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Foreign investment in property is set to rise this year across Canada and the US, if recent forecasts from real estate trust executives in both countries pan out.
In all, 74 percent of respondents to a recent KPMG poll who are employed at American trusts say they expect foreign investment in stateside assets in 2016 to be greater than it was last year, according to the company’s 2016 real estate outlook survey.
To the north, 60 percent of executives at Canadian REITs predict the same for out-of-country inflows into Canada’s market.
“Real estate executives on both sides of the border have a very favorable outlook on the industry’s fundamentals,” says Tom Rothfischer in a statement. “Demand for real estate, from domestic and foreign sources, should remain stable to strong over the near term,” he adds.
The KPMG survey, conducted online from August to November last year, solicited responses from a spectrum of executives at REITs including CEOs, senior vice presidents, and managing directors.
In notes accompanying the results, KPMG says the stability of the US market makes it “a safe haven from the ongoing economic, financial and security issues in the Eurozone and the weakness in emerging markets.”
Further, there is a wider variety of listings available across the US market than elsewhere, says KPMG, and the reliability of the US legal system is also attractive to investors.
“While not providing the same level of liquidity, Canada is similarly attractive to global investors seeking safe and stable returns,” the company says.
“With the weakening of the Canadian dollar versus the US dollar and the Euro, the Canadian real estate market is seen as relatively affordable,” it adds.
Though most executives based in either country see foreign investment growing in the next 12 months, a greater share of US responses call for increases overall.
Six per cent say foreign inflows will rise by more than 20 percent, compared to the 1 percent of respondents with Canadian respondents who agreed, for instance.
At 30 percent, the most common reaction from US execs was that foreign investment would increase by more than five per cent but not more than 10 per cent, while 25 percent of Canada-based REIT respondents expressed this sentiment.
Despite a majority of Canadian REIT employees saying foreign investment would rise, the response that attracted the largest number of votes from them was that it would track at “about the same,” with 34 percent drawing this conclusion.
Nineteen percent of US REIT respondents saw this outcome unfolding in their own market.
The same share (3 percent) of US and Canadian REIT execs say foreign investment will drop by up to 5 percent.
Canadians were more bearish, as 4 percent say there will be declines in foreign investment exceeding 5 percent but not surpassing 10 percent. Just 1 percent of those in the US made that prediction.
“We see 2016 as another positive year for the US and Canadian real estate markets, but it remains to be seen whether there is ‘room to run’ beyond,” KPMG says.