Real Estate Weekly Newsletter (from KPMG)

The following information was obtained from newspaper articles appearing in the Globe and Mail and the National Post for the week ending January 7, 2007

Morguard REIT will sell about 65% of its industrial portfolio for $156.7-million in two
separate transactions to three Canadian pension funds. Morguard has sold 11 properties
comprising a leaseable area of 876,000 square feet for $72-million and will close the sale of
nine properties with 1.06 million square feet of space for $84.7-million in the first quarter of
2007. The REIT also purchased a 50% interest in a 900,000-square-foot warehouse
development in Valleyfield, Quebec, to be leased to Diageo Canada. The project will be
jointly held with Morguard Industrial Property-1 Fund, which is owned by three major
Canadian pension funds.
********
Clarke Inc. paid $27.72-million to purchase 17.79% of Royal Host REIT from Geosam
Investments Ltd., an investment holding company controlled by Clarke’s chief executive,
George Armoyan. Clarke purchased 4,325,876 units for $6.42 per unit.
********
The Ontario Club and the Dominion Club of Canada will merge into The Ontario Club at 1
King West, effective March 1, 2007. The new club will be based in the historic Dominion
Bank building, which was recently renovated into a condo hotel with the addition of a 51-
storey tower.
********
According to Altus InSite Real Estate Information Systems Inc., 71 office towers are
under construction across Canada, nearly four times the level of activity seen two years ago.
Nearly half of all new office construction in Canada is occurring in Calgary, where vacancy
rates for prime space are currently below 1%. Construction is also taking place in Toronto,
with additional activity in Ottawa, Montreal, Edmonton and Vancouver. According to CB
Richard Ellis, close to 11 million square feet of new space will open in 2009, a 2.7%
increase to the national market.
********
According to Cushman & Wakefield LePage Inc., sales of industrial real estate in Canada
rose 73% to $7.1-billion in 2006. Industrial vacancy rates are less than 7% in all major cities
except Montreal and Halifax, which have an 8% vacancy rate. The industrial vacancy rate is
5.1% in Toronto and less than 1% in Calgary. Reserve prices for 36 industrial lots to be
auctioned in the City of Calgary will be between $430,000 and $440,000 an acre, but the
trading price may reach $550,000, compared with $375,000 an acre a year ago. Prices of
$750,000 an acre are expected in the City of Toronto, compared with $700,000 an acre in
2004.
********
Merrill Lynch & Co. Inc. purchased mortgage lender First Franklin and affiliates National
City Home Loan Services and NationPoint from National City Corp. for US$1.3-billion.
********
New York-based ING Clarion Partners has entered into talks to purchase Virginia-based
Apple Hospitality Two Inc., which owns 64 extended-stay hotels franchised by Hilton
Hotels Inc. and Marriott International Inc.
********
Boca Raton-based Ocean Land Investments Inc. has offered US$510-million to purchase
the Briny Breezes waterfront trailer park in South Florida. Ocean Land plans to build about
900 low-rise multimillion-dollar condo units, a high-end marina and a 300-room luxury motel.
Briny Breezes’ board recently approved the sale, which requires support from two-thirds of
the 488 mobile home owners to proceed.
********
An offer by Kirk Kerkorean’s Tracinda Corp. to buy up to 15 million shares of MGM Mirage
Inc. at US$55 per share ended with only about 445,000 shares being tendered.
********
Mortgage Lenders Network USA Inc. became the third U.S. mortgage company in a
month to stop issuing loans. Ownit Mortgage Solutions Inc. filed for bankruptcy protection
in late December and Sebring Capital Partners LP closed operations in December.
According to the Mortgage Bankers Association, late payments on sub-prime loans in the
U.S. climbed to 12.56% of the total during the third quarter of 2006.
********
According to the Mortgage Bankers Association, its seasonally adjusted index of
mortgage-application activity rose 3.6% in the last week of December.
********
According to Moody’s Economy.com, the median sale price for an existing home in the
U.S. is projected to fall by 3.6% in 2007. The U.S. National Association of Realtors
expects that existing home sales for 2006 will total 5.47 million, down 8.6% from 2005.
********
OAO Gazprom is proposing to build a 320 metre (1,050 feet) tower in St. Petersburg,
Russia, 2.5 times higher than the city’s tallest building.
********
According to DTZ India, organized retail space is expected to rise from two million today to
14 million square feet in Delhi, Gurgaon and Noida by the end of 2007. According to Knight
Frank India, monthly rentals for discount stores in Mumbai city have climbed to more than
125 rupees per square foot from 55 rupees about two years ago. Monthly rentals in prime
commercial space in Mumbai are US$11 a square foot, compared with US$24 in Singapore
and US$80 in Hong Kong.
According to SSKI, demand for commercial real estate in India will reach 160 million square
feet over the next three to four years, while 15.9 billion square feet of construction in the
housing sector is projected by 2010. Prices of prime residential property in central Delhi
have increased more than 75% over the past two years.
********
According to Chinese Government figures, residential property prices have more than
doubled in China since 2000. Residential property purchases rose 24% in the first 10
months of 2006. Guangzhou R&F, a Chinese developer, reported a 60% gain in first-half
profit. China Overseas Land had a 48% increase in first-half profit.
********

Just Another Manic Monday…

Calgary Real Estate continues to rise.

