State OF THE MARKET
2019 was a year of recalibration for the Lower Mainland development land market and this was amplified in areas like South Surrey. The greatest corrections happened in the most luxury markets across the region and South Surrey is one of the Fraser Valley’s largest luxury sub-markets. Construction of recently approved development projects created the appearance of steady activity in the area but digging one level deeper, to the development land market, you can see the impacts of the broader market correction.
There is a long list of factors behind the market correction but among them are:
- the implementation of the mortgage stress test
- additional or increased taxes (foreign buyers tax, vacant home tax, etc.)
- uncertainty created by a new Mayor and Council adjusting infrastructure priorities
- the self-fulfilling prophecy created by speculation that the market would decline
Due to these factors, home prices declined by 8-15% (with luxury homes seeing the largest declines) and when home prices are in decline, home builders are far less interested in purchasing land.
The market downturn and the concern that the market could decline further resulted in a 54% decrease in development land sales volume in South Surrey, compared to 2018.
Towards the end of 2019 market sentiment began to shift and became much more positive. This had most developers and investors back in the market for their next development site. The renewed confidence in the market was pointing towards a strong 2020 until COVID-19 threw a wrench into the gears. An overwhelming majority of developers and investors we have spoken with over the last few weeks maintain confidence in the market 12-18 months out from now. We are in uncharted waters and that has some developers and investors looking to extend transaction timelines to compensate for delays in due diligence work and the general uncertainty in the short-term market.
There were only a few new development applications submitted in 2019, throughout South Surrey. The green highlighted regions on the below map indicate areas containing particularly high concentrations of in-stream development applications and are where we expect to see the next influx of new construction over the next couple years.
The summary statistics below may appear to be a lot of new inventory for the market, but these applications exist at a wide variety of stages in the planning process and will not all come to market at the same time. Of these applications a handful may come to market this year but many could take two years or more.
CURRENT STATE OF south surrey NEIGHBOURHOODs
Sunnyside Heights – Grandview Area 2
Development and construction are roaring along in Sunnyside Heights, where a large portion of South Surrey’s new home construction will occur in 2020. There are now only a handful of properties that have not been purchased by builders.
Dart’s Hill – Grandview Area 3
The Dart’s Hill neighbourhood planning process is back underway and the plan is expected to go to council for approval in the next 12 months. This is welcomed news following last year’s uncertainty and has sparked a renewed sense of optimism and interest from developers.
Redwood Heights – Grandview Area 4
Late in 2019 the subdivision application for the future elementary school site received conditional approval. This was a critical milestone for planning staff to be able to present the stage 2 neighbourhood plan to council for approval, which is a major hurdle stopping new development. Neighbourhood plan approval is anticipated to occur in May and like Area 3, this has brought attention back to the area.
Update: The Redwood Heights Neighbourhood Plan has been approved by council, read our update by clicking here.
Orchard Grove – Grandview Area 5a
Most developable sites in Orchard Grove have been purchased by developers and builders so 2020 should see minimal land sale activity and will instead see the continued build out of the area.
Grandview Area 5
Grandview Area 5 still awaits a neighbourhood plan before new development can occur. A recent city planning staff report indicated staff will not be entertaining new neighbourhood plans until existing in-process plans are complete, so we don’t expect to see much activity here for a while and land values are expected to remain flat.
North Grandview Heights
Development is continuing to move from west to east however, major sanitary servicing upgrades are required before many in-progress applications can receive final approval. Some of these servicing upgrades are shared by Area 4 and imminent approval of that plan should mean good things for the eastern end of North Grandview Heights.
King George Highway Corridor
2019 brought out a couple new development applications along King George as well as approval of some existing applications. Development is slow and steady, as applicants propose increases in density to support future rapid transit along King George Boulevard.
Highway 99 Corridor
It was another relatively uneventful year in the Highway 99 Corridor with very few land transactions or much progress by existing development applications.
Other than the construction of the new elementary school, there was minimal development activity in Douglas last year as much of the land is already developed.
Semiahmoo Town Centre
2019 was a busy year for planning staff with public consultation and creation of the updated Semiahmoo Town Centre Plan. The stage 1 plan was just endorsed by Council on March 9, 2020 so now it will proceed to stage 2, the detailed engineering study. This progress is sure to increase developer/investor interest in the area.
Rosemary Heights Central
In 2019 we saw progress on existing development applications near 156 Street but no new applications. It is likely to be quiet in this area until demand for luxury homes returns, encouraging developers/builders to pursue that segment of the development land market again.
Rosemary Heights West & Morgan Heights
These neighbourhoods are substantially built out.
SOURCES & HOW TO LEARN MORE
In creating this report we consult City of Surrey planning and engineering staff, survey multiple land transaction reporting systems and analyze municipal development data to bring you the most relevant information. If you have any questions regarding development in South Surrey, don’t hesitate to reach out.
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