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November 15, 2010

Looking to invest in commercial real-estate? Looks like you should be checking out apartments and opportunistic assets in the US market recovery, says a PriceWaterhouseCooper and Urban Land Institute survey.

The survey is called Emerging Trends in Real Estate 2011, and is pretty interesting.

According to the survey, Canadian real-estate investors in 2011 should expect “slowing, steady growth and decent prospects.”

The survey surveyed more than 875 real estate players, including investors, brokers, lenders and developers, in Canada and the United States.

Investment opportunities are limited in Canada, which is moving people to look to the US:

“Access to capital may have improved but investment opportunities remain limited. Overall, Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital which may result in pent-up investors seeking market-bottom plays and foreclosed assets in the US. Foreign investors also struggle with finding good acquisition opportunities on Canadian soil. The same can’t be said for insurers and pension funds. They continue to command ownership of Canada’s trophy commercial assets: downtown office space and regional malls.”

While people are going to be looking to the US to invest, Toronto is now taking over Vancouver from the top-spot on the report. According to the survey:

Toronto ejected Vancouver from the top ranking in the Emerging Trends report. Toronto’s metropolitan area stands as the critical economic engine with Bay Street’s impenetrable financial sector and diverse manufacturing industries along with immigration flows supporting growth and intensifying tenant demand. However, some interviewees worry about flattening apartment rents as more condo investors lease out units.

Vancouver’s office and condo markets remain “red hot” while international visitors bought apartments after the 2010 Olympic Games. The city’s water and mountain vistas may control development and attract investors however, some interviewees are uneasy of the potent combination: “The market is artificially inflated; it’s been hot for too long.” In addition, the HST has cooled demand for mid-tier housing in some areas outside of Vancouver’s core. Calgary aims to recuperate from diminishing demand and a smattering of development bingeing.

Interesting.

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