Canadian real estate experts are upbeat about the outlook for 2008, despite the slowdown in the U.S. residential housing market, according to a new report from PricewaterhouseCoopers (PwC) and the Urban Land Institute.

The report reflects interviews with and surveys of more than 600 of the industry’s leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants in both Canada and the United States.

According to Chris Potter, PwC partner and leader of the firm’s Canadian Real Estate Tax practice, Canada benefits from a more conservative investment environment than the U.S. “In Canada, institution-dominated markets appear to be avoiding ‘transaction mania’, but real estate values have reached record highs and a strong economy has accelerated tenant demand for space.”

According to American respondents, a healthy correction south of the border will likely bypass long-term investors but penalize late-to-the-game speculators and overleveraged buyers. Canadian respondents to the survey remain positive about sidestepping any serious impacts of this possible U.S. correction. Close to 36% view their prospects for profitability in 2008 to be very good and a further 22.4% say they’re excellent.

The strongest areas of real estate business activity for Canadian respondents is predicted to be within real estate services, followed by commercial/multifamily development and homebuilding/residential land development. All property sectors share positive prospects across the country especially industrial and retail with respondents, on average, stating development prospects are expected to be modestly good to good. The residential for-sale market is also expected to fair well, but might need to take a breather as homebuilders cannot keep up with the current pace and single-family housing looks overpriced.

Office stock is seeing limited inventories and dated product fill up with tenants. Except for Montreal, where office vacancies are nearing 9%. Canadian metropolitan areas boast below 5% vacancies, and rents have room to push higher. The survey is also showing that costs and land scarcity is limiting new development. Hotel investment and development prospects are modestly good, and most respondents rate this sector either a buy or a hold.

Rental apartments are doing well in major cities with high immigration flows. Primary western cities – Vancouver, Calgary, and Edmonton – are veering toward housing shortages as workers, attracted by a plethora of well-paying jobs, pour into the energy zone. Apartment occupancies are soaring in these areas. Development in other regions remains difficult because of costs and land scarcity.

A copy of Emerging Trends in Real Estate(R) 2008 is available at www.uli.org or www.pwc.com/imre.