of Capital Interest – August 2006
produced by Juteau Johnson Comba Inc.
Real Estate Advisors and Appraisers
2255 St. Laurent Boulevard, Suite 340
Ottawa, Ontario
K1G 4K3

Phone 613-738-2426 ex 104
Fax 613-738-0429

Editor John Comba

August 2006

Trends are always interesting to follow. Based on the last three six month periods, investment in real estate in Ottawa is in decline. However, this in our opinion is due to a lack of product. There is still a strong desire by investors to invest in the Ottawa real estate market which is supported by multiple bids on good product when they are made available. A summary of sales activity for all sales over $500,000 by property class is presented as follows:

The following are observations with respect to the Ottawa market during the first half of 2006:

• The industrial market has remained stable with sales totaling almost $40,000,000 and sales being consistently between 14 and 16 properties for the past three six month periods.
• The investment in multi-family product continues to decline with the total value decreasing by half between the first half of 2005 and the first half of 2006. However, it should be noted that there were several larger apartment building transactions in the first half of 2005 including one sale that accounted for 46.5% of the total, compared with numerous transactions of smaller buildings in the first half of this year.
• The activity in the retail market in the first half of this year was similar to the activity in the same period last year. However, it was much less than the last half of 2005 when one large transaction occurred.
• The office market recovered in the first half of 2006 over the last half of 2005 but was much less than for the first half of 2005. However, the total number of sales has increased slightly from 20 sales in the first half of 2005 to 23 sales in the latter half and 25 sales in the first half of 2006
• Land continues to receive a lot of investment dollars with just over $165 million invested in the first half of this year. I wonder if this is the sign that we are getting towards the end of a bull market in real estate. Land to me is akin to investing in a speculative stock that has no cash flow but a lot of promise. I think many of the readers from Ottawa have a story about a high tech stock they purchased in 2000 that is worthless today. When the market declines, the biggest losses will be in this sector. Be careful where you park your money. They may not be making any more of it (land) but you still have to carry it until it can be sold or developed at a profit.
• The investment in special building sales has also increased this year to over $86 million. This is more than five times that amount that was invested in the first half of 2005. This too could be a sign that the investment market in real estate is getting near the top as investors are seeking higher returns in markets that they would not have considered a few years ago.

Now onto the sales that occurred in June of this year. There were a total of 30 sales reported in the month with a total value of $102,799,197. Retail sales accounted for 9.3%, office 5.8%, residential buildings 19.2%, industrial buildings 1.8%, special buildings 48.4% and vacant land sales 15.5%. Sales data has been provided by RealTrack, Inc. For more information visit www.realtrack.com or call 1-877-962-9033.

SALES

There were nine RETAIL sales in June with a total value of $9,562,000. Ottawa Prestige Properties Ltd. sold 1008-1024 Wellington Street to 2102970 Ontario Inc. for $3,200,000 or $160/sq.ft. The property is improved with a two and three-storey building that was constructed in 1920 and is demised into seven ground floor commercial units varying in size and eleven apartment units on the second and third floor.

There were three OFFICE building sales this month totaling $5,970,000. 2685 Queensview Drive Corp. sold 2685 Queensview Drive to Queensview Property Holdings Ltd. for $3,150,000 or $171/sq ft. The property is improved with a two-storey Class “B” office building that was constructed in 2001.

The INDUSTRIAL market was slow this month with only two transactions totaling $1,810,000. Brofort Investments purchased 2161 Thurston Drive from 177763 Canada Inc. for $1,060,000 or $78/sq. ft. It is improved with a one-storey industrial building that was constructed in 1990. Joel Freedman from Metro Suburban was the broker.

There were four transactions in the APARTMENT market totaling $19,715,553. The sales ranged from $70,323 to $152,500 per unit. The largest transaction involved the apartment building located at 330 Queen Elizabeth Drive which was sold by Roxdrive Holdings Ltd. to Homestead Land Holdings Ltd. for $12,600,000 or $146,512 per unit. This property is improved with an eleven-storey 86 unit apartment building. Aik Aliferis of Primecorp was the listing agent with respect to this transaction.

Saint Paul University sold 305-315 Nelson Street to Nelson Place Apartments Inc. for $5,020,000. This property is improved with an eight-storey apartment building.

There were three sales that fell into the SPECIAL category this month totaling $49,760,000. Two of the sales were retirement home properties that were sold by Rose Corporation to Retirement Life Communities as part of a larger portfolio of properties. One of the properties was located at 2604 Draper Avenue which is a former apartment building that was converted to a retirement residence. It was sold for $31,000,000 or $146,919 per unit. The other property is located at 480 Metcalfe Street and was purchased for $18,000,000 or $180,000 per unit. This is a former hotel that had been converted into a retirement home in 2001. An addition is being constructed on the west side of this property.

There were eight vacant LAND transactions during the month of June with a total consideration of $15,981,644. Of the eight transactions, there were two residential, one commercial, two industrial, two future growth and one institutional sale.

Atalla and Georges Swaita sold 52.9 acres located at 2290 Trim Road in the east end of the city to 1470424 Ontario Inc. (Cardel Homes) for $7,182,572 or $135,775/per acre.

Richcraft Homes Ltd. purchased a 26 acre parcel of land on the south side of Innes Road east of Trim Road in Cumberland from Eelke Bakker for $2,151,452 or $82,748 per acre.

NEWS

The local unemployment rate as reported by Statistics Canada for the month of June was 4.9%, down from 5.1% in May. The National unemployment rate was 6.1% which remained the same in May and the Provincial rate was 5.9% same as reported for May 2006.

Canada Mortgage and Housing released their Housing Now - June 2006 report. Residential construction rebounded by 55% and there were 591 housing starts in May 2006, compared to 381 in 2005. There was a total of 1,965 units year-to-date which is up 22% over the same period last year. There were 303 multiple housing starts in May of 2006 which was doubled the number in May of 2005