Photo: Nikos Koutoulas Flickr
The Canadian Dollar hit a decade-low 74.5 US cents earlier this week, yet it appears that hasn’t stopped Canadians from embarking on a major spending spree on real estate south of the border and overseas.
In the 10 foreign cities that saw the most Canadian investment this year, property acquisitions by Canadians totalled about $17 billion (US), according to data from Real Capital Analytics covering the January 1st-September 29th period.
London garnered the most Canadian real estate investment by far, with $5.3 billion spent there so far this year. Manhattan placed second, drawing $3.9 billion from Canadians, who spent more than any other foreign investor in that market.
Jim Costello, Real Capital Analytics’ vice president, explained that Manhattan is a “good, natural first step for a lot of Canadian investors looking outside of Canada.”
“It’s the largest, most liquid market in the United States, so that’s going to capture the attention of these investors right away,” he said in a telephone interview from San Francisco to BuzzBuzzHome News.
It’s worth noting that a single acquisition made up a big chunk of Canadians’ overall investment in Manhattan. Ivanhoe Cambridge, a Canadian real estate company, and Callahan Capital Properties joined forces to purchase 3 Bryant Park, which includes a 42-story office tower, from Blackstone Group for $2.2 billion.
Purchases by big-time investors such as pension funds, including the Canada Pension Plan Investment Board, have had a big impact on overall investment in Manhattan’s real estate market, according to Bloomberg.
Over the last 10 years, Canadians have purchased about 80 Manhattan properties for a total of about $15.3 billion.
The popularity of Manhattan and London for Canadian investors hints at a more general trend: nine out of the top 10 cities are located in either America or England.
As for what draws Canadians to the US and British markets in general, Costello said common cultural ground plays a significant role.
“There’s a reason that Canadian investors go to a place like the United States… there’s deep cultural connections: we’re both neighbours, we speak the same language, we all play hockey and all” Costello said.
“[In] London and the UK, there’s also deep cultural connections just given the history of Canada and the relationship with the UK.”
Two statistical oddities — “East England Other” and “East Midlands Other” placing in seventh and eighth with $820 million and $786 million in Canadian dollars pouring into real estate respectively — are not a sign of emerging real estate markets.
“Those outlying areas of England are really single asset deals and not indicative of anything bigger,” said Costello in a followup email to BuzzBuzzHome News. “In both cases in fact, the sale was of amusement park locations.
The only city in the top 10 that’s not on British or American soil is Berlin. The German capital placed third behind Manhattan with Canadians spending $1.7 billion on real estate there.
Here are the top 10 cities that Canadians spent the most money on real estate in so far this year:
1. London, UK — $5.3 billion
2. Manhattan, US — 3.9 billion
3. Berlin, Ger. — $1.7 billion * highest outside of the UK and US
4. Boston, US — $1.6 billion
5. Los Angeles, US— $1 billion
6. Dallas, US — $836 million
7. Milton Keynes, UK — $820 million
7. East England, UK — $820 million
9. East Midlands, UK — $786 million
10. Manchester, UK — $744 million