Investor survey identifies 'best' commercial market

South of the border offers the most stable and secure option in commercial real estate, according to the 20th annual survey of Association of Foreign Investors in Real Estate (AFIRE). Improvement in rent and occupancy levels as well as the repeal of a key foreign investment tax have all contributed to the ranking.

 

AFIRE'S survey respondents hold more than $874 billion of real estate globally, with about 40 per cent of that, or $338 billion, in the U.S.

That last figure is expected to grow, with 60 per cent of respondents saying they plan to increase their investment stateside this year. That is, however, down from the 72 per cent who answered the same in 2011.

That interest, buoyed by property prices still in the doldrums since the 2007 collapse, is shared by a significant number of Canadians both on the commercial and residential sides.

In particular, survey respondents were bullish on apartment buildings, with the 2012 survey representing the fourth consecutive year multifamily units topped the AFIRE list.The survey, by Wisconsin School of Business, was conducted in fall.

Interest in the U.S. notwithstanding, a Canadian expert is encouraging investors to look at apartment buildings in that province for some of the same reasons investors are now turning to the U.S.

“Changing economic, political and social trends are turning the apartment sector into an exciting place to develop and invest,” says Derek Lobo, CEO for ROCK Advisors, in his first-ever report on the apartment segment from an Ontario perspective. “Today, investors willing to take the leap in developing new stock or renovating old stock are bound to reap the reward of a revitalized, strong and stable sector. All investors need is the will.”

Not all locations are considered equal, according to the report, but changing realities in the province suggest that rent controls, responsible for limiting investor interest during the last couple decades, will be altered enough to renew that interest, says Lobo, head of the boutique commercial real estate firm with an exclusive focus on the apartment industry.

A tight vacancy rate is also giving investors reason to take a second look at apartments across Ontario, although the report lists Vaughan/King/Richmond Hill at the top of the list.

Markham and Ottawa come in as close seconds.

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