South Surrey State of the Market Report 2023

STATE OF THE MARKET IN SOUTH SURREY

Amidst a backdrop of market corrections affecting real estate nationwide, South Surrey has not been exempt from this trend. After a remarkable two-year high during the pandemic, the housing market in South Surrey is currently in a phase of gradual adjustment. With seven interest rate hikes in 2022, followed by an additional three in 2023, pushing the rate to 5%, the challenges in the South Surrey real estate landscape have intensified. Nevertheless, despite the elevated borrowing costs and broader market adjustments, discussions with local developers continue to highlight the resilience and attractiveness of South Surrey’s housing market.

Looking at the transaction data, there is an increase in transaction volume in 2022 compared to 2021, likely reflecting deals negotiated in the preceding year. However, the notable highlight is the sharp decline in the first six months of 2023, with a significant drop of approximately 61% compared to the same period in 2022. This decline is largely attributed to recent interest rate hikes, municipal fee increases, and rising construction costs, which have impacted the affordability and financing dynamics of development land.

DEVELOPMENT APPLICATIONS IN SOUTH SURREY

In South Surrey, there are two prominent zones where the majority of ongoing development proposals are concentrated. Sunnyside Heights and Dart’s Hill collectively envision the addition of approximately 3,000 new residences spread over 180 acres. These areas lead development in South Surrey in upcoming residential projects. While the figures below suggest a substantial influx of new housing units into the market, it is crucial to emphasize that these applications are in varying stages of the planning process and will not be introduced to the market simultaneously. While a few of these proposals may materialize within the current year, a portion will require a timeline of two years or more for full implementation.

Sunnyside Heights

23 significant* applications
1,578 units proposed over 78+ acres
131 Single Family Homes
1,007 Townhomes
440 Condos

Dart’s Hill

15 significant* applications
1,416 units proposed over 101 acres
100 Single Family Homes
1,316 Townhomes
0 Condos

* A “significant” application is any application with greater than 5 units or lots

Impact On The Road Ahead

The land market in South Surrey is currently at a standstill, evident through the low volume of transactions. This pause is largely due to landowners’ pricing expectations not aligning with developers bids, which are affected by rising municipal fees, and high interest rates. Notably, the 14 transactions in premium locations this year saw an average price per acre** fall by 0.4 percent, a deviation from the usual upward trend in such locations. For the market to move forward, landowners will need to adjust their expectations in light of the increased costs of building. Such a realignment, together with a potential leveling off of municipal expenses and interest rates, could kick-start market activity and improve the outlook for development land.

NEIGHBOURHOOD UPDATES

Below you will find a summary of the distinguishing features of each neighbourhood as laid out in the draft plan, as well as an update on the current status of each neighbourhood.

Sunnyside Heights — Grandview Area 2

• Further to our previous State of the Market report, this area still has the highest concentration of development applications. Most of which are unchanged from our previous report.
• Construction is well underway in the area with some projects near completion, there are 4 townhouse projects actively selling in the area, majority of them close to selling out.

Dart’s Hill — Grandview Area 3

• The approval of the Darts Hill NCP in 2021 has sparked a notable increase in applications, particularly for townhouses. This is further complemented by the robust sanitary servicing infrastructure routed through the Fergus Pump Station initially constructed for the neighbouring Sunnyside Heights. Notably, a leading developer has secured land for future detention ponds, setting the stage for an expedited development phase in Darts Hill. This momentum is expected to gain further traction once essential water infrastructure is upgraded.

Redwood Heights — Grandview Area 4

• Since our last report, Surrey approved the acquisition of the parkland which is strategically situated near a future school on 180 Street and 24 Avenue.
• In terms of development progress, challenges related to water infrastructure upgrades have slowed things down. To unlock development in Redwood Heights, essential service upgrades are needed along 24 Avenue, including new water mains to support the area’s growth and meet the community’s future needs. There have been rumors of potential federal government funding support to expedite the process, but progress is slower than expected. Local residents can voice support for faster infrastructure improvements, helping make Redwood Heights’ vision a reality.

Orchard Grove — Grandview Area 5a

• The majority of this neighborhood is already developed with only a few small sites remaining for development.

Grandview Area 5

• Canadian Horizons is currently working with the City of Surrey, local residents, and stakeholder groups on a Neighbourhood Concept Plan (NCP) for Grandview Heights (Area 5). They submitted a formal petition to Surrey staff in February 2022 which is now under review.
• While builders may not be interested now, there is plenty of interest from more patient investors with longer term vision, this neighborhood had the highest volume of transaction in 2022.

North Grandview Heights

• Despite a handful of large Single-Family applications, development activity has been minimal over the past 12-18 months.

King George Highway Corridor

• There have been only a handful new development applications, but there’s a noticeable pattern – most of these proposals seek to increase housing density, often transitioning from townhouses to condo developments

Highway 99 Corridor

• This corridor remained mostly unchanged since our last report with minimal activity or progress on existing applications.

Semiahmoo Town Centre

• Last year, council approved the Semiahmoo Town Centre plan, sparking an influx of new applications, mostly involving condos, which contributed to a total of 422 units in the neighborhood.

Rosemary Heights Central

• Future development will be contained to the central portion along 156 Street as well as one application near Morgan Creek Golf Course, which includes combination of single family, townhouse, and condo.

Rosemary Heights West & Morgan Heights

• These neighborhoods are substantially built out.

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SOURCES

In creating this report, we survey multiple land transaction reporting systems (Commercial Edge, MLS), analyze municipal development data, and consult the Township of Langley planning staff as well as key stakeholders to bring you the most relevant information. If you have any questions about this report or the local development land market, don’t hesitate to reach out.

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