Alberta real estate investment is on a noticeable downward trend

by Ephraim Vecina06 Sep 2019

Despite its sustained economic recovery, Alberta is experiencing a marked deceleration in its commercial real estate investment volumes, according to latest Altus Group data covering Q2 2019.

In Edmonton, investment levels during the first half were considerably lower than last year’s output. Second-quarter values fell by 62% on an annual basis.

Q2 2019 was also the third straight quarter of decline for the city’s property investment segment. Nearly $419 million in commercial transactions took place during the period, with 162 of these exceeding values of $500,000. Together, they brought the year-to-date total to $1.1 billion.

“While the market has experienced declining investment volumes since mid-2018, the apartment and industrial sectors continue to be the preferred asset classes, providing reasonable returns while servicing a continued demand from users” Altus Group data solutions manager Ben Tatterton stated.

Apartments accounted for 31% of that quarter’s transactions, while industrial assets represented 19%. Offices were a mere 2.1% of the city’s total Q2 investment.

“The drop in commercial investment comes at a time when Edmonton exhibited an uptick in investor preference in Q2,” the report explained.

“The trend demonstrates that ‘opportunity’ purchases continue to drive the market as investors target higher yields in undervalued assets located in well-serviced areas, unlocking potential through redevelopment plays. The improvement also defies the economic uncertainty that the market has been facing this year.”

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