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Policy & Research

Impacts of COVID-19 on Real Estate Deals

June 4, 2020

The COVID-19 pandemic has caused many real estate deals (sales and leases) to be terminated or postponed however, the final impact will be difficult to measure until more deals occur. The impact is also expected to vary depending on the type of real estate. The real estate boom ended in about late 2014 when oil prices crashed. The overall Saskatchewan real estate market was relatively weak even before COVID-19 and the virus is expected to exacerbate the situation, as least temporarily. However, there are still some sales and leases occurring. Buyers include both owner users and investors. Some investors have substantial cash and see some opportunity to buy income producing properties at lower prices. Investors are carefully considering the strength of tenants before they buy and mortgage lenders are also more strict.


There is downward pressure on rents in all categories which impacts prices but there are few high quality properties for sale and if they are there are still buyers who need to park their cash.

Vacancy rates have been increasing and there are some tenants who will fail or not re-open due to COVID-19. A high rise apartment building and a large warehouse for an owner user are being sold which indicates some positive activity.


The Saskatoon market has taken a wait and see approach. There is no evidence of downward pressure on sale prices yet. The transactions that have occurred within the past month are still at pre-covid pricing. There have been significant rent deferrals for retail and restaurant properties. Office tenants have also asked for rent deferrals but to a lesser degree than the retail market. The industrial and multi-family markets have not seen a significant change. Like Regina, investors and lenders are analyzing the strength of tenants before completing deals.


The Prince Albert market in a lot of ways is very similar to Regina and Saskatoon markets but on a much smaller scale and does not react as quickly. There are no indicators of any changes as of yet; however, it is the gateway to the resource industries in the northern portion of the province and the Lake region. The reopening of these will have an impact on the city’s economy. Values for commercial property appear to be the same as pre-pandemic ones.


These cities have seen a decline in rents/prices since the 2014 oil crash. There was substantial building during the real estate boom and there is now over-supply. There was a December 2019 apartment sale in Weyburn at $75,000 per suite and some apartments in Estevan have sold in the $45,000 per suite range.


Although they are in better shape than the southeast the rents and prices have declined as well. A Yorkton strip mall is in the process of being sold which is good news.


Commercial markets in the other smaller cities in the north-central portion of the province are almost totally owner-occupied and their economies are tied to the agricultural and the oil and gas industries. As a result, their economies follow the trends in these sectors.


This is the one bright spot in the market. According to Farm Credit Canada, farmland prices increased 7.4% in 2018 and 6.2% in 2019. The success of the agricultural industry will depend on how fast global markets open as the province depends heavily on these exports.


In Saskatchewan, assessments are updated every 4 years. The next 4 year period is 2021-2024. Once you receive your new assessment you will have 60 days to appeal. Brunsdon Lawrek can review your assessment and determine if an appeal is warranted.

In summary, the Saskatchewan real estate markets have not yet seen large declines in values due to COVID-19. Many investors are in a wait and see pattern. Owners are reluctant to take a discount on their properties and will hold on as long as possible. The retail and restaurant markets will see higher vacancies over the coming months as owners and tenants struggle with cashflow problems. Given the low margins already seen in these markets, some businesses may not reopen which will negatively impact vacancy and ultimately the value of the property. The multi-family and industrial markets have faired the best during this pandemic and are likely going to be impacted the least by the pandemic.

Providing professional real estate advice to its clients, Brunsdon Lawrek & Associates has offices in Saskatoon and Regina with 22 appraisers and researchers serving the entire province. It has the most comprehensive real estate database in the province and offer residential, commercial, agricultural appraisals, market rent studies, property tax consulting, reserve fund studies, arbitration, and litigation support services.

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