Calgary Alberta Mortgage and Real Estate News

Real estate bidding wars in Calgary have shifted from the residential sector to the office sector.

With virtually no space available for lease in the downtown, the city’s office rental market is on fire. A study from real estate firm CB Richard Ellis Ltd. also added a new title to the oilpatch: most expensive office market in Canada.

Occupancy costs in Calgary climbed to US$53.51 a square foot per annum in the third quarter, according to the real estate company.

That was higher than Toronto, which had occupancy costs of US$52.80.

“It’s extraordinarily tight,” said Damien Mills, a partner with Cresa Partners, a real estate company that represents tenants. “If we get 5,000 sq. ft. come on the market, we will have multiple bidders going for it.

“Calgary needs space and it needs it now.”

CB Richard Ellis surveyed 176 cities around the world and the good news for Canada is only two cities — Toronto and Calgary — cracked the top 50 markets in terms of expense.

Occupancy costs, calculated in U.S. dollars, included base rent, taxes and operating expenses such as heat and hydro.

“Canadian cities remain very, very competitive on the world scene when it comes to occupancy costs,” said Blake Hutcheson, president of CB Richard Ellis.

The most expensive district in the world continues to be London’s West End, where occupancy costs are US$212.03 per sq. ft. Tokyo’s inner central district finished second at US$145.68 per sq. ft. Midtown Manhattan was the most expensive North American district, with occupancy costs of US$62.07 per sq. ft.

While Alberta’s booming energy market has helped spur growth and made demand for office space soar, along with base rents, the real estate company says the city is still a bargain by international standards.

“As would be expected from the continuing high growth in Western Canada, Calgary is the most expensive city in Canada, but is still very, very low in costs when compared with other leading world business centres,” Mr. Hutcheson said.

Edmonton has also benefited from the energy boom, the study says.

Occupancy costs climbed to US$29.58 from US$17.45 two quarters ago.

Toronto’s slip to second place came despite the fact it remains one of the most heavily taxed jurisdictions that CB Richard Ellis studied.

The real estate company said 23% of occupancy costs in Toronto come from taxes, compared with 8% in Calgary.

“Toronto remains highly competitive in terms of costs and would be even more competitive if our commercial real estate taxes were lower and more in line with those of other cities around the world,” Mr. Hutcheson said.

Real estate bidding wars in Calgary have shifted from the residential sector to the office sector.

With virtually no space available for lease in the downtown, the city’s office rental market is on fire. A study from real estate firm CB Richard Ellis Ltd. also added a new title to the oilpatch: most expensive office market in Canada.

Occupancy costs in Calgary climbed to US$53.51 a square foot per annum in the third quarter, according to the real estate company.

That was higher than Toronto, which had occupancy costs of US$52.80.

“It’s extraordinarily tight,” said Damien Mills, a partner with Cresa Partners, a real estate company that represents tenants. “If we get 5,000 sq. ft. come on the market, we will have multiple bidders going for it.

“Calgary needs space and it needs it now.”

CB Richard Ellis surveyed 176 cities around the world and the good news for Canada is only two cities — Toronto and Calgary — cracked the top 50 markets in terms of expense.

Occupancy costs, calculated in U.S. dollars, included base rent, taxes and operating expenses such as heat and hydro.

“Canadian cities remain very, very competitive on the world scene when it comes to occupancy costs,” said Blake Hutcheson, president of CB Richard Ellis.

The most expensive district in the world continues to be London’s West End, where occupancy costs are US$212.03 per sq. ft. Tokyo’s inner central district finished second at US$145.68 per sq. ft. Midtown Manhattan was the most expensive North American district, with occupancy costs of US$62.07 per sq. ft.

While Alberta’s booming energy market has helped spur growth and made demand for office space soar, along with base rents, the real estate company says the city is still a bargain by international standards.

“As would be expected from the continuing high growth in Western Canada, Calgary is the most expensive city in Canada, but is still very, very low in costs when compared with other leading world business centres,” Mr. Hutcheson said.

Edmonton has also benefited from the energy boom, the study says.

Occupancy costs climbed to US$29.58 from US$17.45 two quarters ago.

Toronto’s slip to second place came despite the fact it remains one of the most heavily taxed jurisdictions that CB Richard Ellis studied.

The real estate company said 23% of occupancy costs in Toronto come from taxes, compared with 8% in Calgary.

“Toronto remains highly competitive in terms of costs and would be even more competitive if our commercial real estate taxes were lower and more in line with those of other cities around the world,” Mr. Hutcheson said.

 

The S&P/TSX composite index roared through another record Tuesday, the latest milestone in a four-year bull market that experts contend can continue.

“We still have very low interest rates, inflation rates have stayed relatively under control, corporate earnings have been steady,” said Eric Kirzner, professor at the University of Toronto’s Rotman School of Management. “Without rising interest rates that could choke off price-earnings multiples, you’ve got no reason for the market to fall.”

