estate
market in 2015 (though that may actually be a good thing).
Fortunately, amid all the uncertainty, some sectors seem
poised to outperform by Jim Sutherland
4
walls of
worry
Real
Estate
2015
