Canada’s largest institutional and private real estate investors think that the market has reached rock bottom and is on the verge of an upswing according to Colliers International’s Global Investor Sentiment Survey. Equipped with cautious optimism that the market will rebound over the next 12 months, the majority of Canadian respondents are looking to expand their portfolio (61 per cent) or to rebalance it (22 per cent).
The global survey of more than 200 major real estate investors with a total investment portfolio of $710 billion also found respondents are increasingly looking at home and abroad for investment opportunities. The vast majority (89 per cent) of Canadian respondents intend to invest at home with Toronto topping the list of the preferred investment destinations by one in four investors (26 per cent), followed by Vancouver (18 per cent), Calgary (14 per cent), Ottawa (9 per cent) and Montreal (7 per cent).
“The relatively sound Canadian economy and its ability to weather the recent recession better than other countries, have increased investors’ confidence and appetite for risk,” says Milton D. Lamb, Chair, National Investment Services, with Colliers International in Canada. “Respondents are increasingly looking for opportunities outside of their domestic market, mainly south of the border where Canadian investors are among the top three buyers of commercial property.”
Nearly half (44 per cent) of investors indicated they would be looking abroad for buying opportunities. This represents a dramatic increase from the previous survey where only 19 per cent of Canadian investors cited plans for foreign investments. The survey also found that investors are not rushing to dispose their current foreign investments. An overwhelming majority (94 per cent) of Canadian respondents are not planning to sell their investment abroad and are waiting for the world economic conditions to improve to ensure prudent investment return.
“One of the reasons Canadian investors are looking beyond their domestic borders is the sense of confidence they have in our economy that went from ‘boring’ to ‘brilliant’ following the latest recession and outperforming the other G8 countries,” adds Wayne Duong, Director of Research with Colliers International in Canada. “This, coupled with limited supply of good investment opportunities in Canada, drives investors to search for opportunities elsewhere.”
Additional findings and highlights
- Seventy-eight per cent of respondents do not believe we are heading for a double dip recession, compared to 58 per cent of U.S. investors who hold the same stance.
- Large majority (94 per cent) of respondents believe the cost of borrowing to increase or remain the same over the next year.
- Investors overestimated the challenging credit conditions. While only 54 per cent of respondents in the previous survey thought that access to debt would become easier, 94 per cent acknowledged in this survey that access to capital was actually easier than expected.