A report from Avison Young says that the build-up began in 2012 before accelerating in 2015 and peaking to a record high in the first half of 2017, but is now in decline.
Investment in the first six months of the year hit an unprecedented 109 transactions valued at $5.09 billion; but the report says that several challenges are converging to restrict the market from these levels.
“A lack of demand is not what will impact investment activity in BC commercial real estate. Supply remains the challenge. Increases in the Canadian interest rate environment and the cost of capital as well as changes to federal and provincial taxation policy, combined with greater enforcement of limitations on foreign capital, particularly from China, are what will ultimately lead to a pause in BC,” explained Avison Young Principal Mehdi Shokri.”
Canadian institutional capital surged to 60% of all investment in the BC commercial sector in the first half of 2017.
Although they were involved in just 6% of deals, institutional investors committed $5.09 billion.
Private purchasers were the most dominant buyer group in terms of deals volume (86%) but accounted for just 36% of dollar volume.
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There has been a rise in the commercial real estate market in British Columbia over the last few years but it may now have peaked.