British Columbia's real estate market has always been a hot topic, and 2025 is no exception. Whether you're a seasoned investor, a first-time homebuyer, or simply curious about the market’s direction, understanding lender trends is crucial. The recently released 2025 Canadian Real Estate Lenders’ Report from CBRE, a major real estate services firm, provides surprising insights—and potential opportunities—for those looking at BC property. The report surveyed 37 lenders representing over $200 billion in commercial real estate loans, offering a detailed picture of their priorities and concerns.

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Vancouver: Still a Star, But with a Twist

Vancouver remains a top choice for lenders, consistently ranked alongside Toronto, Montreal, and Ottawa. This signals strong confidence in the long-term value of BC real estate, particularly in its largest city. However, the report reveals crucial shifts that buyers and sellers need to understand. Lenders are becoming more selective, and their priorities are changing.

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The Rental Boom Continues

If you're considering investing in a rental property, there's good news—lenders are highly interested in purpose-built rentals, especially those with government-backed (CMHC) insurance. In fact, 86% of lenders plan to increase their budgets for CMHC-insured rental construction loans, while 75% plan to do the same for CMHC-insured term loans. This means financing for these projects should be more readily available, potentially at better rates.

This is particularly relevant in high-demand areas like Vancouver, where rental vacancy rates are notoriously low. The positive trend extends to growing markets like Kelowna, where an increasing population and a diverse economy (tourism, agriculture, and tech) are driving demand for rental housing.

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Condo Conundrum

The condo market—especially high-rises—presents a more complex landscape. Lenders are tightening their belts across Canada, and BC is no exception. The report highlights several key trends:

• Higher Equity Requirements: 52% of lenders are demanding that developers invest more of their own money (down from 72% last year, but still significant).
• Bigger Deposits: 36% require larger deposits and shorter payment schedules from developers.
• Pre-Sale Hurdles: A substantial 68% of lenders require 60-79% of units to be pre-sold before financing construction.

These stricter requirements, combined with a potentially softening condo sales market, create a challenging environment for condo developers in BC. The report notes a "material year-over-year increase in lender concern" for high-rise condos. This means fewer new projects may launch, and those that do will undergo rigorous vetting. For buyers, this could mean fewer choices in the short term but potentially greater long-term stability. This trend is visible across BC, from Vancouver’s established high-rise market to Kelowna’s expanding skyline.

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Land

Thinking of buying land to build on? Lenders are raising red flags—nationwide. They view development land as the riskiest type of real estate investment right now. The CBRE report cites recent market value drops and an increase in distressed land asset sales as key reasons. Specifically:

• 25% of lenders see the risk as "significantly elevated."
• 43% view it as "elevated."

This caution will likely make securing financing for land purchases in BC more difficult, particularly in areas with volatile prices.

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Retail’s Surprising Comeback

Here’s a twist—lenders are showing renewed interest in retail properties. After years of focusing on other sectors, nearly half (48%) of the lenders surveyed plan to increase their lending for retail properties. This marks a significant jump from an average of just 14% over the previous seven years.

This could signal a belief that the retail sector is rebounding post-pandemic, presenting potential investment opportunities in well-located shopping centers or commercial spaces in BC.

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Office Space

The office market remains uncertain. While lender sentiment toward office properties has improved somewhat nationally, Class B offices (older buildings, often in less desirable locations) remain a concern. The report highlights that refinancing office loans often requires short-term renewals or equity paydowns.

This suggests that BC’s office market, particularly in Vancouver, will continue to face challenges, especially for older, less desirable office spaces. Loan-to-value ratios for top-tier office assets remain highly divided, ranging from 45% to over 75%.

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What Does This Mean for You?

The CBRE report underscores a key challenge—determining the true value of properties. Lenders are struggling with this, affecting how much they’re willing to lend. A significant 57% of lenders cite "uncertainty of property valuations" as their biggest concern.

Here’s what this means for buyers and investors:

• Expect More Scrutiny: If you're applying for a mortgage, expect lenders to be extra cautious in assessing your finances and the property’s value. They’ll closely examine leverage (the amount of debt compared to the property's value) and the specific asset type.
• Negotiation is Key: The report highlights a persistent "mismatch in buyer and seller expectations" (a concern for 46% of lenders). Be prepared to negotiate!
• Do Your Homework: Understanding local market trends—whether in Vancouver, Victoria, the Interior, or Kelowna—is more critical than ever.
• Leverage and Asset Type Matter Most: These two factors are the most critical variables lenders consider when refinancing, according to the report.

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The Bottom Line

BC’s real estate market in 2025 presents a mix of opportunities and challenges. While Vancouver remains a desirable market, lenders are becoming more cautious in certain areas. The uncertainty surrounding property valuations is the single biggest challenge they face.

By understanding these trends, you can make more informed decisions—whether you're buying, selling, or investing in BC property. The report suggests a more selective lending environment, with strong lender interest in purpose-built rentals and a surprising resurgence in retail. However, caution prevails in the condo and development land sectors.

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Source: CBRE