April 7, 2011
Canada’s condo boom has been a gold rush for some investors.
Canadians and foreign buyers have earned large returns by purchasing pre-construction condos with small down-payments and then either flipping them or renting them out.
However, an article out yesterday in the Globe and Mail that’s generating some buzz, suggests buying a REIT may be the more profitable investment.
According to a study by Macquarie Capital Markets Canada Ltd., REITs are producing returns that trounce those of Canada’s hottest condo markets.
For example, Calgary’s Boardwalk REIT was up 16.3 per cent last year and Toronto’s Canadian Apartment Properties REIT was up 29.6 per cent return. In comparison, the total return on the purchase of a Toronto condo in 2010, according to the article, was 11.3% and a condo in Calgary -2.8%.
In December, we reported that the average REIT as measured by the Dow Jones All REIT index was up 27% over last year and that this had trumped the broader stock market.
So, will REITS keep cruising into the future? Check out the discussion on the topic here.