The Real Property Association of Canada has released its second-quarter report measuring the confidence of senior executives in the country’s commercial real estate industry.
Individual opinions are divided, but as a group industry leaders have become more anxious about the prospects for the market.
The confidence index has dropped to its lowest level in four years due to concerns about the Canadian economy. Chief among these appears to be that the fear that the industry’s run of good fortune can’t continue. The prospect of higher interest rates is also noted as a key cause for concern.
Even though the Canadian property markets are very stable, real estate executives have expressed concern that the country’s economy is still not in the best shape. As a result, Canadian investors are looking outside of the country’s borders for opportunities. Many regions in the United States are presenting investment opportunities for Canadians right now.
Jones Lang LaSalle global capital markets research director David Green-Morgan pointed out recently that in 2012, at least 20 per cent of all cross-border international real estate investments were coming from Canada.
Pension plans are a major player in the story, but he said that real estate investment trusts (REITs) and insurance companies made almost half of their investments outside the country.
Green-Morgan said, “We don’t see that often, that half of activity is outside the country. It’s not typical investment strategy, but I guess it reflects the nature of the Canadian market at the moment.”
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