Income should be priority this year—observers

While Canada’s real estate markets remained stable overall in 2015 amid an economy gradually recovering from a technical recession, various observers said that real estate investment trusts did not perform well at the stock market.
Last year’s market stability is expected to bleed off into most of this year, with BMO Capital Markets senior economist Sal Guatieri pinpointing better economic growth, low interest rates, and possible recovery in oil prices as the main drivers. However, analysts said that the underachievement of the real estate trust segment in 2015 indicated a potential decline this year.
Lincluden Investment Management assistant vice president Derek Warren said that this development should prompt institutional investors to seek viable income generation alternatives such as development or redevelopment in popular neighbourhoods.
“The focus should be on the income component or value add. The biggest trend right now is mixed use,” Warren told Benefits Canada, he says, citing projects that integrate commercial and residential components as reliable income generators for investors this year.
Guatieri concurred with this conclusion, adding that buyer demand and average pricing for condos and other integrated housing solutions—especially in high-demand areas like Toronto and Vancouver—would remain stable for the rest of this year due to the demographic shift giving rise to millennials and young families looking to settle down.
“Montreal will continue to strengthen as Quebec’s economy is poised to pick up in response to stronger exports. Calgary’s battered market should stabilize as oil prices are expected to increase moderately in 2016,” Guatieri said.

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