Recent months have seen a wave of economic negativity with housing affordability and rising interest rates across Canada, the outlook for Kelowna continues to be optimistic for recovery and bullish for long-term real estate investment.
While the ‘Roaring ’20s’ boom time for developers in the aftermath of the COVID-19 pandemic has been curbed, the message now is to ‘keep calm and carry on,’ that the current economic uncertainty doesn’t diminish the long-term outlook for Kelowna or the Okanagan region.
That message was relayed by a panel of real estate development industry guest speakers at the 7th annual HM Commercial Group ‘Crystal Ball’ forum held at The Laurel Packinghouse on Thursday evening.
The lifestyle and business opportunity attributes that fueled a wave of growth in Kelowna over the past 25 years have not disappeared, the panel offered, and will only continue to build up more momentum, marked by the prognostications of another 90,000 people moving here over the next 20 years.
The panel also cited new property development trends seen across Canada that are already apparent in Kelowna - airport commercial development, higher density residential particularly around downtown and other community urban commercial centres, retail shopping centre parking lot space being repurposed for residential development, and the greater influence of providing rental units.
Brad Pelletier, one of the forum panellists and the senior vice-president of Wesbild Properties, behind the Predator Ridge development, said the Lower Mainland and Alberta have been dependable draws for seasonal and permanent local real estate buyers over the last two decades.
But he points to the ‘Golden Horseshoe’ region of Southern Ontario, the most densely populated and industrialized region in Canada, emerging as a growing influence on the real estate market.
“There are six million people living in that region and we are only beginning to scratch the surface as Kelowna being a place of emerging interest. People coming to Kelowna from there are going to be a major part of our future,” he said.
Like the other panellists, Pelletier also cited the changing development model where rentals are becoming more financially viable to build, coupled with demand for rental housing continuing to escalate as rising interest rates make home ownership more difficult.
He said Predator has embarked on a high-end rental development in response to changing market demands.
“We are looking at a higher-end project with a one-year rental commitment as a new introductory product for us to offer. It gives people a chance to test the lifestyle we offer before making a commitment to buy,” he said.
Scott Thomson, vice-president of Northland Properties Corp., said regardless of the current economic conditions, his company plans to invest $500 million in the region between projects at Kelowna’s airport and Revelstoke Mountain Resort.
He cited Kelowna as being a “sweet spot” for economic growth, on a par with two other cities, Victoria and Halifax, which each offer unique growth and lifestyle opportunities not found elsewhere across Canada.
“We still see Kelowna with a five-year projection of being bright, with a longer-term projection being super bright,” Thomson said.
He said Kelowna, and in particular the airport, as being an essential hub to the overall growth of the Okanagan region, illustrated by his firm’s commitment to building a new 260-room Sutton Hotel at the airport.
“While people can still drive here via roads, the airport is going to be the key gateway point for Kelowna’s future,” he said.
Jenn Podmore, vice-president, of portfolio services with the Rennie Group, says looking at census data for population growth within the Kelowna metro area, from 2016 to 2021 the population grew by 6,000 people and on average the area became younger and a little more diverse.
Understanding the impact of a growing population, particularly one that is also defined by its youth and not the Boomer generation, is critical for forecasting the demand for housing, workspace, social infrastructure, and places to play and recreate, Podmore said.
But while Canadians will continue to migrate to Kelowna if expectations prove accurate, the question still remains where those people will live and work.
Luke Turri, executive vice president of the Mission Group, said interest rate fluctuation has placed a renewed focus on rental housing, coupled with rising rental rates.
But for those who can afford it, the demand to buy in Kelowna is reflected in his company’s Aqua Waterfront Village project in the lower Mission, with phase 1 sold out and phase 2, another 415 units, already 60 per cent sold out.
“We are offering residential opportunities on the lakefront which is unique coupled with a high-end restaurant and waterfront boardwalk that are attractive to buyers,” he said.
But for rentals, Turri said Mission Group is looking beyond just providing rental units, but seeking to provide quality lifestyle features fueled by new technologies impacting everything from security to how kitchens function.
“We are starting to think more about lifestyle from a rental aspect,” he said.
He said rental unit construction has been about 600 units annually for the past five years in the Central Okanagan, where it was 150 units for each of the previous 30 years.
Thomson ended the panel discussion on a note of caution, noting the alignment of community leadership, civic government and the development community need to all continue to work together.
“Right now you have that alignment in Kelowna, a shared vision, and you can see what has happened here as a result over the last 20 years,” Thomson said.