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Real estate values on the move, says CBRE Canada

“Investors have had to assess potential fallout from Greek debt negotiations and the Chinese stock market rout; however, it appears that volatility and a low Canadian dollar will be a net benefit for Canada’s commercial real estate market, as long as liquidity is maintained. Investors continue to appreciate the safety of Canadian bricks and mortar despite slow economic growth,” says Paul Morassutti, executive vice president, Valuation & Advisory Services at CBRE Canada. “Cap rates have been relatively stable nationally and investment momentum is growing. Notable cap rate increases occurred in Calgary’s Class B and C office buildings and low-rise apartment buildings, while compression took place in the Vancouver office and retail market, the Toronto industrial market, and apartment buildings in Central and Eastern Canada.”

“The bond market is typically considered “risk free”; however, events in Greece and China have resulted in a level of volatility that is more commonly seen in equity markets, says Carmin Di Fiore, executive vice president, Debt & Structured Finance, CBRE Canada. “The Bank of Canada opted for a cut to the key overnight rate, which temporarily inverted the yield curve, increased talk of a recession and leaves them with few options moving forward. That said, the Greek tragedy is turning into a Canadian opportunity as investors move to safety. Borrowers and lenders remain active despite increased volatility, which is a vote of confidence for Canadian commercial real estate.”

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