The composite closed at 12,602.30, up 185.67 points. That broke the old record of 12,487.32, set on April 19. The index got a boost from the price of oil, which rose 2.3% to close above US$60 a barrel. Higher crude prices also lifted the Canadian dollar, which rose to US87.28¢ despite a weak reading on September retail sales.

Like most of the past four years, Tuesday’s rally was driven by energy, materials and financial stocks, which make up roughly three-quarters of the index. So the future direction of the composite depends largely on how those sectors perform.

There are concerns a slowing U.S. economy could choke off Canadian economic growth and drive those stocks down. But Avery Shenfeld, senior economist at CIBC World Markets, says that’s just part of the story.

“[The U.S.] is a factor for part of the Canadian index,” Mr. Shenfeld said. “But we also have sectors that are either levered to the Canadian domestic economy — which is holding up fairly well — and those which are levered to global growth, like many of the raw-material sectors. And global growth is still quite strong.”

Soaring global demand has pushed commodity prices to unprecedented highs in the past few years. That has been great news for Canadian energy and resource stocks, but it also changed the behaviour of the TSX composite.

Recently, the index has fluctuated alongside commodity-heavy emerging-market indexes more than those in the United States, according to research from National Bank Financial. As demand for commodities accelerates in developing countries such as China and India, the TSX has continued to rise regardless of what happens south of the border.

But the United States is still the destination for about 80% of Canadian exports, and any slowdown is certain to have some impact in Canada.

“Typically when we see the U.S. economy slow down, we see the Canadian economy slow down six months later,” said Kate Warne, Canadian market strategist at Edward Jones. “However, it also looks like the U.S. slowdown will be mild and probably brief. And if that’s the case, it’s less of a concern than it would be if the U.S. economy were likely to weaken more dramatically.”

After hitting its last peak in April, the TSX composite went into a slump in the spring, falling nearly 13% by mid-June before it rebounded. That drop was due to temporary weakness in commodity prices.

Since then, energy stocks have rebounded, materials and financials have jumped sharply, and shares of tech giant Research In Motion Ltd. have more than doubled.

Ms. Warne expects the TSX to continue to push higher overall, but with continued volatility in the short term. “Right now we’re seeing increased optimism on the global economy, and that’s part of why energy and materials stocks have been moving higher. But we tend to swing between optimism and pessimism, and that will swing back at some stage,” she said.

Another factor that will affect stocks in the short term is interest rates. Bank of Canada governor David Dodge is predicting a “mild” slowdown in the Canadian economy because of weaker demand in the United States.

The “soft landing” scenario has many analysts predicting an interest-rate cut early next year, which would be good for interest-sensitive stocks such as banks. But the rising price of oil could raise inflation concerns and easily derail those forecasts, as could a sharper economic slowdown.

“If oil rises, you could have [oil stocks] moving up, but on the offset you could have the banks pulling back somewhat,” said Bob McWhirter, president and chief executive of Toronto-based Selective Asset Management. “My guess is yes, this overall level is sustainable. But I don’t think we’re going to rip out to new highs because I don’t think we’re going to have all cylinders firing at once.” He said rising copper inventories is one danger sign for investors to watch.

The soaring TSX has also brought back memories of 2000, the last major bull run for Canadian stocks, which ended when the tech bubble burst. Many experts are not worried about a similar outcome this time around, despite concerns that the four-year rally is starting to get long in the tooth and commodity prices could easily fall.

“The contrast this time is that earnings have more than kept pace with equity valuations,” said Mr. Shenfeld of CIBC, which is predicting the TSX will reach 13,500 points by the end of 2007. “So this is not a rally based on hype for earnings to come. This is a rally well-supported by earnings in the here and now.”

SYDNEY -(Dow Jones)- Bank of Canada Governor David Dodge said Monday he is satisfied with the nation’s current interest rate settings, adding that inflationary risks are evenly balanced.

“Policy settings at this point we think are appropriate,” Dodge told Dow Jones Newswires on the sidelines of the Bank for International Settlements meeting in Sydney.

Asked if the pace of the U.S. economic slowdown is alarming, he said that so far everything is consistent with the central bank’s forecasts.

“That is exactly what we built into our outlook,” Dodge said, referring to the Bank of Canada’s monetary policy statement last month.

He described the developments in the U.S. economy as “not nice but consistent” with expectations.

Nothing that was discussed at the BIS meeting would force a rethink of expectations about the U.S. economy, Dodge said.

“From the middle of next year, we would see U.S. GDP recover towards 3.0% or something closer to potential, nothing we heard in here would cause us to change that,” Dodge said.

He said in the first half of 2007, the U.S. economy is expected to show growth of between 2.0% and 2.5%.