Boomers love the booming condo market!

An interesting article regarding Title Insurance in Ontario.

One of the more interesting stories developing over the past number of years is the growth of Habitat for Humanity. It is an idea, concept and charity whose time has come. Furthermore, I believe, that with the continuing boom in Canada’s real estate industry, coupled with increasing prices, Habitat for Humanity will continue to be in high demand. This is an interesting article from the Toronto Star. Read it HERE.

If you’re intersted in volunteering please visit www.TorontoHabitat.ca

Investing in Real Estate is a family affair.


Merry Christmas & Happy New Year!

Dear Freinds,

Unless something important or interesting comes up this will be the last posting on this blog. I want to thank all of you for visiting us this year. I started this blog in the hopes of generating business, interest, and communication between you and I. And although we are far from dominating the real estate blogsphere we are well on our way.

Please keep checking back to keep in touch with all the wacky stuff that goes on in this interesting industry.

From everyone here at “THE Destination”, Merry Christmas, Happy Holydays, and all the best to you and your family for 2007!

Regards,

Karim Kanji
Manager – Client Services
MoneyNow@RealCashCanada.com
www.RealCashCanada.com

National Bank, Canadian Chamber predict slower economic growth next year

December 20, 2006 Edition of Canadian Business Online:

MONTREAL (CP) – Canada will see “relatively modest” gross domestic product growth of 2.2 per cent in 2007 as the pace of world economic growth moderates and a slowdown in the United States acts as an anchor to expansion here, the National Bank (TSX:NA) predicted Wednesday in its quarterly outlook.

Rapid industrialization in Asia, where powerhouses China and India continue to gain steam, will ensure the continued expansion of the world economy, “albeit at a slower pace,” the bank said in a release.

An American slowdown already in progress “will spread in 2007 as American households become more focused on savings in the wake of the real estate sector’s nosedive,” National Bank said. “Although its fundamentals are among the most solid of all G7 nations, Canada will not be protected from the headwinds blowing south of the border in 2007, with a relatively modest 2.2 per cent growth in GDP predicted.”

Chief economist Clement Gignac said the bank believes a regional divide will continue between the hard-hit manufacturing centres of Central and Eastern Canada and the burgeoning Western provinces in 2007.

As natural resources continue to drive the Western economies, Ontario and Quebec will likely see economic growth under two per cent in the coming year.

The bank said it believes there are interest rate cuts on the horizon, with the “Bank of Canada’s key rate likely to total close to 100 basis points,” which is good news for Canadian households.
A drop in rates will likely produce a drop in the loonie, “which is expected to take a break from its climb of recent years and settle between 85 and 88 cents US before rising to trade on par with the greenback by the end of the decade.”

In another report Wednesday, the Canadian Chamber of Commerce said the economy will be hit by several speed bumps in the first two quarters in 2007, producing slower growth and slightly higher unemployment.

The business lobby group said Canada’s average annual real GDP growth will be 2.8 per cent this year, slowing to two per cent in the fourth quarter. Growth will average 2.4 per cent in 2007 because of the weaker American economy.

In its forecast, the Ottawa-based chamber predicts:

– The national unemployment rate will rise to 6.4 per cent in 2007 from 6.3 per cent this year.

Housing Affordabillity – RBC Economics

From Canadian Business Online on December 20th 2006:

Housing affordability down despite stable borrowing rates, says RBC EconomicsDecember 20, 2006 – 10:43 a.m.

TORONTO (CP) – Housing affordability diminished for the fourth straight quarter in Canada despite stable borrowing rates and a decline in utility costs but the cost to own a home will likely abate somewhat next year, RBC Economics said Wednesday.

House prices continued to climb across the country, the economics wing of Royal Bank (TSX:RY) said in releasing its quarterly Housing Affordability Index.

“Across Canada, housing affordability further eroded as rising house prices outpaced income growth in the third quarter of 2006,” assistant chief economist Derek Holt said in a release.

“However, affordability is likely to improve slightly next year as the lagged effects of fourth quarter mortgage rate declines, easing energy price pressures and a topping out of home price appreciation will have a positive impact for home buyers.”

The pace of the decline in housing affordability eased somewhat during the quarter almost everywhere except Alberta, though that province will likely see an improvement in affordability as well in 2007, Holt said.

According to the RBC index, which measures the proportion of pre-tax household income needed to service the costs of owning a home, condos remain the most affordable housing class, with an index of 28 per cent.

Standard townhouses were the next affordable class at 32 per cent, followed by a detached bungalow at 40.2 per cent. The standard two-storey home is still the least affordable housing type with an index reading of 45.8 per cent, the bank said. Both new home construction and resales are expected to soften in 2007 while the overall volume of home sales activity remains high and the majority of home equity gains seen in recent years should also be retained, the report said.