Vancouver a “hedge city” to park foreign cash: study An annual study ranks Vancouver among the top five Canadian markets for real estate investing in 2015, but the reasons given may…

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An annual study ranks Vancouver among the top five Canadian markets for real estate investing in 2015, but the reasons given may prove controversial.

The PriceWaterhouse Cooper (PwC) and Urban Land Institute’s Emerging Trends in Real Estate 2015 – which is based on interviews with leading real estate developers and investors – ranks Vancouver fourth among nine “markets to watch,” behind Calgary, Edmonton and Toronto, but ahead of Ottawa.

But while No.1 Calgary is called the “strongest market in the country” and No. 2 Edmonton is cited for robust job growth, Vancouver is called a “hedge city” dependent on foreign investors to keep the real estate market afloat.

“Foreign buyers – the vast majority of whom hail from mainland China or Hong Kong – are, of course, one of the key reasons Vancouver real estate prices continue to rise,” the report states. “Vancouver lacks the cultural cachet of Paris or Milan. But it does offer comfort and stability – and a place for the super-rich to park sizeable funds in local real estate as a hedge against risk.”

The report suggests such offshore investors aren’t interested in how much they will make on their Vancouver real estate. “Returns aren’t the point: safety of capital is, and a $5 million condo is more insurance policy than investment.”

The report forecasts that Vancouver will see 3.3% annual gross domestic product growth in 2015, the second highest in the country behind Halifax, but notes that strength will not be seen in the office market, which they say is under threats of overcapacity, a spike in vacancy rates and downward pressure on prices.

“Some foresee AAA space leasing at B rates, barring a significant boost in the economy – though progress on liquid (sic) natural gas projects or Northern Gateway [Enbridge Inc.’s northern oil pipeline project] could change the picture very rapidly.”