The value of commercial real estate deals in Vancouver fell 50% to $1.3 billion in the first half of 2008 compared to $2.3 billion in the last half of 2007, according to a mid-year report from Colliers International.
The U.S. sub-prime mortgage crisis that started in August 2007 also resulted in a 47.6% drop in the number of deals to 406 in the first half of 2008 from 778 in the last half of 2007.
A decline in land sales contributed the most to the decline in sale values and deals in the first half of 2008. Sales fell to $765 million from $1.25 billion. While land sales are still above the historical average, the economic slowdown and the financial crisis reduced the number of speculative land deals in the period.
Multi-family apartment sales in Vancouver have declined significantly in the past year. They fell almost 50% in the last half of 2008. The value of those sales fell to $160 million from 45 transactions.
Industrial sales volume was down slightly in the first half of 2008 to $307 million from 72 transactions. Sixteen office buildings were traded in the first half of the year totalling $89 million.
Sales of retail units surged in the first half of 2008 as 66 transactions resulted in a total value of $296 million. The total was $30 million more than the deal value in the last half of 2007. However, volumes are expected to fall for the rest of 2008 due to the increasingly tight availability of financing for new projects.
While debt markets are expected to remain turbulent over the next few months, the report noted that buyers such as pension funds that don't need to use a lot of debt will be in the best position to make acquisitions.