U.S. Federal Reserve Chairman Ben Bernanke wouldn’t take questions from reporters after the meeting.

SYDNEY -(Dow Jones)- Bank of Canada Governor David Dodge said Monday he is satisfied with the nation’s current interest rate settings, adding that inflationary risks are evenly balanced.

“Policy settings at this point we think are appropriate,” Dodge told Dow Jones Newswires on the sidelines of the Bank for International Settlements meeting in Sydney.

Asked if the pace of the U.S. economic slowdown is alarming, he said that so far everything is consistent with the central bank’s forecasts.

“That is exactly what we built into our outlook,” Dodge said, referring to the Bank of Canada’s monetary policy statement last month.

He described the developments in the U.S. economy as “not nice but consistent” with expectations.

Nothing that was discussed at the BIS meeting would force a rethink of expectations about the U.S. economy, Dodge said.

“From the middle of next year, we would see U.S. GDP recover towards 3.0% or something closer to potential, nothing we heard in here would cause us to change that,” Dodge said.

He said in the first half of 2007, the U.S. economy is expected to show growth of between 2.0% and 2.5%.

U.S. Federal Reserve Chairman Ben Bernanke wouldn’t take questions from reporters after the meeting.

Nov. 20 (Bloomberg) — European Central Bank President Jean-Claude Trichet and his Group of 10 colleagues meeting in Sydney may signal confidence in the global economic outlook, indicating the world can withstand higher interest rates.

Central banks “will need” to raise interest rates further to contain inflation, policy makers of the world’s 20 largest economies said in a statement yesterday after a weekend summit in Melbourne. Global growth may slow from the rapid pace of the past few years, it said. Today’s G-10 gathering is held under the auspices of the Bank for International Settlements.

The world’s biggest central banks raised interest rates this year to contain inflation, marking the first global policy tightening since 2000. The fastest period of global growth in three decades is stretching production, the G-20 said, spurring companies to raise prices and workers to demand higher wages.

“Global growth will slow next year but there’s no reason to be concerned about it,” said Shane Oliver, chief economist and head of investment strategy at AMP Capital Investors in Sydney. Oliver predicted Europe, the U.K, and Japan will increase interest rates next year.

The ECB and the Bank of Japan have already signaled they’ll raise interest rates again. The U.S. Federal Reserve paused in August to assess new data after raising its key rate 17 times to 5.25 percent. Central banks in China, Australia and the U.K. may also increase lending rates.

Fed Chairman Ben S. Bernanke, ECB President Jean-Claude Trichet, Bank of Japan Governor Toshihiko Fukui and People’s Bank of China Governor Zhou Xiaochuan will attend the bi-monthly G-10 meeting, the first time it’s being held outside Basel, Switzerland, since November 2003. Trichet, 63, who chairs the summit, will hold a briefing around 1 p.m.

`Multiple Engines’

Trichet “will continue to talk of the need for higher interest rates in Europe,” said Oliver. “They’re worried about inflation.”

The International Monetary Fund expects the global economy to expand 5.1 percent this year and 4.9 percent in 2007, extending the longest period growth rates have held above 4 percent since the early 1970’s.

With growth in America, Asia and Europe, the world’s economy is running on “multiple engines,” Australian Treasurer Peter Costello said Nov. 18 at the G-20 summit. “The rise of China will fuel global economic prospects for a long time to come.”

Russia, Germany

In Russia, which is on track for the longest period of expansion since the fall of the Soviet Union in 1989, growth may exceed a government estimate of 6 percent next year, Finance Minister Alexei Kudrin said Nov. 17.

Peer Steinbrueck, his German counterpart, said the same day that he’s more optimistic about growth in Europe’s largest economy this year, calling the economic development “very pleasing.”

“The most important message is that we’re still on a robust growth path” globally, ECB council member Axel Weber said Nov. 18. “Inflation risks persist in the medium-to-long term.”

The ECB has signaled it will raise its benchmark interest rate next month after five increases to 3.25 percent since early December. The Bank of Japan in July ended almost six years of near-zero rate policy designed to counter deflation, and the People’s Bank of China has raised borrowing costs twice this year.

The Bank of Japan will increase interest rates “gradually” as long as the economy keeps expanding along the lines expected by the bank, Fukui said he told his G-20 counterparts.

Inflation Concerns

Central bankers are concerned that faster growth will feed into wage demands and lead to more persistent inflation, even after crude oil prices retreated from a record.

The ECB expects inflation to average about 2.4 percent this year and next, exceeding its 2 percent limit for an eighth straight year. In the U.S, the core personal consumption expenditure price index has been at or above the upper end of Bernanke’s “comfort” range of 1 percent to 2 percent since April 2004 even as higher borrowing costs show signs of cooling the economy.

U.S. housing starts tumbled in October to the lowest level in more than six years, raising the prospect that growth in the world’s largest economy will weaken further after notching its slowest pace since 2003 last quarter.

