THIS WEEK'S TRIBUNE  THIS WEEK'S TRIBUNE Canada, Israel real estate markets better positioned to weather recession than US, panelists say
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Canada, Israel real estate markets better positioned to weather recession than US, panelists say |
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Written by Rick Kardonne
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Wednesday, 01 April 2009 |
TORONTO – While Canada’s real estate industry, like its counterparts elsewhere, has been affected by the current global recession, it enjoys certain advantages over its foreign counterparts and the proposed remedies for its woes are more achievable.
That was the general consensus of a panel discussion held last week by the Canada-Israel Chamber of Commerce (CICC) at Toronto’s Pantages Hotel, The Real Estate Challenge: Survival of the Fittest. Sponsors included El-Ad Group of Canada, the Gazit Group, Emerald City Condominiums, The Sonshine Family Foundation, Skyline and El Al. Greetings were extended by CICC President David Rubin and opening remarks were delivered by moderator Oded Orgil, chair of Canaccord Capital Corporation.
Panelist Ed Sonshine, a former Negev Dinner honouree and CEO of RioCan Real Estate Investment Trust, said that worse times for the Canadian real estate market existed in the past, especially during the 1970s (the stagflation era) and in 1981-2, when the prime rate was 20%. He started RioCan in 1993. “The last 15 years have been pretty good. But now the real estate market is not good.”
However, according to Sonshine, the big advantage for Canada as opposed to the US and most European countries is that “our banks are solvent. This is a big difference for us. This recession is all about availability of capital. However, once the capital does become available, and it will, there are huge acquisition opportunities.”
Sam Crignano, CEO of Cityzen Development Group, first described the current categorization of the Canadian housing market and then put the onus on CMHC(Canada Mortgage and Housing Corporation) to play a major role in freeing up more capital for future real estate development.
He said that in Vancouver and Calgary there was a recent boom in real estate prices which has recently gone bust. Such a boom-bust sequence has not happened in Manitoba and Saskatchewan, where the outlook is now “good. In Toronto there has been a drop in demand but there was no recent run-up in prices,” so the market in Canada’s largest city has been more stable.
“While in the GTA, housing starts in January 2009 were down 46 per cent from that of January 2008, there has been an upswing in February 2009, which is continuing in March.”
The biggest growth in Toronto has been in condominiums, because land for detached and semi-detached houses, according to Crignano, is running out. “Intensification is the key to the GTA’s future,” he said. “Buyers of condominium units are now renting them out. But because CMHC now requires 100 per cent financing, no new projects are being planned now.”
Crignano strongly emphasized that “the federal government must pressure CMHC to increase financing for new housing units. CMHC must step up to the plate and relax its (credit) policies.”
This proposed change of policy on the part of CMHC makes a Canadian real estate recovery more achievable than a similar recovery in the US, where sub-prime mortgages, failed banks, and home foreclosures present huge problems, which don’t exist here in Canada.
Israeli-born Dori Segal, the third and final panelist, dealt more with his own professional background; first as a diamond dealer and then as a real estate developer in Israel, the US and Canada in partnership with Chaim Katzman. He candidly discussed his business setbacks as well as his triumphs. The years from 2002 to 2005 were the best years.
“But this is not the first time of hard times in the real estate business,” he said, attributing his survival-of-the-fittest staying power to his success.
Segal had high praise for the Israeli real estate scene, saying that the real estate climate in Israel is more akin to that of Canada.
In both Israel and Canada a few big national solvent banks dominate the scene, in contrast to the US where there are many small regional banks.
But when he talked about survival of the fittest, Segal discussed Israel’s political survival as well as economic survival.
“Israel is not winning the war for public opinion in North America,” which he feels is as important for Israel’s economic as well as military survival.
While Segal said that he trusts the US because of Israel’s economic value, especially in terms of solar energy (the Israeli firm Ormat is the biggest solar energy provider in the US), Sonshine said that US President Barack Obama “makes me nervous” not only because of his political policy towards Israel but also because of his economic protectionist inclinations, which Sonshine feels could potentially harm both the real estate scene and larger economic scene both in Israel and Canada. |
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Last Updated ( Wednesday, 08 April 2009 )
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