Buyers are seeking to cash in on frenzied demand in Canada for properties from offices to warehouses.
Transactions last year totalled about $43 billion, up from 2016’s record of $34.7 billion, the real estate services firm said in a statement. Historically strong fundamentals, such as high rents and low vacancies, are likely to improve even further, pointing to potentially even higher investment in 2018, according to CBRE, a real estate company.
“Despite the relatively late stage in the cycle, investors are not shying away from Canadian commercial real estate,” Paul Morassutti, executive managing director for CBRE Canada, said in the statement. “We have record-low vacancy rates, record-low unemployment, increasing institutional allocation to real estate and supportive immigration that fuels population growth.”
Why is this happening? Because the good reputation Canada has on political stability and growing economy.
CBRE sees the technology industry — already a key driver of the office market, particularly in Vancouver and Toronto — soaking up an even greater share of space in the future.
Canada was one of just four countries to set back-to-back records for commercial real estate investment last year, the others being China, Spain and the Netherlands, according to the firm.
Foreign investors last year accounted for 13% of all deals above $10 million. That was second to the peak of 27% set in 2016, a year with such blockbuster deals as the sale of Bentall Centre in Vancouver to China’s Anbang Insurance Group Co.
Some clouds are aware by the experts. Potential risks for investors in the coming year include rising interest rates and negotiations over the North American Free Trade Agreement. A slowdown in Canadian imports and exports may hurt several sectors, especially the industrial market, according to CBRE.
“The housing market is really the engine behind Canadian growth over the last decade,” Morassutti said in an interview with Bloomerg. “Look at consumer household spending and the wealth effect of having your house price go up every year. If that were to really falter, and given the fact that many Canadians are levered right up to the hilt, that could have real dire consequences for the country.”