Slower U.S. growth may be partly offset by faster expansion in Europe and Asia, International Monetary Fund Managing Director Rodrigo de Rato said Nov. 18. Others share his optimism.

“Mexico is well prepared to face a slowdown in the U.S.,” Francisco Gil Diaz, Mexico’s Finance Minister said Nov. 17. “Europe seems to be stronger and the global outlook doesn’t seem to be that bad.”

The G-10 comprises the U.S., Japan, Germany, the U.K., France, Italy, Canada, Sweden, the Netherlands, Belgium and Switzerland. The G-20’s member states account for 85 percent of the global economy, 80 percent of world trade and about two- thirds of the world’s population.

Nov. 20 (Bloomberg) — Canadian Finance Minister Jim Flaherty said he plans to extend the central bank’s inflation- targeting mandate for another five years.

“We have been in discussions with the Bank of Canada and we will be in a position to announce the agreement in a few days,” Flaherty told reporters following a speech in Sydney today. He said his intention was to maintain the five-year timeframe.

Canada’s inflation-targeting agreement, which requires the Bank of Canada to aim for a 2 percent inflation rate, expires at the end of the year. Central bank Governor David Dodge said in September the government will probably renew the five-year agreement without “major changes.”

Flaherty, 56, in Australia for a meeting of Group of 20 finance ministers, declined to say whether there would be any minor changes to the arrangement or if he would launch a broader review of the policy for future consideration.

Canada’s inflation-targeting policy has come under attack from manufacturers such as Bombardier Inc., whose Chief Executive Laurent Beaudoin called on the central bank to focus less on prices and more on weakening a currency that has advanced 38 percent over the past four years. The higher dollar has made U.S. goods cheaper in Canada and crimped Canadian exports, causing plant closures and layoffs.

“While I understand that the Bank of Canada’s role is to control inflation by varying interest rates, I have a hard time understanding why it only steps in when there is a loss of confidence in the Canadian dollar, and not in the opposite case,” Beaudoin, who heads the world’s third-largest airplane maker, told reporters at a press conference on May 30.

Successful Policy

Canada in 1991 became the second country with a numerical goal for inflation, after New Zealand, which adopted its target a year earlier. There has been little policy debate on inflation targeting since then because the system has been so successful, said Christopher Ragan, a McGill University professor who worked at the Bank of Canada last year as a special adviser.

Inflation has averaged 2.1 percent since the Bank of Canada adopted targets in February 1991, compared with an average of 6.9 percent during the previous 15 years, according to Bloomberg figures.

“The system is working quite well,” Ragan said in a telephone interview. “The only people who think it’s not working well is people like Beaudoin.”

Still, Ragan and other economists including David Laidler of the C.D. Howe Institute have said it may be time for the government to begin a debate on improving the current system, possibly by lowering the inflation target to less than 2 percent.

The central bank also has considered changes such as targeting price levels rather than the inflation rate or changing the time horizon over which it returns the inflation rate to its target, Dodge has said.

CALGARY, Nov. 20 /CNW/ - Bridgewater Bank, Canada’s newest chartered bank, and AIG United Guaranty(1), Canada’s newest mortgage insurer announced today the agreement of a strategic partnership. The two companies will combine their respective mortgage finance and mortgage insurance expertise to deliver innovative products and superior customer service to the Canadian homebuyer market.

Bridgewater Bank’s Vice-President & General Manager, Peter O’Neill says, “AIG United Guaranty has shown remarkable willingness to work with us to provide excellent products and services to Canadian homebuyers.” AIG President and CEO, Andy Charles adds, “We are pleased to have Bridgewater Bank as our first strategic partner in the Canadian mortgage industry and we look forward to creating additional value for mortgage professionals and Canadian consumers.”

Effective January 01, 2006 Bridgewater Bank became Canada’s newest chartered bank and maintains a commitment to provide superior service while continuing to enhance its innovative product line up. This partnership announcement supports that commitment confirms O’Neill; “AIG United Guaranty’s customer philosophy compliments Bridgewater Bank’s commitment to providing relevant and competitive product offerings. We look forward to working together to exceed our customers’ expectations.”

Earlier this year, AIG United Guaranty received approval from the Office of the Superintendent of Financial Institutions (OSFI) to commence business in the Canadian market. “Our entry to the Canadian market marks a new and exciting chapter in the mortgage insurance industry,” said Charles. AIG United Guaranty’s launch in the Canadian market, making it the first new entrant in more than decade, has resulted in many positive new innovations for lenders, mortgage professionals, and Canadian consumers. The addition of new players such as Bridgewater Bank and AIG United Guaranty to the Canadian financial services landscape is good news for consumers who will benefit from the increased competition leading to more options, enhanced product offerings, and better service.